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Judging by some of the numbers in this year’s NYLJ 100 survey of New York’s largest law offices, a booming economy is not the only spur to law firm growth. At many of the city’s top firms, a lackluster economy has had a similar effect on their size. Last year, only three firms had more than 500 lawyers in New York. Now there are six of that size. Cravath, Swaine & Moore now has 477 lawyers in its New York headquarters, 19 percent more than last year’s 401. Similarly, Cleary, Gottlieb, Steen & Hamilton and Sullivan & Cromwell have seen their New York legal staffs increase by 16 percent and 11 percent, respectively. Weil, Gotshal & Manges and Chadbourne & Parke added 72 and 62 New York-based lawyers, respectively. Skadden, Arps, Slate, Meagher & Flom, the largest firm in New York, now has 857 lawyers working in its Times Square offices, up from 781 the year before. Out-of-town firms have not been left out of the growth trend. Though the year saw a number of high-profile mergers, a number of firms saw enormous organic growth. Chicago’s Kirkland & Ellis grew its New York office 31 percent, to 161 lawyers. Los Angeles’ Latham & Watkins increased the size of its New York office 20 percent, to 265 lawyers. Indeed, many firms’ growth within the last year far outstrips their growth during the boom years just past. Other than through merger, the largest size increase of any major firm last year was Cadwalader, Wickersham & Taft’s addition of 65 lawyers. Last year, three firms added more than 70 lawyers without merging. At the height of the boom, in 2000, Skadden Arps added 72 lawyers, four fewer than this year. Such growth at law firms clearly runs contrary to expectations in poor economic times. Indeed, according to Danilo DiPietro, the head of the law firm group at Citigroup Private Bank, the continued high levels of growth at many of New York’s top firms flies in the face of national trends, which show that growth at firms nationwide has slowed from last year’s average rate of 6 percent to an average of 3 percent this year. Some expansion among New York firms is clearly attributable to the burgeoning litigation and bankruptcy practices that some have. However, another major source of continued growth at many firms is much more prosaic. “We’re not losing people to the investment banks or dot-coms like we used to,” said Robert Joffe, the presiding partner of Cravath Swaine, who said dramatically lowered attrition was the chief reason for his firm’s large jump in size this year. But low attrition has been the norm nationwide as well, DiPietro pointed out, and evidence from elsewhere indicates that law firms have become more aggressive in dealing with overcapacity through layoffs or other cuts. New York may stand apart from national trends, he said, because the city has become the focus of national consolidation trends and competitive concerns, with many firms still regarding New York offices or New York-based practice groups as long-term investments. Moreover, he said, the most elite firms in New York have a greater capacity to finance overcapacity, owing to their higher level of profitability. “The question is how long they’ll be willing to do that,” said DiPietro. At Cravath Swaine, Joffe said the firm would not resort to layoffs to address overcapacity. Rather, to the extent possible, associates would be put to work in the firm’s extremely busy litigation department rather than in the slowed corporate department. Cravath Swaine and other elite New York firms have generally avoided lateral hiring, relying completely on law school hiring for growth. Other than attrition or dismissals, these firms generally have their growth determined by the size of incoming first-year classes. DiPietro noted that most firms have not dramatically reduced first-year hiring. At firms where lateral hiring is actively pursued, growth can be more closely planned. Chadbourne managing partner Charles O’Neill said his firm has also seen low attrition, but he attributed much of his firm’s growth in the last year to lateral hiring. “We have brought on lateral partners and they have brought on lateral associates,” said O’Neill, noting that at least two associates are generally hired for each new partner. Chadbourne has made a particular effort to hire lawyers for its intellectual property practice in the last year, he said. Overcapacity is a concern, though, O’Neill acknowledged. “We’ve been careful about that, monitoring it across the board,” he said. Though previous years have seen largely uniform growth among firms, growth within the past year has been more polarized, with the largest growth among the largest firms. Indeed, perhaps the majority of New York-based firms reported attorney rosters only slightly changed from the year before, suggesting that national trends have not gone unnoticed completely and that several firms have been more aggressive than others in maintaining or reducing staff levels. Simpson Thacher & Bartlett, with the second-largest law office in New York, increased its rolls by 27 New York-based lawyers to 635, a 4 percent increase. Davis Polk & Wardwell increased its New York staff by roughly the same percentage, going from 492 to 527. Milbank, Tweed, Hadley & McCloy and Cadwalader Wickersham both saw 5 percent increases in the size of their New York offices, adding 15 and 17 lawyers, respectively. Willkie Farr & Gallagher added one lawyer; Fried, Frank, Harris, Shriver & Jacobson lost one. LeBoeuf, Lamb, Greene & MacRae and Kelley Drye & Warren added six and seven lawyers, respectively. White & Case and Proskauer Rose shed three and six lawyers, respectively. Of course, a number of firms showed much more substantial reductions. As expected, Shearman & Sterling, which announced major associate layoffs a year ago, has fewer lawyers than in 2001. The firm now counts a New York legal staff of 559 lawyers, a 7 percent drop from the 599 lawyers the firm employed last year. But Dewey Ballantine, which also had layoffs in 2001, showed a much gentler drop in its New York staff. The firm now has 357 lawyers in Manhattan, seven fewer than last year’s 364. THE MERGER EFFECT In contrast to previous years, much of the outstanding growth in New York last year seemed to take place at hometown firms. Indeed, most of the major out-of-town firms that previously participated in massive mergers with New York firms reduced their New York presence in the last year. London’s Clifford Chance and Chicago’s Sidley Austin Brown & Wood, both of which burst into the ranks of New York’s largest firms through blockbuster mergers and seemed poised for ever greater growth, just about kept their places last year. Sidley Austin, the product of last year’s merger between Chicago’s Sidley & Austin and New York’s Brown & Wood, shed 27 lawyers since last year’s survey. The firm now counts 436 lawyers in New York. Similarly, Clifford Chance, which acquired New York’s Rogers & Wells in 2000, shrank by about 10 lawyers in New York, going from 461 to 451. Pillsbury Winthrop, which resulted from last year’s merger between San Francisco’s Pillsbury, Madison & Sutro and New York’s Winthrop Stimson Putnam & Roberts, also showed a somewhat sharper drop in the ranks of its New York-based lawyers, who now number 158 compared with 193 last year. Chicago’s Winston & Strawn, which acquired New York’s Whitman, Breed, Abbott & Morgan in 2000, also saw its New York office shrink somewhat, going to 232 lawyers from 252 a year ago. Similarly, Tampa, Fla.-based Holland & Knight, which last year acquired Gilbert, Segall & Young and acquired Haight Gardner Poor & Havens in 1997, saw its New York office shrink to 125 lawyers this year from 139 in 2001. Bingham McCutchen, created through the merger between Boston’s Bingham Dana and San Francisco’s McCutchen, Doyle, Brown & Enerson, saw little growth in New York this year, inching up to 114 lawyers from 110 a year ago. Bingham Dana last year acquired New York’s Richards & O’Neil. One of this year’s big mergers, KMZ Rosenman, has already seen a steep drop in the size of its New York office. Last year, New York’s Rosenman & Colin, which merged with Chicago’s Katten Muchin & Zavis in March, counted 235 lawyers in its main office. Now the combined firm has 193 lawyers in New York, 18 percent less than a year ago. That merger, of course, had the effect of placing KMZ Rosenman among the largest New York offices of a non-New York-based firm. Though the past year lacked mergers comparable in size with last year’s biggest, the merger trend continued unabated, with several of New York’s most well-known and substantial firms swallowed up by larger, out-of-town firms. St. Louis-based Bryan Cave’s merger with 170-lawyer Robinson Silverman Pearce Aronsohn & Berman was the second-largest New York merger of 2002, though the combined firm of more than 800 was considerably larger than KMZ Rosenman. With 61 Bryan Cave lawyers already in New York, the firm also now ranks as the fifth-largest New York office of an out-of-town firm, just behind major players like Clifford Chance; Sidley Austin; Morgan Lewis & Bockius and Latham & Watkins. Two somewhat smaller but extremely high-profile New York firms also faded into history in 2002. Just days after the death of founding partner Howard Squadron, the firm of Squadron Ellenoff Plesent & Sheinfeld merged with Hogan & Hartson, making that Washington, D.C., firm the primary outside counsel to media titan and News Corp. head Rupert Murdoch. Hogan now counts 115 lawyers in New York, up from 46 last year. Likewise, O’Sullivan, regarded as one of the leading law firms handling mergers-and-acquisitions for private equity firms, merged with Los Angeles’ O’Melveny & Myers, boosting the California firm’s New York office to 212 lawyers from 105 the year before. The acquisition of RubinBaum by Chicago’s Sonnenschein Nath & Rosenthal was the year’s other big merger, bringing Sonnenschein’s New York office to 128 lawyers from 64 a year earlier. A smaller merger boosted the New York presence of Morgan Lewis, which last December acquired the 35-lawyer intellectual property boutique Hopgood Calimafde Judlowe & Mondolino. OUT-OF-TOWNERS Even without mergers, a number of out-of-town firms continued to grow steadily. Cleveland’s Jones, Day, Reavis & Pogue now counts 204 lawyers in New York, up from 168 last year. Chicago’s Mayer, Brown, Rowe & Maw increased the size of its New York office to 193 lawyers from 166 a year ago. Atlanta’s King & Spalding shot to 129 New York-based lawyers from 112 last year and Dallas-based Akin, Gump, Strauss, Hauer & Feld reached 157 from last year’s 141. Though Latham and O’Melveny were among the firms that saw enormous growth in their New York offices last year, many major West Coast firms saw little movement. The New York office of San Francisco-based Orrick, Herrington & Sutcliffe grew to 193 lawyers from 189. Los Angeles’ Gibson, Dunn & Crutcher also added four lawyers in New York, going to 140 from 136. San Francisco’s Morrison & Foerster saw its New York office drop from 136 lawyers to 133. While many firms have turned to overseas offices for their greatest growth in recent years, that trend seemed to cool in the last year. During 2001, White & Case added 274 lawyers, only 23 of whom were based in New York. That came on the heels of the whopping 327 lawyers the firm added in 2000, most of whom were also based overseas. In 2002, the firm added only 43 lawyers overall. Shearman & Sterling, another firm committed to international expansion, also slowed down from last year, when it added 137 lawyers outside of New York, largely overseas. This year the firm’s 40-lawyer reduction in New York was offset by only two additions elsewhere.

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