X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Fed up with large-firm economics, two prominent Paul, Hastings, Janofsky & Walker partners have packed up their corner offices in Atlanta’s Bank of America tower and set up a downsized firm that they say represents the future of employment practices. R. Lawrence Ashe Jr. and Nancy E. Rafuse said they had grown increasingly frustrated with Paul Hastings’ overhead and rates. “In a time of economic downturn, we did not enjoy the ever-increasing pressure on rates and revenue production, and our new firm has much lower overhead and has substantially lower rates,” said Ashe. Their new employment, civil rights and litigation boutique, Ashe & Rafuse, includes three former Paul Hastings associates, and Ashe said he expects to hire up to five more attorneys from his former firm. Partner rates at Paul Hastings went up 10 to 15 percent this year, and associate rates went up the same amount on top of the normal lockstep rate hikes, said Rafuse. When she made partner at the firm in 2000, her hourly rate was $275, and this year she was supposed to charge $380, she said. Rafuse expects Ashe & Rafuse to charge clients 20 to 25 percent less than Paul Hastings. A confidante of Mayor Shirley C. Franklin, Ashe chaired the search teams for Atlanta’s chief of police, city attorney, chief operating officer and chief financial officer. He is married to state Rep. Kathy B. Ashe, D-Atlanta. Ashe opened Paul Hastings’ local office in 1980 and served as local managing partner for a decade. Rafuse joined Paul Hastings after graduating from the University of Georgia School of Law in 1991 and was most recently chairman of the local employment group. Philip J. Marzetti, local managing partner of Paul Hastings, said from the firm’s perspective, the defections were related more to Ashe and Rafuse’s desire to do plaintiffs’ work and less to the firm’s rate structure. “The issue from our side … really revolved around differences of opinion as to the direction of the firm.” Both Ashe and Rafuse wanted to maintain a plaintiffs’ practice, he said. “That plaintiffs’ practice over time has created increasing and serious positional conflicts with our clients,” Marzetti added. Ashe acknowledged that about 10 percent of his practice involved plaintiffs’ work and he’ll continue that amount at his new firm. When he joined Paul Hastings more than 20 years ago, Ashe said, he told firm management that he wanted to do some plaintiffs’ work, which he did until two years ago. But a new employment department head, Nancy L. Abell, wouldn’t allow Ashe to keep his plaintiffs’ practice, he said. Abell said a number of the firm’s clients don’t approve of having their lawyers do plaintiffs’ work because of potential conflicts. The departures, Marzetti added, have a minimal impact on Paul Hastings because of the firm’s size. Locally, the firm employs about 120 lawyers and 100 staff. “We think that we continue to have a very strong office here in Atlanta,” he said. Paul Hastings still has four employment partners here and a total of 30 lawyers in the group. Firmwide, Paul Hastings has 150 employment attorneys among its 800 lawyers. The firm has 11 offices around the world. Last year, Paul Hastings’ average profits per equity partner were $940,000. Both Ashe and Rafuse were equity partners. Rafuse said the move was motivated by clients who were beginning to balk at the growing budgets for large cases. Training junior lawyers on litigation was becoming increasingly difficult because of budget constraints, she said. Clients no longer want to pay junior associates increased rates because it takes younger lawyers longer to do the work, Rafuse said. “Large firms’ employment lawyers are pricing themselves out of the individual case market,” she said. Clients are re-evaluating their relationships with all vendors and service-providers, Rafuse added, and in the current economy, it was hard to justify raising rates. Rafuse said that as she and Ashe approached clients about the move, the response was generally, “You always had my heart, and now you have my wallet.” Debra J. Libby, associate counsel with Acuity Brands, said her company’s non-immigration employment work will follow Ashe and Rafuse to the new firm. Ashe said he became frustrated with large law firms’ emphasis on revenue production and profits per equity partner. He added that a boutique firm doesn’t have a “one size fits all budget” typical of bigger outfits. “Large firms have large bureaucracies, lots of rules, not lots of flexibility,” he said. “We’re in a much better position.” The new firm will have offices in 12,000 square feet of Class-A office space at The Peachtree building in Midtown. Paul Hastings has around 100,000 square feet of space in the Bank of America Plaza. Rafuse said the firm plans to match the associate pay structure at firms such as Paul Hastings, King & Spalding and Alston & Bird, all of which pay first-years $100,000 to start. C. Lash Harrison serves as managing partner of 150-lawyer Ford & Harrison, a locally based labor and employment firm. Harrison said there’s no question that, generally, rates and overhead are lower for a boutique firm because a more specialized firm doesn’t need as many support staff. Harrison has heard that multi-practice firms have been trying to raise employment lawyers’ rates, and that can be unrealistic given the rate offers at boutique firms. “Across the country there has been pressure to get the rates up [at big firms], and they don’t have the same opportunities because they have competition from folks like us,” he added. Former Paul Hastings senior associates David E. Gevertz and Daniel E. Turner joined Ashe & Rafuse as partners. C. Brooks Seay, an attorney and former director of finance at Kilpatrick Stockton, joined as chief operating officer and chief financial officer. Sandra Kim, a Paul Hastings first-year, joined as an associate, and the office has six staff members.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.