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There are no elaborate displays of fresh flowers in the lobby of Harris, Wiltshire & Grannis. The white-painted wall trim is faintly scuffed, and the floors are covered in thin wall-to-wall carpeting. So cost-conscious is the staff that when a lawyer needs a new file, a secretary is apt to re-use an old folder. But no one at the 18-lawyer firm, which counts the Microsoft Corp., Cisco Systems, AT&T Wireless, and the News Corp. as major clients, would have it any other way. That’s because low overhead means higher profits — not just for the partners, but for associates and staff as well. From name partner to receptionist, everyone who works at Harris Wiltshire holds “tracking points” in the telecommunications and litigation boutique. The points are assigned value based on the firm’s overall profitability, and can make up a substantial portion of an employee’s salary — more than $75,000 for a senior associate, for example. At a time when most law firms have grown increasingly stingy about sharing equity by lengthening the partnership track and creating nonequity tiers, Harris Wiltshire’s policy is all but unheard of. Hildebrandt Inc. consultant Lisa Smith says she is aware of a handful of firms that give points to associates, but none that do so for staff. “I think it’s a very good idea,” she says, but cautions that outside D.C., the practice could violate bar rules prohibiting lawyers from sharing fees with nonlawyers. For Harris Wiltshire, the system allows the firm to pay above-market salaries in good years and share the pain in bad ones. “We wanted everyone to have a stake in the success of the firm,” says name partner William Wiltshire, 41. “It’s a way to build esprit de corps. It’s not just the partners in good times riding high and in the bad times looking to save. We have secretaries clipping coupons to save money on office supplies, because they get a piece of the savings.” By keeping a lid on expenses, about half of the firm’s revenue now translates into profit, compared with the industry standard of one-third for small firms. The approach has succeeded beyond the founding partners’ dreams when they split from the D.C. office of Los Angeles-based Gibson, Dunn & Crutcher five years ago. Name partner Scott Blake Harris, 51, is reluctant to disclose profits, but acknowledges that all three founders “significantly increased” their compensation in 1998 when they left Gibson Dunn, where Harris was a partner and Wiltshire and Mark Grannis were of counsel. That year, Gibson Dunn posted average profits per partner of $815,000. Revenue per lawyer at Harris Wiltshire is on par with firms such as Jones Day, Wiley Rein & Fielding, and Hogan & Hartson, where numbers range from $500,000 to $550,000. In 2002, the average profit for the firm’s 10 partners, who all hold equity stakes, was around $500,000. But what makes Harris Wiltshire’s numbers so impressive is that the lawyers there, most of whom have young children, bill just 1,500 to 1,600 hours a year. That’s about 500 hours — or 12 full weeks of work — less than the norm at most big firms. “We all expect we’re going to spend time with our families, and we’re not going to ask anyone else to give up time with their families,” says Wiltshire, who has three children, ages four, six, and eight. “I think a balance can be struck between doing good work at the highest level and also having a personal life.” Adds Grannis, who leaves early most Thursday afternoons to coach his seven-year-old daughter’s soccer team, “We don’t want to be known as a ‘lifestyle firm,’ where people come because they want to work less. This is a place where really smart and dedicated attorneys can give clients the absolute best representation and still live a normal life. It doesn’t need to be all-consuming.” It’s a revolutionary sentiment for a trio of lawyers who started their careers at D.C. litigation powerhouse Williams & Connolly. A Harvard Law School alum, Harris joined Williams & Connolly after a one-year judicial clerkship, and made partner in 1985, specializing in litigation and international commercial law. When Bill Clinton was elected president, Harris, a Democrat with ties to the new administration, landed an appointment as the chief of the newly formed International Bureau at the Federal Communications Commission in 1994. Initially, he was allowed to add one outside lawyer to his staff. He chose Grannis, a sixth-year litigation associate at Williams & Connolly. Grannis recalls his surprise at the phone call. “I said to him, ‘This is a political appointment, right? But you and I don’t agree on anything politically.’ “ Harris’ response: the agency was full of people who for 12 years had worked under Republicans, and who might not welcome the changing of the guard. “I’m not the kind of Democrat who wants to re-regulate everything,” Harris told Grannis. “With you here, maybe I can convince them of that.” Grannis accepted the offer, and when the opportunity arose for a second outside hire, Harris tapped Wiltshire, another sixth-year Williams & Connolly associate. None had any prior telecom experience to speak of, but like all good litigators, they were quick studies, and took to the rapidly evolving field with gusto. At the FCC, Harris and team were responsible for international and satellite communications policy and licensing, and represented the agency before foreign governments, international organizations, Congress, and the executive branch. In 1996, as Clinton’s first term drew to a close, the three were ready to cycle out of government. They decided to stick together in the private sector. “Not in law, but in fact, we were already partners,” says Grannis, 39. The problem was, what law firm wanted to take on three new partners with no clients? The best offer came from Gibson Dunn, which made Harris a partner and chair of the communications group; Wiltshire and Grannis became of counsel, with the expectation that they would be considered for partnership relatively soon. Gibson Dunn, says Harris, is “a fabulous firm, with wonderful people. It was a perfect fit.” But the fledgling group quickly ran into conflicts with the 600-lawyer firm’s pre-existing clients. “Conflicts really are a problem in telecom and high-tech,” says Harris, noting that the FCC holds numerous industry-wide proceedings where virtually every player participates. No matter what position you take, says Harris, “It is literally inevitable that if you are at a large firm, you will find yourself adverse to one of the firm’s other clients.” As the conflicts mounted, the group found little synergy or cross-selling between their practice and the rest of the firm. “It’s a very unsophisticated client who would decide to send their bond work to a firm because we did good work for them at the FCC,” says Grannis. “We weren’t generating much nontelecom work for the rest of the firm, and the rest of the firm wasn’t generating much telecom work for us.” Wiltshire and Grannis started pushing to go it alone. Harris hesitated, then agreed, and in February 1998, Harris, Wiltshire & Grannis was born. “It took more courage for Scott to leave Gibson Dunn than for us,” says Grannis. “If we had failed, everyone would have said Scott was a failure, and no one would have known our names.” “I didn’t sleep for a month,” Harris recalls. “Williams & Connolly and Gibson Dunn both have worldwide reputations, and I knew nobody would have heard of us. I had no idea if people would give us work.” From the beginning, Harris took on the lion’s share of marketing and business generation. Wiry and quick-witted, he radiates a good-humored intelligence that makes him a natural pitchman for the firm. That ability has proved key in overcoming the inherent disadvantages faced by a small and relatively unknown firm. For instance, Harris tells of the general counsel of a Fortune 100 company — he asks that the company not be identified — who was in town to hire new telecom counsel. The general counsel had all but decided to go with a major D.C. firm and spent the entire day there being wooed. At the urging of the company’s D.C.-based lawyers, who were familiar with Harris Wiltshire’s work before the FCC, he reluctantly agreed to meet with Harris for half an hour before leaving for the airport. “I was thinking we didn’t have a chance,” says Harris. But he landed the client. What did he say in those 30 minutes? “I don’t really remember,” he laughs. “He was concerned about the size of the firm, and I made the case that we could do the job well.” Another early client was the News Corp., which still turns to Harris Wiltshire for satellite-related issues. Most recently, Harris Wiltshire served as co-counsel with Skadden, Arps, Slate, Meagher & Flom and Hogan & Hartson in News Corp’s acquisition of Hughes Electronics Corp., the parent company of DirecTV. News Corp. Deputy General Counsel Lon Johnson raves about the firm and its lawyers, calling their work “top quality.” As a result of the acquisition of DirecTV, Johnson says he expects to rely on the firm even more for regulatory advice and operational issues. “We’re going to be keeping them quite busy,” he says. Johnson says he also appreciates the firm’s policy of not charging for expenses like photocopying or WestLaw searches — it’s all built into the hourly rate, which he describes as priced “in the middle” compared with News Corp.’s other outside counsel. “It makes it easier to review their bills, and we don’t have to haggle over expenses,” Johnson says. Rob Curtis, who heads the legal department at Z-Tel, a local and long distance phone company based in Tampa, Fla., says Harris Wiltshire is his company’s main outside counsel. To him, the firm’s small size is a benefit. “Everyone at the firm knows my business,” he says. “They’re the best lawyers I’ve ever worked with. They’re fantastic.” Another big client is Cisco Systems. Bruce Mehlman, a former in-house lawyer at Cisco who is now assistant secretary for technology policy at the Department of Commerce, says the company uses the firm for regulatory filings at the FCC and “strategic guidance. That is, recommendations on which issues to engage on, and how to achieve [Cisco's] objectives.” Likewise, the Microsoft Corp. has retained Harris Wiltshire for work related to the FCC’s ongoing proceedings on broadband, or high-speed, Internet access. Neither company would have been considered a telecom player even 10 years ago, notes Wiltshire, but as technology has advanced and converged, high-tech companies have found they have a strong interest in “how to get the right rules in place,” he says. “By and large, the technology we’re talking about doesn’t fit in the current [regulatory] boxes,” says Wiltshire. “We tend to get the stuff that’s cutting-edge.” The result is a practice uniquely suited for a start-up boutique. “We were fortunate in our timing,” Wiltshire says. “The [telecom] industry is young and growing. If we tried to do this in insurance defense, we wouldn’t have been able” to break in and snare big clients so quickly. “Most of what we’re called in to do is higher-end, value-added work,” he continues. “If you need a lot of bodies going through documents, you won’t hire us. But we do things that others can’t. … It’s all the best parts of litigation — advocacy, writing, legal and critical thinking, but no discovery, no depositions, and no flying all over the country.” The telecom bar has taken notice of the new entrant. “Scott Harris is a very dynamic leader of a very strong boutique,” says Richard Wiley, founder of Wiley Rein & Fielding. “They are doing high-quality work, and are doing it well.” In addition to attracting clients, the firm’s other challenge has been attracting first-rate lawyers to join its ranks. One of the biggest coups was bringing aboard Christopher Wright, who served as FCC general counsel from 1997 to 2001. Prior to joining the FCC, Wright spent nine years in the solicitor general’s office, arguing 27 cases before the U.S. Supreme Court. He heads the firm’s appellate practice. Another big hire for the firm was John Nakahata, who was the chief of staff at the FCC under Chairman William Kennard, and the senior legal adviser to the prior chairman, Reed Hundt. Although Nakahata weighed competing offers from large firms, he says that he “felt like I would have more control over my life being part of an autonomous small business unit.” And, as the father of two children, ages six and eight, he wanted time for his family as well. At Harris Wiltshire, he knew he would have colleagues who “all had similar life choices, and similar priorities.” Indeed, while it’s clear that Harris relishes his work, it is equally apparent that he is devoted to his family. During an interview, his 12-year-old son, home sick, calls twice asking to bid $61 on a Ford Thunderbird for sale on eBay. “It’s not going to sell for $61,” says Harris, who sometimes comes to work wearing a sweatshirt from his son’s or 10-year-old daughter’s schools, St. Albans and National Cathedral School. “I’ve got to go. I love you, sweetie. … The car is where? Terre Haute? … When you’re 16, if there’s a Thunderbird for sale for $61, I promise we’ll buy it for you. … I have to go. Really. I love you.” Says partner Thomas Connolly, whose wife just gave birth to their second child, “It’s like I imagine practicing law was in the 1950s: you work hard to do very professional, competent work, and at the end of the day, you go home to be with your family.” Connolly joined the firm from the U.S. Attorney’s Office for the Eastern District of Virginia in 2000 and founded the firm’s litigation practice, specializing in white-collar defense. “It made no sense in terms of meshing the practices,” says Connolly, an old friend of Wiltshire’s. “But they liked me and I certainly liked them, so we said, ‘Let’s see if it can work.’ “ The practice has flourished. And the firm’s small size has proved an advantage when it comes to referral business, Connolly says. Friends at other firms don’t hesitate to send him white-collar work, since they know he “has no platform to steal the client,” he says. Still, not everyone is drawn to the firm for its work/family balance. Yul Kwon, an unmarried third-year associate, says he fully expected to work long hours at any legal job. What attracted the 2000 Yale Law School grad to Harris Wiltshire was that he “didn’t want to be a fungible associate and spend the first few years doing document review. I wanted a small firm where people genuinely enjoy working with each other and do top-quality work.” He says he’s found it. One of his current projects at the firm: writing the first draft of a pro bono amicus brief to the U.S. Supreme Court in the campaign finance case, McConnell v. Federal Election Commission, on behalf of a group of academics. “I can’t fathom there would be a better law firm than this place,” says Kwon. All associates are paid a flat $100,000, plus tracking points — five for a first-year, increasing each year to 35 for a seventh-year. The points are typically worth around $2,500 apiece. A new receptionist would get one point. The firm also contributes up to 14.5 percent of an employee’s salary to a 401(k) retirement account — the firm puts in 10 percent automatically, then matches employee contributions up to another 4.5 percent. The use of tracking points tends to blur the distinction between partners and associates, notes senior associate Patrick O’Donnell, a lateral from Steptoe & Johnson. “It aligns partner and associate interests in a way that’s better than what happens at a lot of big firms,” O’Donnell says. “There’s not nearly the sense of ‘us versus them.’ “ Going forward, firm partners anticipate moderate growth, but also worry they could ruin what they love if they get too big. “We all know each other well enough to trust each other,” says Grannis. “Focusing on quality, not quantity, is what allows us to keep things sane around here.” Adds Connolly: “If you can be in a practice this size and get high-quality work, not grunt work, how can you beat it?”

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