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They are often the biggest names at their respective law firms, rubbing elbows with the world’s power elite in both boardrooms and gossip columns. Well-known, well-credentialed and well-connected, they are almost ideally situated to be major rainmakers for their firms. Except they are not lawyers. Instead, they belong to the growing ranks of law firm senior advisers. Though many of these advisers do, in fact, have law degrees, they do not practice. And in contrast with the lobbyists and governmental affairs specialists who have been the most significant non-lawyer professional staffers to date, firms hire senior advisers to guide them and their clients through the non-legal intricacies of various markets and to provide access to prospective new clients in those markets. Former White House Chief of Staff Thomas McLarty and National Urban League Chairman Hugh Price have both become senior advisers to law firms in recent weeks. Other prominent examples include former National Security Adviser Samuel Berger at Hogan & Hartson, former International Business Machines general counsel Lawrence I. Ricciardi at Jones Day and New York financier Maurice Sonnenberg, who works with Manatt, Phelps & Phillips. On the one hand, law firms’ creation of senior-level, client-facing positions for non-lawyers is but a new wrinkle on their longstanding eagerness to hire big-name grandees as partners and counsels. “Firms have always done that, though they used to make at least some pretense that these people were practicing law,” said one legal recruiter who has noted the trend. On the other hand, the proliferation of senior adviserships, along with the establishment of related strategic alliances, promises a new front in the continuing debate over whether law firms should become multidisciplinary practices (MDPs), with ethical canons altered accordingly. In particular, compensation arrangements for senior advisers will be challenged to reward business origination as long as ethical rules continue to bar fee-splitting between lawyers and non-lawyers. “I think they’re going to have to be very careful. This raises the whole issue of ancillary businesses again,” said Lawrence Fox, a partner at Philadelphia’s Drinker, Biddle & Reath and an outspoken MDP opponent. The issue, he said, had become far less pressing since the collapse last year of Arthur Andersen and the atomization of legal departments at most of the major accounting firms. WASHINGTON MARKET Firms active in the Washington, D.C., market, where lawyers and lobbyists have long practiced side-by-side, have perhaps unsurprisingly led the nation in bringing non-lawyer senior advisers into law firms. The Washington bar is the most permissive in the country in allowing lawyers and non-lawyers to be partners in law firms, though a number of restrictions apply, and large firms with offices around the country are mostly unable to take advantage of Washington’s more open approach. Washington-based Covington & Burling announced earlier this month that it had formed an alliance with New York-based international consulting group Kissinger McLarty Associates, headed by former U.S. Secretary of State Henry Kissinger. As part of the deal, McLarty, who served as President Bill Clinton’s first chief of staff, became a senior adviser at Covington, along with Kissinger McLarty principals Richard Fischer and Nelson Cunningham. Conversely, Stuart Eizenstat, the head of Covington’s international practice and a former deputy treasury secretary, became a senior adviser at Kissinger McLarty, along with Covington of counsel David Marchick. The alliance is designed to allow the firms to refer business to each other when appropriate, said Eizenstat. For instance, he said, Kissinger McLarty bars itself from representing foreign governments or lobbying the U.S. government; Covington does both, he noted. On the other hand, he said, Kissinger McLarty has deep experience in Asian and Latin American economic markets in particular, and the alliance allows the firm to extend its reach into those regions. In Eizenstat’s view, there is no question law firms will increasingly turn to high-level, non-legal professionals to both work with and bring in clients. “In today’s globalized world, law practice has moved from the traditional four corners of the law practice,” he said. Baltimore’s Piper Rudnick has a strategic alliance with the Cohen Group, the national security-oriented consulting firm headed by former Secretary of Defense William S. Cohen. Jeffrey Liss, Piper Rudnick’s chief operating officer, agreed with Eizenstat that law firms were realizing clients wanted more than just legal advice. “Increasingly companies global and regional realize that the strategic advice they get can’t be strictly put in box labeled ‘law.’ ” said Liss. Piper Rudnick last week brought aboard one of the first senior advisers to work outside of the international and political arenas. Hugh Price, who headed the Urban League from 1994 to this spring, joined Piper Rudnick’s New York office as a senior adviser to help build the firm’s practice among non-profit organizations. Though he graduated from Yale Law School in 1966, Price said he has not practiced law since 1968, when he was a legal services lawyer in New Haven. In the intervening three decades, he had become woefully out of practice, he said. “It will not be hard for me to not practice law,” he joked. Instead his responsibilities will include providing introductions for the firm to major figures in the business and non-profit worlds. His Rolodex is substantial. A former vice president with the Rockefeller Foundation, Price is also a board member of the Metropolitan Life Insurance Co., Verizon Communications, Sears Roebuck and the Mayo Clinic. “I will try to open the door,” he said. “The lawyers have to do the rest.” Price will also offer advice to clients seeking non-legal strategic advice about non-profit organizations and to the firm about how to position itself in the market. Despite his other positions, Price said he expects his job at Piper Rudnick to consume about 80 percent of his time. FEE SPLITTING But if many lawyers believe non-lawyers can make valuable contributions to client service and development, valuing those contributions can be tricky, particularly given ethical bars on fee-splitting. Charles E. Buffon, a Covington partner who vets ethics issues at the firm, said there would be no fee-splitting between Kissinger McLarty and the law firm, which would bill clients separately. However, he said “finder’s fees” for referring sizable transactions would be possible and permitted under ethical rules nationwide, as long as such fees are fully disclosed to and approved by the client. In the event a successful transaction merited premiums on the close of the deal, the matter would be carefully discussed, said Buffon. “We’ve given this a lot of thought,” he said. “We are going to follow the ethical rules in every instance.” Price said he was receiving a salary as well as “performance incentives.” Liss explained that Price would not receive fees pegged to business origination, but would be eligible, like other firm employees, for a performance-based bonus. The firm, he said, would be extremely careful that such bonuses would not be based on business origination. Fox, of Drinker, Biddle & Reath, said he believed it was possible for law firms to hire non-lawyer professionals in client service roles, but added such hires would always raise difficult issues. “If someone’s job is to bring in clients, how do you reward them without looking at how much business they’ve brought in?” he asked. “If you have advisers working with clients, what kind of advice are they giving them?” If firms were going to toe the line on MDP, he said, they needed to resist the temptation to step over it. “There seems to be this incessant need to push the envelope,” he said. By and large, firms are taking a cautious but flexible approach. Last month, Coudert Brothers hired Werner Walbrol, the former head of the New York-based German American Chamber of Commerce, as a specialist on the German market. But Anthony Williams, a partner at the firm and its former chairman, said Walbrol’s role for now was advising the firm’s lawyers on how to expand the firm’s presence in Germany. He said there were currently no plans to have Walbrol work with clients in any way. Williams said he would not rule out the firm’s taking advantage of an opportunity arising from a senior adviser’s contact, though he said he was not overly optimistic about non-lawyers’ capacity to funnel work to lawyers by making introductions. “I’ve never felt cold introductions work very well,” he said. “Nothing ever happens on a first date.” Likewise, Liss said Piper Rudnick had made no projections of revenue streams coming from Price or other senior advisers. Price’s role as a non-legal adviser to lawyers and clients may well outstrip any client-development role, said Liss. “I don’t think anyone’s really explored this market yet,” Liss said of senior advisers’ roles at law firms. “There’s no cookbook.”

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