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Whether it goes under the heading of downsizing or (more charitably) strategic focus, this is a painful period of time for Minneapolis’ Dorsey & Whitney. The firm’s Washington, D.C., office is dwindling, and its New York office has suffered recent defections as well. Some of the departing lawyers blame management blunders for the attrition, but managing partner Peter Hendrixson says the firm is shedding lawyers in order to focus on core competencies. In 2000, the firm envisioned growing the D.C. office to more than 100 lawyers. The firm, in particular, targeted the vibrant growth in the Northern Virginia technology market. In 2002 Dorsey leased two floors in a grade-A Pennsylvania Avenue office building blocks from the White House. The space could accommodate more than 100 lawyers. Dorsey chief operating officer James Karlovich confirmed that an estimated annual lease cost of $3.5 million was in the ballpark. By early 2002, the office had grown to 55 lawyers, its high-water mark, and it was swimming in work, says Raymond Van Dyke, a former IP partner at the firm: “We would be there until 5 a.m. sometimes.” Then the bottom fell out. Current and former Dorsey lawyers say the D.C. office was slammed by tech crashes in Virginia and the general downturn. Van Dyke says Minneapolis partners became more apt to hoard work than farm it out to D.C. “When the human body is thrown into a cold lake, you protect the torso and sacrifice the appendages,” says Van Dyke, who in 2003 moved to the D.C. office of Nixon Peabody. Dorsey’s D.C. office suffered more key defections, including those of two former heads of the branch. Currently, the office is down to 18 lawyers, and it may dip further. “Certainly some people are looking [for other jobs]. … Morale is down in D.C.,” says a Dorsey partner who spoke on background. And with only seven partners left, it will be hard to keep associates busy. Some lawyers blame Dorsey’s management, not just a sour economy. One former D.C. partner, speaking on background, says Dorsey did not recruit enough lawyers with political clout and regulatory expertise to help D.C. become more self-sustaining. “They had Walter Mondale in Minneapolis, but a lot of good that did us in D.C,” says the lawyer. Mark Hogge, another former D.C. partner, who left in 2004 for Greenberg Traurig, and Aldo Noto, a former IP practice leader who fled to Andrews Kurth, blame Hendrixson for taking on Sun Microsystems Inc. as a client. Hewlett-Packard Co., another client and a Sun competitor, had warned that it would fire the firm if it did work for Sun. Hendrixson forged ahead, Hogge says, and HP took its business elsewhere: “It was sheer idiocy.” Hendrixson says the firm simply seized an opportunity to represent Sun and other clients that he won’t name. And the decision to pursue the opportunity, he adds, was approved by other firm leaders as well. In talking generally about the D.C. office, Hendrixson puts on a brave front. He says the turnover is due to the firm’s decision to concentrate on three practice areas in D.C.: litigation, energy and regulatory work. “We have decided to focus on those [practice] areas in which we make a difference for our clients,” says Hendrixson. He will not say whether Dorsey fired any D.C. partners (most say they left voluntarily), but he concedes that the firm did lay off some D.C. associates. Going forward, he says, Dorsey plans to hire D.C. lawyers who work in the firm’s focus areas. And it is sending Andrew Brown, the firm’s energy co-head, to D.C. to boost the practice in that office. As its works to stabilize D.C., Dorsey must also deal with turbulence in its New York office. On Jan. 24, seven of its New York partners, led by former office head James Swire, moved to the Manhattan office of Arnold & Porter. The departing group also included Michael Griffin, head of Dorsey’s financial services and hedge fund practice; Stewart Aaron, co-head of Dorsey’s securities litigation practice; and Ramon Marks, co-head of Dorsey’s international litigation team. Former partners say that Dorsey, which posted modest average per-partner profits of $430,000 in 2003 (the 2004 figure is not yet known), has had difficulty paying competitive rates for New York talent. Swire would not talk about his former firm, but he hinted that he may try to bring over associates from Dorsey. Robert Dwyer Jr., Dorsey’s current office head in New York, says the firm plans to grow the New York office from its present 70 lawyers to about 100. “That is regarded as a good level for strong national firms,” he says. Like many law firms, Dorsey certainly thinks of itself as a strong national firm. But it takes vibrant D.C. and New York offices to achieve that status.

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