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Tall, handsome and corporate, Patrick Byrne is not the Las Vegas lawyer of lore. He’s not famous like Oscar Goodman, who, according to his official biography, showed up in the mid-’60s with $87 and a University of Pennsylvania law degree, and proceeded, according to his unofficial biography, to become counsel to Meyer Lansky and Tony the Ant Spilotro, before getting elected mayor. Nor is he infamous like the fictional Tom Hagen, who moved to Vegas on behalf of his one and only client who wanted to diversify out of his olive oil business. Instead, Byrne is the head of the largest branch office in Las Vegas of any Am Law 200 firm, the 27-lawyer outpost of Phoenix’s Snell & Wilmer. When it comes to dramatic offers, he’s just hoping to find a local IP or regulatory lawyer who might be susceptible to the temptations of a lateral move. If legal markets went through life stages, Las Vegas would be an adolescent. At roughly 1.5 million people, the city is in the awkward years: It is one of the country’s fastest-growing metropolitan areas (its population grew by 70 percent between 1990 and 2000 alone), but as a legal market, it is just starting to awaken. Ten years ago Nevada did not have a law school. Five years ago it had the most restrictive rules on multijurisdictional practice in the country. And for decades Las Vegas’ legal community was a tiny pool of lawyers at insular firms, handling local matters for hotels, casinos and mining companies. Today, all that is changing, driven by a housing boom, a hotel boom, an office boom and, most important, a fundamental shift in Las Vegas’ biggest business, gaming. (That’s the politically correct local term for the business previously known as gambling.) Local firms are slowly being forced to make way for outsiders — regional players like San Francisco’s Gordon & Rees, Los Angeles’ Lewis Brisbois Bisgaard & Smith, and Phoenix’s Lewis and Roca and Snell & Wilmer. And in May, Greenberg Traurig, a national firm with big ambitions for the market, arrived. These firms are beginning the long march to a war over billing rates, salaries and clients. Are these arrivistes late to the party? Over the last decade casinos have morphed from a local attraction into a multistate, multinational empire. Gross revenue from gaming in the United States more than doubled in the 10 years from 1993 to 2003, according to the American Gaming Association. Las Vegas’ companies now operate on riverboats in Louisiana, reservations in Arizona and casinos in Macau. “The whole industry went from being a unique, localized practice to something that was national, and now international,” says Anthony Cabot, a gaming lawyer in Lewis and Roca’s Las Vegas office. A wave of consolidation has already swept the industry: Today, five publicly held corporations dominate the Las Vegas Strip, and two — Harrah’s Entertainment Inc. and MGM Mirage — own 16 of the 22 largest hotels. Las Vegas’ law firms don’t reside in the glitz of the Strip — they are in office parks or the city’s shabby downtown. But the Strip is to Las Vegas what Wall Street is to New York: The Las Vegas firms depend on the casinos for real estate, intellectual property and regulatory work. For years, that work has been awarded on the basis of established bonds between casinos and their longtime counsel — lawyers who know the unspoken rules of the local game. Even in Vegas, or especially in Vegas, practicing law is a relationship business. For out-of-state firms, getting a piece of that action is as good as — and nearly as difficult as — drawing a royal flush. Being the new kid on the block is never easy, but nothing quite compares to the frosty welcome that Lewis and Roca got when it came to Las Vegas in 1999. The firm, today Phoenix’s third-largest, wanted to become a regional player and decided that Las Vegas was central to that strategy. It found two experienced local attorneys, Martha Ashcraft and Von Heinz, partners from Las Vegas’ Jones Vargas, to form the core of its outpost. It seemed like a perfect opportunity: “They had a book of business, Las Vegas was on the cusp of exploding, and there was a low cost of entry,” says current Lewis and Roca managing partner Kenneth Van Winkle Jr. But there was a hitch: Lewis and Roca couldn’t use its name in Las Vegas. Under long-standing Nevada State Bar rules mandated by the state Supreme Court, firms could set up offices in the state only if their name partners were members of the Nevada State Bar. Lewis and Roca were both dead, and they were never members of the Nevada Bar. “We felt that one of the things we had to sell was our franchise, so we made a decision as a partnership to challenge the name rule,” says Van Winkle. The firm filed for a preliminary injunction in federal court, arguing that the restriction, known as Rule 199, violated the Constitution’s commerce clause, as well as the First Amendment. As the matter wound its way through the federal courts, Lewis and Roca would practice locally under the name Ashcraft & Heinz. That was just the de jure roadblock. There was a de facto one, too — the clubbiness of the local legal community. “The bar is so much smaller [than in other cities], and the judiciary is so much smaller, and the judiciary knows the bar, and vice versa,” says Paul Hejmanowski, managing partner of Las Vegas’ 80-lawyer Lionel Sawyer & Collins. Of course, Lionel Sawyer, founded in 1967, is a key beneficiary of that sort of familiarity. It has relationships with most of the major gaming companies, and its partnership includes former U.S. Sen. Richard Bryan and two sons of Senate Minority Leader Harry Reid. By 2000 Lewis and Roca (as “Ashcraft & Heinz”) faced even more competition, this time from a familiar source. Snell & Wilmer, Phoenix’s largest firm and a powerhouse across the Southwest ["Valley of the Sun King," August 1999], had decided to move into Las Vegas. Three partners were sent from Phoenix to open the outpost, which would be headed by Byrne, a young partner who had worked closely with Snell chairman John Bouma on professional malpractice and insurance litigation. (In Phoenix, Byrne had an office next to Bouma’s.) Snell also recruited Patricia Curtis, a real estate partner from a local firm, Hale Lane Peek Dennison and Howard. When Snell registered with the State Bar, it met the same fate as Lewis and Roca. In Las Vegas, Snell & Wilmer would be known as Curtis and Associates. “It was really difficult,” says Byrne. “It was confusing for clients.” Receptionists answered the phone “Curtis and Associates, affiliated with Snell & Wilmer,” and the firm produced two different sets of marketing material, stationery and business cards. Like Lewis and Roca, Snell & Wilmer filed a complaint against the State Bar. The State Bar, in turn, announced it would file disciplinary proceedings against Curtis. A federal district court granted Lewis and Roca an injunction against Rule 199 in April 2000. The State Bar appealed to the 9th U.S. Circuit Court of Appeals, which upheld the injunction. The following year, the Nevada Supreme Court ordered the State Bar to look into repealing the restrictions on multijurisdictional practice. In 2002 the rules were changed to allow out-of-state firms to practice under their own names, although they must complete an annual registration process with the State Bar, and there are limits on the number of pro hac vice appearances that out-of-state firms can make. (Snell & Wilmer’s litigation with the Bar was settled when the State Bar was on the brink of drafting the new regulations.) With the Rule 199 dispute resolved, the way was finally clear for out-of-town firms. Lewis and Roca grabbed its first high-profile group of laterals, hiring five lawyers from Quirk & Tratos, a local IP boutique, in 2003. It now has 15 lawyers in its Las Vegas office, and scored its biggest coup in March, when it hired Cabot from Lionel Sawyer, where he headed that firm’s gaming practice. In 2004 San Francisco’s Gordon & Rees sent two lawyers to town to service nursing home, health care and hospitality clients. That same year Lewis Brisbois came to Las Vegas, mostly to handle insurance defense work. Lewis Brisbois now has 23 lawyers in Las Vegas and recently leased a floor of office space to make way for more. Some firms have come and gone: Los Angeles’ Jeffer, Mangels, Butler & Marmaro partnered with a local firm in 2000, but left less than two years later. Jeffer partner Jeffrey Reuben chalks the departure up to “a difference in philosophy with the local firm.” Snell & Wilmer, meanwhile, has steadily increased its presence. At 27 lawyers, Snell has the largest out-of-state office. It has steadily added partners and associates in real estate, corporate work and litigation. In April 2004 Snell hired five lawyers from Las Vegas’ Gordon & Silver to handle real estate and construction law matters, a booming practice in a city where construction cranes dot the open landscape. The firm has “a pretty good market share” in representing developers in mixed-use and high-rise condominium developments, says partner James Mace. Clients include Turnberry Associates, The Related Group of Florida and Ruffin Trump LLC. Still, Snell has not snagged anyone in the critical IP and gaming regulatory areas. Byrne says he is aggressively looking to hire lawyers in those practices. Byrne’s plight isn’t unusual. Finding qualified talent has become the trickiest part of any managing partner’s job in Las Vegas. “Part of the challenge is that Las Vegas is still in many respects an overgrown small town,” says Ashcraft. The talent pool is limited: Las Vegas may be growing fast, but its newcomers move to work in the tourism industry, not as lawyers. Nevada’s sole state law school did not produce its first graduate until 2001, and the stream of eligible associates from it continues to be relatively small. “It can be a challenge to find people at the partner level who are practicing at the level of Lewis and Roca,” says Ashcraft. Until the regional firms began bidding for partners, Las Vegas did not have a lateral market to speak of, and wresting the top partners from their comfortable perches at local law firms still can take months or even years, since the take-home pay for top partners at local firms can far exceed the average rungs of regional firms. When Lewis and Roca sought an employment group, it searched for more than two years for a local partner with a book of business. “We pushed on for years in the L&E area, and tried to find more senior people. But they are very entrenched,” says Van Winkle, the firm’s managing partner. Unsuccessful, the firm instead hired four midlevel associates from Fisher & Phillips, an Atlanta-based employment shop across the hall. The firm’s attitude became: “Let’s accept the fact that they may come over without a book of business,” Van Winkle says. “That’s easier to do if you’re paying salaries of three-, five-, seven-year associates.” Not everything that happens in Las Vegas stays in Las Vegas — high-end corporate work, for instance. For that, gaming companies go to New York or Los Angeles, to such firms as Skadden, Arps, Slate, Meagher & Flom; Latham & Watkins; and Gibson, Dunn & Crutcher. “I don’t know anybody in the state who can do major securities work,” says Frank Schreck of Las Vegas’s 30-lawyer Schreck Brignone. When Harrah’s Entertainment bought Caesar’s Entertainment Inc. for $9.4 billion in a deal that closed earlier this year, the transaction was handled by Latham and Skadden. For its initial public offering last year, Las Vegas Sands turned to Paul, Weiss, Rifkind, Wharton & Garrison, and when Boyd Gaming Corp. bought Coast Casinos Inc. for $1.3 billion last year, the M&A work went to Cravath, Swaine & Moore and Gibson, Dunn, respectively. Top Am Law 100 firms also represent investment banks in underwriting debt and equity financing for gaming companies. Some of these ties go back years. Latham, for instance, represented what is now Harrah’s — the largest gaming company in terms of market value — in 1990, when it was spun off from Holiday Inn. “They were an afterthought of a big hotel company,” says Charles Ruck, a partner in Latham’s Costa Mesa, Calif., office. “This is a company that hundreds, maybe thousands, of Latham lawyers have worked on over the years.” Latham represented the company as it set up casinos from Louisiana to Virginia, partnered with Indian casinos, and made major acquisitions, including those of Harveys Casino Resorts for $712 million in 2001 and Horseshoe Gaming Holding Corp. for $1.5 billion in 2004. Despite the volume of work, Ruck says that Latham sees no need to open an office in Las Vegas. “I don’t think that’s on our radar screen,” he says. Another beneficiary of Las Vegas corporate work is Los Angeles’ Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, which has had a long relationship with MGM Mirage. “For major merger transactions and financial work, we do go outside” of Nevada, says MGM Mirage general counsel Gary Jacobs, who is also an of counsel with Christensen Miller. “But we have relationships with many firms in Las Vegas.” The local firms handle IP, labor and employment, real estate and regulatory matters, he says. The inability of Las Vegas’ native firms to do major securities work for gaming clients — and the disinterest of elite firms in anything else — creates a balance that the out-of-state firms would like to upset. “My sense is that the market has been underserved on pure corporate transactions and securities work,” says Snell & Wilmer’s Byrne. “We are doing our best to keep some of that work in the marketplace.” But the local work that Las Vegas firms do is not commodity work, and local counsel means more than a signature. Nevada is the Delaware of the West; many out-of-state companies are incorporated there but headquartered in other states, and Las Vegas lawyers handle incorporations and provide comments on Nevada law. Just as the casinos have created a unique style, demonstrated by the Strip’s mishmash of five-star restaurants and tacky casinos, luxury hotel suites and tasteless musical acts, they have created their own brand of legal work. The financing, IP and labor work that the gaming industry needs is as special, bold and confounding as the casinos themselves. Local work in Las Vegas is local not so much because it is small-time, but because it is industry-specific. Local lawyers have cornered the market — in fact, written the rules of the market — for regulatory work, where the jackpot lies in local gaming work. To make almost any move, gaming companies must take a trip to the regulators. State officials approve major transactions, new games, gaming licenses for the top executives, and transfers of those licenses during a merger. To receive approval for an impending merger, the state regulatory authority requires a lengthy brief with full disclosure. For the regulators, “the question is: Is it good for Nevada or not good for Nevada?” says MGM Mirage’s Jacobs. “We do the gaming [regulatory] work for all the major transactions on the Strip and all the financings they do,” says Schreck, of Schreck Brignone, one of a small cadre of local lawyers who handles gaming regulatory work. Schreck, who worked at the Nevada Gaming Commission in the ’70s, helped draft gaming regulation. Since then, he has represented hundreds of gaming clients in regulatory work, including both Caesar’s and Harrah’s in their merger. In addition, he represents executives in approvals for licenses. It is, Schreck says, work that builds relationships with clients deeper than any deal work: “You have a bonding experience,” he says. “They have to divulge [all their personal] information to me.” That process, Schreck says, creates personal ties that send those executives back to the firm. Even intellectual property takes on a local hue in Las Vegas. Brand protection is an essential part of a gaming company’s business and marketing strategy. Mark Tratos, the IP lawyer who heads Greenberg Traurig’s new Las Vegas office, says that he has secured trademark and trade-dress protections for such exotic things as sounds of a volcano at the MGM Mirage hotel and the facade of the Treasure Island casino. For all its potential, Las Vegas, with about a half-dozen out-of-state firms, has not yet grown into a midsize legal market. Phoenix, Denver and Atlanta all have more, and larger, out-of-state firms. Will the city transcend its small-town roots and join the firmament of midsize markets? Can it become a destination, or is it fated to be a blip in the strategic plans of firms looking for a “national footprint”? Las Vegas’ quirky work and insular bar are serious impediments to large firms that have looked at the market. “We have not gotten our arms around it,” says Arthur Makadon, chairman of Philadelphia’s Ballard Spahr Andrews & Ingersoll, who says he has considered a Las Vegas presence for the firm’s real estate practice. But much would need to change before the Nevada desert would be flooded with Am Law 100 firms. Ending the independent streak of the local players would need to be chief among the changes. Only one major firm, Quirk & Tratos, has joined with a regional or national player: That firm, a 13-lawyer IP boutique, was absorbed by Greenberg Traurig, forming the basis of that firm’s Las Vegas operation. (Greenberg almost always expands by hiring one or two lateral partners at a time, but in a nod to Las Vegas’ unusual market dynamics, Greenberg chief executive officer Cesar Alvarez says his firm decided to pursue a merger because “in a small market like that, it’s harder to start with onesies and twosies.”) The most powerful players in town, such as Lionel Sawyer, Schreck Brignone, and Jones Vargas, have so far demurred on merger opportunities. “Candidly, that’s why it’s a market that hasn’t seen a lot of firms coming here,” says Snell & Wilmer’s Byrne, who adds that Snell’s preferred method of growth, like Greenberg’s, is hiring small groups of lateral partners. But mergers are another phase in the evolutionary cycle of a legal market. How long can Las Vegas’ natives remain independent? Lionel Sawyer’s Hejmanowski says his firm intends to stay single: “If we can maintain the perception that our services are good and our fees are appropriate, we can be successful.” He says the firm has a tight network of referrals that connects clients to work that the firm cannot provide. Schreck, on the other hand, says he has spoken with two merger candidates lately: “We have some interest in being able to provide more services to our clients.” If the needs of clients are the criterion, Schreck’s position may prevail. As casinos have expanded, the reach of their legal work has spread. Gaming companies now need regulatory advice not just in Nevada, but also in, say, New York state. “When I got here back in 1981, gaming law was limited to Nevada and New Jersey,” says Cabot, the Lewis and Roca gaming lawyer. Today, Cabot is as likely to help a client in Texas — or Sydney — as in Las Vegas. Cabot himself is testament to the fact that another phenomenon of the modern legal market, the lateral job hop, is coming to Las Vegas. If other partners mimic Cabot’s move from Lionel Sawyer, new firms will have a shot at breaking in. “If outside firms in Las Vegas succeed, it’s because … they can attract good local people,” says MGM Mirage’s Jacobs. But for the economics to work for most out-of-state firms, Las Vegas lawyers will have to start charging higher rates. Las Vegas rates are approaching Phoenix rates, but battles over billing rates have not begun. “That may happen, but I don’t think any impact [in rate changes] has been noticeable yet,” says Gary Goodheart, managing partner of Jones Vargas. Goodheart admits that could change if more national firms pour in. “Companies are not used to paying $600 to $700 an hour here,” says Schreck. Currently even Las Vegas’ premier partners charge as little as $300 an hour. And the bottom line may be that for many firms, that sort of a payoff may not be high enough to merit a bet on Las Vegas.

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