Even the biggest of Connecticut’s major law firms have had to adapt to the new economic reality.
Consider Hartford-based Day Pitney, which in 2011 had gross revenues of $185 million and a head count of 314 lawyer. That’s down $10 million and 10 lawyers from 2010.
“The legal business landscape has changed for quite a while going forward,” said Stanley Twardy, a partner in the Stamford office. In the wake of the Wall Street banking and real estate meltdown of 2008, “corporate clients aren’t willing to incur the same rate increases” that lawyers had previously come to expect, he said. They have, Twardy explained, “become accustomed to living more without outside counsel on day-to-day matters. The model has changed.”
The response has been to search for different types of clients. “What we’re trying to do is change, not our model, but recognize who our clients might be,” Twardy said. “We hope to continue to do the work for the UTC’s and the Travelers and the Aetnas of the world, for matters they have in Connecticut. We’ve had long-standing relationships with them. But for more of the day to day work, we may be looking to the Fortune 500 as well as the Fortune 100. We have a special niche and work well with those clients.”
Going forward, Twardy predicted, “we may have some new clients, and new focus.”
That could well be the motto of many Connecticut firms, some of which opened new offices or delved into new practice initiatives in 2011. As the economy slowly recovers, those that cultivated a balanced client list from a wide range of practice groups are reporting healthier returns, according to the Law Tribune’s 2012 survey of the top 25 law firms ranked by gross revenue. This year’s Trib 25 contains 24 of the same firms as last year, with the sole newcomer being Westport-based Levett Rockwood, which broke into the rankings at No. 23.
But that doesn’t mean the state’s legal market is a stagnant one.
In the middle of the pack, at No. 15, Hartford-based Updike Kelly & Spellacy is opening branch offices in smaller cities in an effort to bring larger firm abilities to strategically selected locations. This past year was the first for Updike’s Middletown office, said managing partner John Wolters, a Middletown native who sees promise in smaller markets. “We plan to open up another office like Middletown, in a yet-to be-announced location, later this year,” he said.
Eight years ago, Updike was still being managed by its lawyer-lobbyist founders Bourke Spellacy and Peter Kelly, but in the intervening years, new hires and new managers have given the firm a much younger character. “I’m 51, and sometimes I feel like the old guy around here,” Wolters said. In 2011, the firm launched a new immigration practice, and found surprisingly strong reception among its corporate clientele.
Another firm with a new office is third-ranked Shipman & Goodwin, whose year-old Washington, D.C., office focuses on insurance litigation. Managing partner Scott Murphy characterizes 2011 as “a very solid year – we finished above 2010 results, and found most practice groups were back and at stride.”
The firm’s traditional areas – school law, trusts and estates, health care – were all solid performers. The 150-lawyer head count is up by 15 from 2010. “To a cautious, but noticeable, degree we were back in the hiring market,” Murphy said.
Six days into 2012, the firm hired Dorman Stephen, who focuses on venture capital and private equity, and real estate and land use partner Andrew Davis from Dewey & LeBoeuf, as that New York-based national firm was beginning to dissolve.
Viewed as a Connecticut-centered firm, Shipman represents more school districts than any other, and has a strong municipal practice group. But many of its big clients are outside the state, with about half of its top ten clients based in other states. “We have clients all over the country. We do work in all 50 states for somebody,” Murphy said.
Regional diversity is also key for McCormick, Paulding & Huber, an intellectual property firm based in Hartford, with offices in Springfield, Mass. Its historic clientele is colorful – Indian Motorcycles and Smith and Wesson revolvers. In more modern times, it’s added Sun Microsystems and Amazon.
Managing partner Kevin Grogan, whose 14-lawyer firm is the smallest on the Trib 25, said about one-third of the firm’s clients are overseas patent holder in northern Europe and Asia. “We try to keep as many chits on the board as possible, because you don’t know what will happen when they spin the roulette wheel,” he said.
One innovative practice Grogan has devised is teaming up with a Chicago civil litigator to handle patent trials. “I have 28 years of experience in patent litigation and he has 30 years experience in civil litigation. We go all over,” trying cases in multiple states. Usually the cases settle before the trial concludes, said Grogan, “and then I have to go look for something else.”
For some firms, the revenue stream comes in fits and starts. At Hartford’s Rome McGuigan, which is No. 17 on the list, last year’s unusual $15 million gross revenue figure has returned to a more normal $10.7 million, which is still above the $10.2 million reaped in 2010.
The unusual bump was the result of a 2007 federal civil case involving Joseph Salvati, a Massachusetts man wrongfully convicted in the 1960s of a murder linked to organized crime. Rome McGuigan lawyers helped win a record $101 million verdict against the FBI for framing Salvati and the others in order to protect an FBI informant. The firm finally collected its share in 2010, when the FBI’s appeals were rejected by the U.S. Court of Appeals for the First Circuit.
As for the firm’s 2011 revenue stream, said McGuigan in an interview, “We’re hanging in there.” The firm’s newer practice areas include a family law group headed by former Appellate Judge Anne C. Dranginis, and an appellate practice group led by Proloy Das.
There was a bit less ebb and flow at Cummings & Lockwood, a 100-year-old, Stamford-based firm that serves some of Connecticut’s wealthiest residents and their businesses, focusing on trust and estate planning, trust administration, tax work, probate litigation and financing real estate.The firm had $44.4 million in gross revenues in 2011. Managing partner Jonathan Mills reported that 2011 was a record profit year, “the second straight record profit year in a row.”
While Cummings came in No. 6 in Connecticut in gross profits, it shot up to third in profits per partner, with that figure hitting $621,000. This was accomplished in the same year the firm incurred significant capital costs, opening a new office in Palm Beach, Fla., and funding a major renovation of the Naples, Fla. office.
“Palm Beach is a good idea for us because we have a lot of very significant clients who originated in our Connecticut locations and who have moved their domicile for tax reasons or retired down to the Palm Beach area,” said Mills, who has continued high hopes for the Florida market. “Existing client and new client opportunities drove us to be there.”
New opportunities have also driven business at No. 11 Carmody & Torrance. New managing partner Brian Henebry said one big development for 2011 is intellectual property law. Carmody has gone from doing no patent work 10 years ago to having four partners and seven attorneys obtaining patents and trademarks around the world. The firm engages in high stakes IP litigation in courts throughout the country, Henebry added.
“We are able to provide significant value in IP matters for our clients because our rates are extremely competitive, and our clients are very pleased with the results we’ve been obtaining for them,” Henebry said. “Our goal is to continue to grow that practice.”
Health Care Boost
At Hartford’s Reid & Riege, No. 15 on the Trib 25, managing partner Craig Sylvester has been able to make lateral hires of two seasoned litigators, keeping the firm lawyer head count steady, at 44 attorneys. The new people are Erek Sharp, hired from the New Jersey office of Day Pitney to practice retirement benefits law, and general commercial litigator Peter Rydel, hired from Day Pitney’s Hartford office.
The firm’s health care business has been strong in 2011, Sylvester said, and it may be bolstered by the changes created by the Affordable Care Act, set in motion by last week’s U.S. Supreme Court decision.
“A big part of health care practice is the administrative and regulatory burdens being placed on health care professionals, and this decision certainly doesn’t change that,” Sylvester said. “There are two aspects here: one, how does it change the marketplace for people in the area? Does it make it grow or detract? Secondly, as regulations increase, or become more burdensome, practitioners need help from lawyers at compliance, and dealing with investigations and other compliance issues.”
One casualty of the recession has been ordinary real estate practice, as routine house-closing work dried up. But for firms with specialized practices, real estate work is anything but dead. “Our real estate business is a boutique practice that’s mostly focused on leasing, and representing some larger institutional clients in nationwide leasing,” Sylvester said. “We represent one of the larger health care companies in negotiating space requirements all over the country. We do that for several national companies.”
In Greenwich, partner Michael Jones of Ivey, Barnum & Omara, said his 31-lawyer firm also has a national footprint. While known for its trusts and estates and its litigation groups, it also has a niche practice of helping franchise holders obtain loans.
“There are these bulk deal where we’ll package up a loan for 50 or a hundred franchise stores – whether it be Subway or Applebee’s or Shell Oil stations. For a firm our size, that’s unusual,” said Jones. “There are only about two other firms in the country that do this, and they have lawyers in the hundreds.”
Of course, the local angle can be just as profitable. Robert Berchem, of Milford’s Berchem, Moses & Devlin, reports that his firm is winding up work on a complex, $125 million magnet school project near the Bridgeport-Trumbull border.
“The site became quite controversial,” said Berchem. “Trumbull had concerns about the impact [of the school], so we went to the legislature and we reconfigured the municipal boundary line. It took 55 acres of historic land in Trumbull and brought it into Bridgeport. There were eight towns involved – the largest project ever in Connecticut for a magnet high school.”
Once the school was technically located within the Bridgeport town lines, he said, “the state agreed to fund, and the building is about 60 percent up by now. “
Overall, Berchem said his firm combines trust and estate work and commercial litigation in its business approach. Like others, he preaches the benefits of a balanced client list. “Having a public-private mix is the diversification that makes our system work,” he said. •