Correction: This article has been modified to reflect the correct number of attorneys at Faegre Baker & Daniels. Following the merger between Faegre & Benson and Baker Daniels, the combined firm numbered 720.
With nearly 50 million food-poisoning cases each year in the United States and almost 3,000 deaths, the food industry has problems. Midsize law firm Freeborn & Peters is building its business to help fix them.
The 120-attorney law firm, based in Chicago, has melded litigators, mergers-and-acquisitions experts, regulatory lawyers, business advisers and bankruptcy counsel — many with existing food industry clients — into a dedicated practice. The strategy is to focus on the troubled industry, cross-sell services to the firm’s established clients and woo new ones with its specialized knowledge.
The move was motivated by a number of major emerging challenges to the food industry. “There are land-mine, big issues for companies about what the legal risk may be, and there are strong consumer advocacy groups out there,” said David Ter Molen, a partner on the food industry team.
Motivation No. 1 is increased governmental regulation of the industry, including the Food Safety Modernization Act, signed by President Obama last year. The law, which beefs up the inspection and enforcement powers of the U.S. Food and Drug Administration (FDA), aims to prevent the distribution of contaminated food and intensifies regulations to guard against it.
Although most of the law’s provisions have yet to be implemented, the impending changes are a major concern for the industry, Ter Molen said.
Another motivator is the plaintiffs bar’s vigorous pursuit of food industry claims ranging from food poisoning to false advertising about nutrition, he said. At the same time, regulators are looking into the industry’s marketing to children. An interagency group comprising officials from the FDA and the Federal Trade Commission is developing recommendations for Congress regarding food advertisements aimed at children. The focus will be on childhood obesity and nutrition problems.
Freeborn & Peters’ business strategy makes sense to William Marler, a plaintiffs attorney at Seattle-based Marler Clark. “Few midsize firms have practices that zero in on the food industry,” said Clark, who began litigating against food companies during the mid-1990s, starting with e-coli lawsuits against Jack in the Box Inc. He represents most of the plaintiffs in claims involving recent listeria contamination of cantaloupes, mainly in Colorado.
Food industry groups generally are the domain of larger firms, Marler said — Faegre Baker Daniels, with 720 attorneys, for example, or Shook, Hardy & Bacon, with 472 lawyers.
Advising clients about how to avoid becoming the target of lawsuits could prove a rich niche, he said, especially since contamination scares can prove a public relations horror for food companies. “It’s a growing area of the law, and there’s a lot of opportunity, especially for strategic advice,” he said.
The firm’s clients range from snack makers to restaurant owners to food processing equipment suppliers, and include TriMark USA Inc., Heartland Harvest Inc., Link Snacks Inc., Taco Cabana Inc. and Clark National Inc. Practice leader Michael Moynihan described the client base as “larger private, classic Midwest companies.”
The 20-member food law group consists mainly of firm veterans, although it recently brought in a litigation partner and another attorney who focuses on alcohol regulation. The 29-year-old firm hopes the sort of help it already provides its general clients will attract new food clients, said Moynihan. Additionally, it looked like the right time to intensify the firm’s focus.
“We don’t try to be all things to all people,” Moynihan said. “You have to stick to a limited number of things.”
Moynihan declined to give specifics about financials, but said that the firm’s revenue increased by 3.3 percent from 2010 to 2011 and is expected to grow by 4.6 percent in 2012. Profits rose by 6.4 percent from 2010 to 2011 and are projected to climb by 16.8 percent in 2012. The growth trajectories, he said, should continue into 2013.
The strategy certainly carries risks — firms that concentrate on a particular industry too keenly could lose clients outside that field. But the business gained from a firm’s differentiation from other law firms generally outweighs that risk, said James Cranston, principal of LawVision Group, a business-development consultancy.
GROWING PUBLIC CONCERN
The firm’s increased focus on the food industry comes at a time of growing public concern about food safety and nutritional content. Aside from sickness and death (the figures cited above are from the Centers for Disease Control and Prevention) , the U.S. Department of Agriculture estimates that contamination outbreaks cost the U.S. economy around $6 billion per year. When Freeborn & Peters announced the formation of its food practice in March, firm leaders said the idea was to “address the complex challenges facing the food industry.”
Some of those challenges are coming from the plaintiffs bar. For example, the Law Offices of Eric H. Weinberg in New Brunswick, N.J., has acquired the website “salmonellalawyers.com.” Marler Clark hosts another website, ecolilitigation.com, which addresses issues related to e-coli contamination.
According to Ter Molen, a major focus is helping clients avoid becoming a target of class actions.Recent high-profile cases include an April settlement for $2.5 million paid by Ferrero USA Inc., the makers of Nutella, which plaintiffs claimed falsely advertised that the highly fattening hazelnut-chocolate spread constituted a healthy breakfast.
“It’s about issue spotting,” Ter Molen said. In the excitement to launch a product or label an old product in a new way, companies can open themselves to a host of troubles, he said. Additionally, his team has defended an organic food company’s import procedures and another client faced with a rodent infestation before state and federal regulators, including the FDA (although the firm declined to identify the clients).
Pests aside, a big part of Freeborn & Peters’ food industry group is shaping business strategy, said Moynihan, whose angle on the practice is real estate. The firm helped with the financing of Jimmy John’s Gourmet Sandwich Shops, which has added about 200 stores during each of the last three years. It advised The Protein Bar on leases to expand in the Chicago area and helped put together a joint venture for Jack Link’s Beef Jerky with Brazilian meat supplier JBS S.A.
Freeborn & Peters’ strategy has tapped into two of the three basic ways that law firms distinguish themselves, said Cranston, with LawVision Group. Basically, firms have a choice between touting lower fee structures, better service or innovation, he said; the move by Freeborn & Peters mainly falls under the third category, the most difficult. At the same time, the firm has the advantage of being able to charge lower fees than the bigger firms, he said.
But small or midsize firms that try to brand themselves as serving a particular niche face tough competition from larger firms that may be more recognizable in the industry. “[The smaller firms] have to be in the market,” Cranston said. “They need to be at speaking engagements, conferences. They’ll need to get out there.”
Leigh Jones can be contacted at email@example.com.