This is one in an occasional series of Q&As with the leaders of midsized law firms in New Jersey, whom the Law Journal asks to provide management insights and other perspectives on a range of topics.
It’s been nearly a year since Porzio, Bromberg & Newman changed its management structure and appointed new leaders. Among the changes was the installation of litigator Vito Gagliardi Jr. as managing partner, taking over for D. Jeffrey Campbell, who had held the post for two decades. (The prior managing partner, Myron Bromberg, had been in the role for 27 years at the Morristown-based firm, founded in 1962).
Part of the objective of the changes, Gagliardi now says, is to run the firm more like a business. That requires addressing the value proposition that midsized firms can provide, how to recruit and retain young attorneys, and many other areas.
Gagliardi also challenges some conventional wisdom in the legal market, chiefly that client demand and rate concerns have led to a windfall for midsized firms: It’s not so simple, he says.
How big is your firm, where is it located and what are its primary areas of practice and focus? Porzio is a mid-size firm. We currently have 82 lawyers and 206 total employees. We are located throughout the Northeast. Our largest office is in Morristown, and we have additional offices in New Jersey in Princeton, and Ocean City. We also have offices in New York City, Westborough, Massachusetts, and Washington, D.C.
Please explain your firm’s governance structure and compensation model. Since I began my tenure as Managing Principal on March 1, 2017, the firm has largely overhauled its governance structure. As the Managing Principal, I chair the Management Committee which consists of five other principals to whom I can delegate responsibility for specific areas of the firm. This structure has helped us run our firm as a business, and based on the internal feedback, I am confident this was a positive change for us.
What do you view as the two biggest opportunities for your firm, and what are the two biggest threats? Our most significant opportunities are in the synergies that our firm has among our law firm and our three wholly owned subsidiary companies (Porzio Life Sciences, Porzio Governmental Affairs, and Porzio Compliance Services). Given the current environment, there are many areas of law and regulation that are constantly in flux right now, and our model allows us to drive the most value to our clients through being able to offer not only legal services, but consulting, database products, compliance products and services, and several other areas of business that are becoming more and more critical to business every day. The most significant threat we face is larger firms that are taking a loss leader approach to get work in the door. That said, while we have seen this as a hindrance to getting some new work, we have also seen prospects and clients boomerang back to us for the level of personalized service and overall value that we provide.
After the recession hit, the prevailing theory was that midsize firms would start to see more work come their way from large clients who could no longer justify paying Big Law rates. What has been your experience? Companies definitely have changed the way that they hire law firms in many instances, but I would say that there hasn’t been the influx that some may have predicted. The best relationships are based on trust, service, and quality. If clients have a great relationship with their lawyer and with the firm, they are not likely to make a broad change. What they are more likely to do is reduce the number of higher priced firms that they use and consolidate work at a lower rate. They may also look to reduce or limit their budget, or in some cases add additional firms at lower price points to their roster for certain areas of work. So, if the question is “did the turn in the market send a whole bunch of business to middle market firms?” The answer is, it did create an opportunity, but that opportunity is based on relationships and value. Middle market firms have to provide the best value to clients continuously to maintain their position as being able to provide the most comprehensive service for the price.
Are your clients pushing for more alternative fee arrangements, and if so what types? Is your firm amenable to those requests? The push for alternative fee arrangements by our clients is not as extensive as some literature would suggest. We are doing more flat-fee work than we did a decade ago. Overall, the most prevalent change is that clients are more likely to insist on a budget and to insist on adherence to that budget.
There is much debate around how law firms can foster the next generation of legal talent. What advantages and disadvantages do midsize firms have in attracting and retaining young lawyers, particularly millennials? Well, if I were a millennial, I would want to work at a mid-size firm. There are great advantages to starting and growing your career at a firm like Porzio. Our upcoming talent has options that don’t exist at larger firms including the ability to experience multiple areas of practice and truly develop a niche that works best for them. At a firm like ours, attorneys and employees at all levels have excellent access to management—and have become a part of management—so that they are helping to shape the next generation of the firm.
Does your firm employ any nonlawyer professionals in high-level positions (e.g. COO, business development officer, chief strategy officer, etc.)? If so, why is it advantageous to have a nonlawyer in that role? If not, have you considered hiring any? Yes, our firm proudly employees business executives and professionals that allow us to thrive as a viable middle market business. As a side note, I think that the term “non-lawyer” really does a disservice to the people that we have in these roles. We are all on the same team with the same goals. There are multiple advantages to working with the talented business professionals that we employ at Porzio. We view our executives and professionals as key business influencers who play a critical role in shaping the firm’s strategy and vision from both an internal and external perspective. Since restructuring our internal departments to allow these types of positions to have greater influence and be more visible, we have seen significant improvements to internal process, more highly skilled and proactive initiatives that were successfully executed, and what will likely amount to greater revenue through strategic client development efforts. To be more specific, we have “non-lawyer” professionals as a CAO, CFO, and CMO. Similarly, there are leaders of our subsidiaries from the world of business and government, so talented professionals from outside the law are indispensable to the services of our firm.
What if any technology advancements have you made in your firm in recent years? What are the challenges in implementing tech changes? This is an area where we expect to make tremendous strides in the next one to three years. We are investing in new marketing technology, both internal and external, and are revamping many areas of internal infrastructure from finance to IT systems to allow our firm to be more productive and efficient and to move away from the old way of doing things.
What would you say is the most innovative thing your firm has done recently, whether it be internal operations, how you work with clients, etc.? Porzio has always been an innovator and has always looked for new products, services and methods of delivery to best serve our clients. We have accomplished a tremendous amount of innovation through our subsidiary, Porzio Life Sciences, which offers innovative products that are unrivaled in the industry. We also recently launched our third subsidiary, Porzio Compliance Services. Porzio Compliance Services will allow us to further leverage the products we have already created to provide innovative compliance products and services to companies in the education and health care industries. I would expect that you will hear more about our innovation in this area in 2018-2019.
Does your firm have a succession plan in place? If so, what challenges do you face in trying to execute that plan? If you don’t currently have a plan, is it an issue your firm is thinking about? In 2016 and 2017, the firm went through a lengthy succession planning process. We are now in the midst of executing the recommendations that came out of that process and we do have a succession plan in place at the management level. We also regularly discuss our client relationships and have plans for those clients who have relationships with any of our attorneys who are a certain number of years from retirement. From a client perspective, because of our model of working as efficiently as possible, our up-and-coming lawyers often get significant exposure to clients alongside of the more senior partners, which helps to make succession planning more organic.