Pennsylvania-based firms have been increasingly looking to grow their revenue through head count and geographic expansion. Sometimes, that means taking from a neighbor.
The lateral markets in Philadelphia and Pittsburgh have been steadily active over the past 18 months, as law firm growth becomes an increasingly zero-sum game. And while in the past firms may have been hesitant to recruit lawyers from fellow Pennsylvania-based firms, that is no longer the case.
“Way back, before lateral recruiting and lateral movement was involved … there was definitely more of a hands-off sense to that,” Philadelphia-area recruiter Frank D’Amore, of Attorney Career Catalysts said. “As the law firm world became more like the business world, things changed.”
Jeffrey Lowe, global practice leader at Major, Lindsey & Africa, agreed that cutthroat lateral hiring is a fact of competition at every level in the industry. And while it’s hardly a new phenomenon in Philadelphia or anywhere else, “I think it’s accelerating” he said.
“There used to be, for lack of a better word, a gentlemen’s agreement among law firms not to poach from one another in their home market,” Lowe said. “Those have really started to fall to the wayside in all cities.”
Philadelphia-based Cozen O’Connor has been one of the more aggressive firms in Pennsylvania when it comes to lateral hiring, even though, CEO Michael Heller said, growth in Philadelphia has not been central to the firm’s strategic plan. Still, Heller made a nod to the “gentlemen’s agreement” to which Lowe referred.
“I also do not believe it appropriate to actively recruit groups of lawyers from other firms in Philadelphia,” Heller said. “My friends are running the other firms in Philadelphia, and I want them to do well.”
Still, friendship only goes so far. In just over a year, Cozen O’Connor has hired groups from several locally based firms, including a construction group from Pepper Hamilton, 30 lawyers from Buchanan Ingersoll & Rooney, and most recently 14 commercial litigators from Drinker Biddle & Reath.
Those groups came to Cozen O’Connor either through a recruiter, or by reaching out to the firm themselves, Heller said, not as a result of Cozen O’Connor’s own outreach. Once those lawyers have expressed a desire to leave their firm, “I’ve got a fiduciary duty to my firm to at least consider the opportunity,” he said.
“With respect to the caliber of groups they’ve been able to attract locally, it’s been very impressive,” D’Amore said of the Cozen O’Connor hires.
Other native Philadelphia firms are fighting their own wars of attrition.
Earlier this year, Blank Rome took three litigators from Pepper Hamilton. Pepper Hamilton last year hired the leader of Saul Ewing Arnstein & Lehr‘s business and finance and life sciences practices, Deborah Spranger. And after Cozen O’Connor’s raid on Pittsburgh-based Buchanan Ingersoll, the latter firm, whose CEO is based in Philadelphia, took eight lawyers from Obermayer Rebmann Maxwell & Hippel to rebuild its labor and employment practice in the city.
Mark Morris, managing partner of Philadelphia-based Fox Rothschild, noted that his firm has made few lateral hires from fellow Pennsylvania-based firms, but that doesn’t mean he’s against it.
“I don’t think we would actively solicit people, but I think if people come to us and are going to move anyway, we would be interested,” Morris said.
Philadelphia recruiter Liz Shapiro said she’s noticed a pickup in lateral hiring activity level and interest among firms in Pennsylvania, as well as in other markets.
“The only time I really saw hesitation [about hiring from another local firm] was where there was a professional relationship” between the firms, she said. “If the components are right, personal is personal and business is business.”
Law firms are being more opportunistic about adding groups or individuals with a book of business, Shapiro said, and that’s increasing competition among them for lateral hires. Lateral movement “doesn’t seem to be as seasonal as it once was,” she said.
“The quest to get revenue continues and is to some extent harder and harder,” D’Amore said.
Another factor, Shapiro noted, is that more conflicts are arising more frequently as law firms grow. That might cause some lawyers to start looking.
The recent group move from Drinker Biddle to Cozen O’Connor, which took place with the help of a recruiter, stands as an example.
“We started looking a while ago because we had some continuing conflict of interest issues that were getting increasingly difficult to solve,” partner Michael Miller told The Legal last month. “Most of the conflicts issues resolved on their own, but by then we had met Michael Heller.”
Still, these moves can have their complications. When Cozen O’Connor brought on the construction group from Pepper Hamilton last year, it resulted in litigation—brought not by Pepper Hamilton, but a former client of partners who moved. The ex-client alleged that Cozen O’Connor mishandled conflicts after the group lateral move, but a judge ultimately ruled in Cozen O’Connor’s favor, denying the client’s motion for injunction.
And it’s not just in-state hires that cause friction. Even in other markets, things can become tense when a law firm recruits partners from another firm with the same homestate.
Swartz Campbell and Chartwell Law Offices, for example, became embroiled in long-running litigation over partner poaching not in the Philadelphia region, where both are headquartered, but in Florida, after a group of lawyers left Swartz Campbell for Chartwell beginning in 2010. The case finally settled in February, the same day a trial was set to begin.
To lessen the blow after a lateral move, sometimes firms will highlight their use of a recruiter when announcing a group hire in order “to send a signal to another firm that we aren’t raiding your firm,“ D’Amore said.
On the other hand, some firms may see no advantage in such niceties, or may see a reason to flaunt their lateral appetites in order to convert clients from their hires’ former firm, D’Amore said. Cozen O’Connor, for instance, was not shy about the numbers when it took its 30th lawyer from Buchanan Ingersoll, putting the tally right into its announcement.
“If it’s someone who has a lot of business … the odds that the business will follow usually increase if you have a number of lawyers going with them that would support the amount of work they have,” he said.
And after all, without the clients, what’s all that lateral hiring for?