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    December 9, 2008  
Laterals on Discount


We wrapped up our Roundtable by discussing laterals with three of DC’s most plugged-in managing partners: Dick Wiley of Wiley Rein, Tom Perrelli of Jenner & Block (just named to Obama’s DOJ’s transition team), and Kevin Fitzgerald of Troutman Sanders. Sponsors Greg McCavera of Jones Lang LaSalle, an expert on law firms’ real estate needs, and Matt Medlin of Huron Consulting, who gets extra thanks for hosting us at his office, also pulled chairs up to the table. Bisnow Legal Editor John Ford moderated.


Maybe we’ve been watching too many press conferences, but they look like a line-up of cabinet designees to us: Tom, Dick, Greg, Kevin, and Matt.


Do you put a heavy emphasis on recruiting lawyers exiting the outgoing administration?

Tom: The combination of what’s happening in the markets with the change in the administration is creating just an enormous wealth of potential laterals coming across my desk. Part of that is because we’ve gone to the market and said we’re in a growth mode right now. But it feels like there’s an unusual amount of movement.
Dick: I’d agree with that. You have to be selective, obviously, with the economy the way it is. Nobody’s going to be profligate. But there are some real buys out there among laterals. Not just people leaving government, but with some unfortunate things happening at some law firms, that creates opportunities for firms that are relatively stable.

Our firms are counter-cyclical, or less beholden to the ups and downs as some others.

Dick: Yes, and Kevin, you’re pulling in Ross Dixon. We think highly of them since we’ve always had a heavy insurance coverage practice and it’s always been one of the major competitors. So congratulations, that was a fine pickup.

Greg had a little déjà vu at the roundtable. For client O’Melveny & Myers, he subleased the offices to Huron in 2004.

Kevin: Thanks, it’s a great addition for us. We’ve had a strong transactional practice and they’re going to give us a good balance since Ross Dixon’s practice is counter-cyclical.
Bisnow: Are law firms insulated from the larger economy? With Heller and Thelen folding, is there something systemic hitting firms across the board?
Tom: We’re certainly insulated more than many of our clients. Law firms failing, it’s not a new thing. I think you have to look at much more particularized things—growth patterns, the amount of debt a firm takes on, and real estate obligations, which often are the driver of troubles.
Bisnow: Are you getting a lot of questions at Jones Lang?
Greg: In the last year, we’ve been asked by a number of clients to look at when leases are expiring and how to limit capital expense and the use of lines of credit. Some firms have used lines of credit in order to grow—either in terms of people or real estate. Other are using reserves to buy talent and not necessarily extending their lines of credit.

What are the tough real estate decisions being made right now?

Greg: No matter how good you are, there are always real estate issues surrounding mergers. Nothing’s ever perfect. You have too much space here, not enough there, and it’s hard to time the market.

Before his plate filled up with transition work, Tom handled the copyright details on the Sirius-XM merger. Jenner stands at 450 attorneys, 85 in DC.

Bisnow: Are you doing a lot of belt-tightening in reaction to the current climate?
Tom: When I look at belt tightening, some of it feels psychological rather than real. We’re actually viewing this as a growth opportunity. We’re at a very stable place. We’re incubating.
Bisnow: Are you doing anything different on the administrative front?
Tom: We’ve obviously tried to push our attorneys to get bills out on time. 
Dick: We’ve always tried to be careful on billing and collection. The lesson you hear from all the advisors is start the collection movement earlier. And we did. Get your partners to get their bills out. For the first three quarters we were in great shape. But I think I can see just a falling off, not so much on the work, but on the income aspect
Kevin: Something we’ve seen in the last few years is the rise of electronic billing. It used to be you could call a really good client and say, we’re on a calendar year; could you get your bills paid before Christmas? Now you’re talking to somebody in a foreign country, which poses its own challenges.
Dick: Right.
Kevin: They ask, when’s Christmas?  
Bisnow: Have you addressed your new billing rates?
Dick: I think you’re going to see pressure on rates next year. Clients are going to be looking for alternative ways of holding down legal expenses. Maybe not having so many first years on their matters, maybe trying blended rates. I think we’ll have to be fairly innovative in that regard rather than just bumping up rates like you might do in the very, very good times.

Quick clarification on a comment from Kevin Fitzgerald in Part One of the Roundtable. His firm, Troutman Sanders, does indeed represent banks and insurance companies. John Ford is Bisnow’s Legal Editor. Story ideas to john@bisnow.com.

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