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    October 7, 2008  
(Part 2)

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Wanting to eat a vicarious mid-afternoon snack, we continue our Smith & Wollensky roundtable. Joining us the other day, three illustrious managing partners: Baker Botts's Jamie Baker, McKenna Long's Mark Flanagan, and Andrews Kurth's Shemin Proctor; together with brilliant, handsome, and generous Bisnow sponsors Matt Medlin of Huron Consulting and Sudhakar Shenoy, CEO of IMC, the IT outsourcers.

Jamie and Mark like what they're hearing—we think it was the dessert menu.
Bisnow: With the disappearance of investment banking and a coming era of financial regulation, is the Washington legal winning out over New York? 
Mark: The data that the Citi Private Bank group just put out for the first six months of this year shows that demand for legal services is down more in NYC than Washington. It's been down in DC, too, but we're comparatively much better off. New York is going to fall a bit more in the short term because they have so many lawyers in the mergers, transactions and capital market areas. It's just not going to be there. 
Bisnow: How long will the fallout last?
Mark: I think there's going to be a long tail on this. In the last year, we've done a lot of work helping corporations value auction-rate securities, and I think you'll see litigation over judgments on value as well as SEC and DOJ enforcement actions. We're still working white-collar cases going back to the Internet bust. The SEC just filed a case in May based on transactions in 2000—an Internet revenue recognition case against AOL executives.

IT outsourcing for law firms is the fastest-growing part of IMC's business, which also does IT work for government and corporations. Sudhakar started the business 27 years ago—"When I was four years old," he smiled.

Jamie: It's impossible to know really what we're dealing with here. On the one hand, it's been referred to as an economic disruption along the lines of the S&L crisis or the Internet bubble, and on the other hand, it's been described as a financial cataclysm tantamount to the Great Depression. But it's clearly a serious dislocation.

What are some of the big open questions for lawyers?

Jamie: Who's going to be the regulator? The Fed appears to be making a pretty bold move to become the principal regulator of the entire financial services sector. So, for example, there are 12 regional banks, just as the SEC has its 12 regional offices. Do those regulatory initiatives applicable to the banks and brokerages come out of the center or the regional offices? And will they come from the Fed or will the SEC remain a principal regulatory player? It's probably still too early to tell. But it's hard to foresee that Richmond or Kansas City would become a locus for regulatory activity with national implications the way that San Francisco or Chicago has been in the past several decades, though I suppose it could turn out that way.
Matt: There's also the question of who's going to manage this big waste can of assets that the U.S. government has taken on. There's a lot of value there, and I do think there will be opportunities for law firms and consultants to be involved in sorting out how it gets managed. 
Bisnow: On the firm management side of things, do you operate from a strategic plan?

We do, yes. We developed it in 2001 and have been guided by it in our development since that time, and we're actually in the process of rolling out a new one this year, probably in another 30 to 60 days.


Huron Consulting has 1,600 people in the U.S., Tokyo, and London. They provide expert witnesses for all types of litigation issues; Matt's specialty: auditor defense.

Bisnow: What about the other firms? 
Mark: Yes, we put a lot of time into a strategic plan back in '03, in part because we had just merged the year before. In our governance structure and operations we tried to take the best practices from both firms. The strategic plan is a helpful reference point—if an initiative you're considering doesn't fit within the plan, there's more of a presumption to overcome.

We have a firm-wide plan that gets reviewed annually. Our policy committee just met last month, talking about the plan and where we want to be in this world of consolidation.

Bisnow: Merger opportunities?
Shemin: We get overtures quite often. We have quite a big presence in Texas—our general guideline is that we don't want to just become even bigger in Texas but to grow the other offices.
Jamie: From the standpoint of mergers that might affect our firm or others in Texas, one trend we haven't touched on is the fact that oil at $125 a barrel hasn't been an entirely bad thing for a lot of firms in Texas. There seems to be a lot of interest lately on the part of firms based in other parts of the country in developing a base in Texas.
Shemin: Houston is having great times right now. We've got firms coming in there from all directions.
Bisnow: What do they want to do?
Shemin: They want to do energy, but they also want to recruit from the established firms. Our top performers are inundated with calls, so that's a challenge.
Bisnow: How did you weather the hurricane?
Shemin: We're in Chase Tower, which is 70-some floors. The first floor lobby was flooded, but they did an amazing job of cleaning it up and we opened back up on Monday.

John Ford is Bisnow's Legal Editor. Send scoops to

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