By Casey Sullivan
SAN FRANCISCO, Nov 16 (Reuters) - As law firms struggle to
regain their footing in a down economy, firm leaders at a
conference in San Francisco on Thursday said they are weighing
recovery strategies ranging from staff cuts to restructuring
compensation, but they expressed doubts about the wisdom of
further international growth.
The chairman of Akin, Gump, Strauss, Hauer & Feld told
attendees at the Thomson Reuters 17th Annual Law Firm Leaders
Forum that his firm had chosen to focus on shoring up profits
per partner during the recession. The downside, however, is that
the strategy may have undermined Akin Gump's ability to compete
in the international market, said Chairman Bruce McLean.
Thomson Reuters is the owner of Thomson Reuters News and
"I don't know if we've made the right decision to trade off
short-term profitability for long-term success," said McLean,
who was on a panel of law firm leaders discussing lessons they
learned during their tenure. "Because we decided to be smaller,
the amount of profit we have to invest is diminished," he said.
Between 2008 and 2009, while McLean was chairman, Akin Gump
chose to prioritize certain practice and geographic areas, he
said. As a result, as many as 59 partners left the firm and Akin
Gump's profits per partner rose by nearly 17 percent, according
to The American Lawyer. In 2011, the firm's profits per partner
hit $1.6 million, up from $1.4 million in 2009.
The other panelists participating in "Lessons Learned from
the Firing Line: A Candid Discussion with Outgoing Law Firm
Leaders" included Orrick Herrington & Sutcliffe Chairman Ralph
Baxter, Wilmer Cutler Pickering Hale and Dorr's former
co-managing partner William Perlstein and Mayer Brown's former
chairman Herbert Krueger.
Growth strategies featured as a subject of the panel
"Challenges Facing Law Firm Leaders in the 21st Century," where
Gregory Jordan, the chairman of the 1,600-lawyer firm Reed
Smith, talked about his experience cutting costs.
One of Reed Smith's biggest savings initiatives has been
trimming staff, Jordan said. The firm has laid off support staff
and this year hired half as many associates out of law school as
it did in 2007. The moves should bolster the firm's revenue by 3
percent and its profits by 5 percent in 2012 if Reed Smith is
successful in collecting on bill payments, he said.
The comments about growth and savings come amid ongoing
turmoil in the industry. A Wells Fargo Private Bank survey
released on Thursday showed that while revenue has ticked up,
firms are facing rising expenses and a glut of underutilized
partners. About 15 percent of U.S. law firms participating in
the survey said they were planning to reduce partnership ranks
in the first quarter of 2013.
There was a variety of opinions on the best way for firms to
rebound. Some said they need to change their compensation
systems to reward partners for the sharing of cross-departmental
work, rather than rely on origination credit to determine pay --
a common method used by law firms that can lead to a divisive
culture, said Brad Hildebrandt, a law firm consultant and
advisor to Thomson Reuters.
Other discussions centered on the wisdom of expanding into
megafirms through mergers and the opening of foreign offices in
places like Beijing and Shanghai, where a large number of U.S.
law firms have established offices and everyone is competing for
the same business.
"It's tough," Jordan said. "It's tough for all of us."
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