Higher mobility, higher starting salaries have law firms scrambling to adapt

All eight attorneys in Lewis & Roca’s Phoenix employment law section left the firm to join specialty practice Ford & Harrison effective Jan. 1. The defection left the firm exposed in an important and lucrative area of the law.

Needing to fill the hole, the firm did what other out-of-state practices have done in recent years: It hired away a partner from an old Las Vegas firm.

Howard Cole is now a partner at Lewis & Roca’s local office. Previously, he was a shareholder at Lionel Sawyer & Collins. He left in April, after 14 years. He took associate Suzanne Martin with him.

That move is just the latest in a bleeding of local talent from the firm. Other recent losses there include Laurel Davis, who left for Fennemore Craig; Elizabeth Brennan and Greg Giordano, who left for Snell & Wilmer; and Anthony Cabot, who left for Lewis & Roca.

What has happened at Lionel Sawyer results from realities affecting the profession nationwide — mobility among lawyers is at historic highs, starting salaries are putting upward pressure on billing rates, and competition from regional players is increasing as Las Vegas grows.

Two things happened to encourage a spike in competition for legal talent here: The State Bar of Nevada revised its rules to allow multijurisdictional firms to enter the market, and, Southern Nevada’s population grew past 1 million people. The rule change occurred in July 2002 and lifted a restriction that kept many national firms from operating here because their namesakes didn’t have Nevada law licenses. Some of the namesakes could never get licensed here — they were dead and their firms simply carried on under their names for marketing reasons. Snell & Wilmer is one such firm.

“It was hard to get into the marketplace because of this restriction,” said Pat Byrne, Las Vegas administrative partner at Snell & Wilmer, an Arizona-based firm with 450 attorneys in six offices throughout the West, including 38 here. “One of the reasons Las Vegas made so much sense to us was we had offices surrounding it.”

Cole agreed that the local firm rule’s repeal changed the market’s dynamics. He said that when he came to Las Vegas as a federal prosecutor in the early 1980s, the city was still relatively small, the market somewhat insular.

“The legal marketplace in Las Vegas is much different today than it was even five years ago,” the labor lawyer said. “Part of it was inevitable. … Once you reach a 1 million population base, it’s like sending up trial balloons. You’re now big enough to justify us (national and regional firms) moving into the market.”

Byrne said the changes have been challenging and good for the local profession.

“What’s going on in Vegas is a rising tide. All ships rise with a rising tide,” he said. “The real challenge is recruiting lawyers. You have to hire people with ties to the community, or you won’t have much success.”

A NEW BREED OF LAWYER

Paul Hejmanowski, managing partner at Lionel Sawyer, agrees the profession is witnessing historic changes. The trend is the result of “greatly increased mobility” among attorneys.

“It’s a huge, huge difference,” he said. “It’s impacted the industry. If you went back 30 years, you’d be hard-pressed to find a law firm with 200 lawyers.”

The Lionel Sawyer shareholder, rated a top Nevada litigator by legal publication Chambers USA, said he’s lost some good attorneys, but understands the changing dynamics. He said a particularly difficult problem arises when a firm loses experts in a particular area of the law. Existing clients will sometimes leave with the expert, so firms must scramble to fill the need, much as Lewis & Roca did when they sought out Cole.

“I complain about my turnover,” Hejmanowski said. “I’ve lost partners I’d rather keep.”

Cole is philosophical about his changing profession. When he graduated from law school in 1979, it was a near certainty that he would work for one firm his entire career. Today’s young lawyers are expected to change jobs about a half-dozen times throughout their careers.

“The young lawyers are a different breed than those of my generation,” he said. “These days, surveys have shown that the average lawyer will hold five jobs through their legal career.”

From a partnership perspective, Cole said, opportunities abound.

“As more tier one law firms come to Las Vegas, it creates more opportunities, better growth opportunities,” he said.

STRUGGLE FOR BEST

Hiring the most accomplished law school graduates and paying competitive salaries have also affected the legal profession.

Hejmanowski says he remembers when young attorneys were hired in the fall. Now, he says, hiring is virtually year-round. Also, today an enormous amount of recruiting goes on in law, with headhunters calling from other firms.

Today, firms compete not just among each other, but with brokerage houses, investment banks, corporations and hedge funds.

Starting salaries in many large markets well exceed $100,000 a year. One ancillary result of this increase in starting pay is that clients are paying higher and higher rates.

“To some extent, rising rates are a function of starting salaries. What you’re doing is competing for the best and the brightest,” said Tom Ryan, managing partner at Lewis & Roca. “Money is not the end-all, be-all. We work hard to maintain relationships. That’s a point of emphasis in our firms.”

The experiences the firm offers young lawyers during their career are advantages above pay, Ryan said. Attorneys at Lewis & Roca are able to service clients who need representation in a number of different jurisdictions, and “that can be an advantage.”

Byrne says the high starting salaries, and resulting rate increases, are a national trend spurred by competition from large West Coast and East Coast firms.

“We’re not New York and don’t demand New York rates. We have some limitations on what we can do. It’s challenging,” he said.

BUCKING THE TRENDS

Greg Kamer, president of Kamer Zucker & Abbott, a boutique law firm, says smaller firms are trying to buck some of the trends affecting larger practices. Kamer’s firm, formed in 1986, has 10 attorneys and specializes in labor law. Kamer says he is constantly fielding calls from larger firms that would like to swallow his practice.

He won’t bite.

“We have as much work as we need. We’ve taken a business model of controlled growth,” he said.

Kamer says he hires young attorneys who are committed to this area of the law, and committed for the long haul.

“We hire people to become partners,” he said. “We hire very selectively, only those who want to do this.”

Kamer says he pays a competitive salary but puts more stock in quality of life than in cash.

“It’s not about money (here). It’s about quality of life. Money’s not going to buy you happiness,” he said. “I practice law with my best friends.”

This story first appeared in the Business Press. Matt Ward writes for the Review Journal’s sister publication and can be reached at mward@lvbusinesspress.com or at 871-6780, extension 339.