Communiqué Past Articles Communiqué - November 2006 | Communiqué - November 2006 |
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Keeping Our Place: One Firm's Response to the Arrival of National Firms to NevadaBy L. Joe Coppedge I joined the Las Vegas legal community in 1993. At the time, while the city was growing at a frantic pace, the legal community remained relatively small. Lawyers knew other lawyers. The practice had a small-town feel. However, with growth comes change. When any city experiences growth and prosperity like Las Vegas, others will undoubtedly want to claim their piece of the pie. Although certainly not new, it seems there is an ever-increasing phenomenon of regional and national law firms arriving in Las Vegas, each seeking to claim a share of the Las Vegas legal market. Like any change, both good and bad have resulted. Your opinion on just what is good and what is bad, like mine, most likely depends upon which side of the fence you are sitting. The entry of the out-of-state firms has no doubt provided Nevada lawyers with new opportunities. With the arrival of more out-of-state firms, they must be staffed with attorneys licensed to practice in Nevada. Some of the out-of-state firms have had their attorneys sit for the Nevada bar. Others have targeted attorneys from local firms to staff their Las Vegas office. While a few have merged with existing Nevada law firms as their introduction to the Nevada legal market, most have hired attorneys and staff from existing law firms to staff their new offices. In any event, it is safe to say that many Nevada attorneys have been sporting new addresses over the past few years. One constant among all of this activity is the legal headhunter. Although probably always present, legal headhunters have definitely become more visible in the valley. Hardly a week goes by that some associate, partner or support staff member does not get a telephone call from a headhunter, asking him or her to abandon the law firm that provided their initial training, and join one of the new out-of-state firms. Local firms have followed suit, becoming more aggressive in their recruiting of legal talent. As a result, movement between law firms seems much more prevalent. The recent changes in the ethical rules, allowing the creation of a Chinese wall, will likely further fuel lateral movement. In this new legal market, firm loyalty is just not what it once was. Nevada attorneys, both partners and associates alike, are now willing to change jobs for what is perceived as a better opportunity. Of course, with associates already burdened by ridiculous student loan debt and increasing home prices, maybe this willingness to change firms is somewhat understandable. As the out-of-state firms set up shop in Las Vegas, they bring with them their own way of doing business. That way of doing business often includes a higher salary structure for attorneys and staff alike. In order to remain attractive and retain legal talent, many local firms have responded in a like manner. Increasing salaries for associates has become an annual ritual. For law firms, salaries are a huge component of overhead, and the trickle-down effect for this increased overhead is clear. Someone has to pay for these higher salaries, and that burden ultimately falls to the client. With the increase in associate and staff compensation, there seems to be a corresponding increase in attorney hourly rates. Running a law firm is a business after all. Although some clients may question the higher rates, others have paid them as a sign of the times—and in recognition of higher quality of service. Competition for staff also involves more than salary increases. Many firms are looking for ways to make their work environment more attractive. For example, our firm has introduced a new policy targeted at allowing our attorneys to achieve an optimum work-life balance. The balanced hours policy permits an attorney to achieve the balance suited to his or her individual pursuits outside of work, whether that might be taking classes for an LLM, taking additional time for parenting, or dealing with a family crisis that requires an extensive reduction of work hours. This policy serves our goals of attracting and retaining the best legal talent in the state. However, increased compensation for staff is not the only change in the legal community. Increased competition among law firms, between both local and the new out-of-state firms, has arguably improved the quality of the legal work in Las Vegas. Certainly, clients have more choices for their legal work, and seem more willing to move their legal work than in years past. In order to maintain and grow their existing client base, law firms are paying more attention to detail. Of course, to some, paying more attention to details is not always a good thing. Telephone calls, once a trusted source of communication between lawyers and clients, are now usually followed by a letter confirming the conversation. The small town feel, cherished by many, seems to be diminishing. One advantage to the loss of a small time feel, however, is the increased expansion to a state-wide practice. It is increasingly common for firms that were once based only in the north or south to expand. KKBRF, which already operated two offices in Las Vegas, recently opened an office in Reno, and shortly thereafter, joined forces with a respected Carson City firm, Crowell, Susich, Owen & Tackes, Ltd. Growing from a Las Vegas firm to a Nevada firm is consistent with our intent to maintain our place in the Silver State in the face of the advent of the out of town firms. Other firms with a long term presence in either Southern or Northern Nevada are following suit. With the influx of new regional and national law firms to the Las Vegas legal market, the legal community will forever be changed as a result. Some of the firms will succeed and remain a viable part of our legal community for many years. Others will fail, pack their bags and quietly slip out of town. No one knows the future, but one thing we do know is that, just as things have changed over the past ten years, the Las Vegas legal community will also be much different in ten years from now. Whether that change is a good or bad thing depends upon all of us. L. Joe Coppedge is a litigation partner in Kummer Kaempfer Bonner Renshaw & Ferrario. He obviously has a problem telling anyone "No," as evidenced by the submission of this article. M&A in the Nevada Legal Market—What's Really Happening?By Jordan Ross I'd like to offer a few pointed comments about Mergers & Aquisitions in the Nevada legal market, especially by out of state firms, from the perspective of someone who sees both the demand side and supply side of the issue every day. I have clients, both domestic and out of state, with varying degrees of interest in merging with or acquiring other firms, practice groups and individual partners ranging from very aggressive to not at all. I'd like to briefly discuss the differing interests, some of what's being offered as incentives (and what's not) and the pitfalls from misunderstanding the Nevada market. I don't have the space here today to address every issue, but let's look at just a few. The marketNevada in general fills many people with a variety of misunderstandings and the legal market here is no exception. First of all the market is really two; Las Vegas and Northern Nevada. They have many things in common but have distinct cultures and communities of their own and recruiting is not the same in each. Any firm that's tried moving an attorney from one to the other knows what I mean. Not impossible, but very close to it. Another is the very common misconception that gaming drives the legal economy here. Gaming drives the general economy in Nevada; real estate drives the legal economy. And the while the legal market is growing, especially retail law and high volume commercial law, many out of state firms do not comprehend that the general commercial legal market is growing also but not at the same rate as the general population or economy. It should also be noted that the changes in Supreme Court Rule 199, which used to block the use of an out of state firm's full name, as well as the more recent changes in Supreme Court Rule 160 allowing unilateral fire walling of routine conflicts of interests for the first time, have had effects on recruiting that some law firms have still not fully adjusted to. Interest level on the demand sideFirms with varying degrees of interest in acquiring a new or increased presence here include out of state firms both national and regional as well as domestic firms both north and south. The state is littered already with a few dried carcasses of poorly considered and poorly informed entries into the Nevada market—and there will be more. Most national firms have adopted a wait and see attitude and the most aggressive out of state players have largely been regional firms such as Lewis, Brisbois, Bisgaard & Smith LLP and Lewis and Roca, LLP in the Las Vegas market and Parsons Behle & Latimer, PLC and Sherman & Howard L.L.C. in the Reno market. Demand is focused on the difficult balance and integration of revenue, profitability, hourly rates and practice areas. There is also a slowing but surely increasing demand to establish a presence in both ends of the state. Interest level on the supply sideWhen approached, firms, groups and individual partners who have a genuinely valuable portfolio and/or skill set frankly start in most instances by saying "no, but . . . ". Fundamentally this goes to the core of another issue, the increasing demand by more successful partners for a greater percentage of their income to be based on their individual production as opposed to the collective production of their firm. Partners and firms will not be interested in what amounts to nothing more than an address or letterhead change. The supply side wants to see transparent, objective bonus and profit sharing formulas, genuine participation in governance, quality legal support services and compatible practice area support including potential increased networking opportunities. Loyalty is less of an anchor to their current firms than it was 30 years ago. Compensation is more important, especially among the more aggressive and entrepreneurial attorney one finds in Nevada. However this does not translate into an automatic willingness to submit to the "BigLaw" business model of intensive practice supervision by a heavily layered hierarchy. On the flip side of this, is an increasing dissatisfaction with many current firms that are not aggressive in terms of growth, marketing and equitable profit sharing. Clearly there are very conflicting needs and wants in this picture that are making the legal market increasingly volatile in Nevada. What's next?When Rule 199 was first changed, I predicted this would happen: nothing – for the first year. The next year I predicted serious change would start to happen and that this year it would start to get ugly. My predictions have been more or less borne out and I don't think it's at an end. Nevada is in the process of market correction – not unlike the sort that many other industries have historically gone through. But movement of partners and firms does not and will not happen simply by leasing an office suite or changing the name on some letterhead. The fact is that the majority of attempted mergers and acquisitions involving firms, groups and individual partners end with no action. Which, in truth, is how it should be. Most deals aren't right. There is no substitute for going through the process and exploring the relative pros and cons of a deal. And the process is neither swift (so don't put it off) nor one of a set of checklists and due diligence forms. Any merger or acquisition in any industry is about people, but in the legal industry it's almost all about people. People deals make it or break it on people's interactions with each other. I tell my clients that 85 percent of what I do, you could pay a clerk 10 bucks an hour to do. It's the other 15 percent, the genuine brokering of a deal involving the future finance and career of real live human beings that's the hard part. Jordan Ross is the principal of Ross Legal Search, LLC, the only Nevada firm devoted exclusively to the permanent placement of attorneys solely in Nevada. He is also the only Nevada member of the National Association of Legal Search Consultants. For more information, visit rosslegal.com or contact Jordan at (702) 298-5791. |
© Originally published in COMMUNIQUÉ (November, Vol. 27, No. 11), the official journal of the Clark County Bar Association. All rights reserved.