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April 5, 2010

Law Firms Upbeat On Growth Prospects

Despite a faltering economy that triggered a spate of law firm mergers and cutbacks, the legal business remains strong in Greater Hartford. And federal healthcare reform holds the promise of a vast growth opportunity for firms both large and small.

While corporate finance transactions and real estate deals bottomed out in 2009, an uptick in commercial litigation, patent proceedings, intellectual property and employment law cases helped many firms survive the downturn, according to Francis Brady, president of the Connecticut State Bar Association.

“Business owners are looking for every last dollar they can find right now,” said Brady, also a partner at Murtha Cullina LLP, a full-service law firm with more than 115 attorneys in six offices throughout Connecticut and Massachusetts.

From Brady’s perspective, the slowdown gave strong companies with long-term assets to protect a chance to revamp their business strategy and take a long, hard look at how they operate.

“When the economy was good, they could just walk away from a $100,000 case and move on to the next job,” he said. “Now that business is slow, they are taking the time to fight these cases.”

The dismal economy also led many firms to look closely at the way they practice law.

For example, some law firms offer their clients a flat fee structure compared to hourly billing, a win-win move that sets attorneys apart in a competitive market, attracts budget-conscious clients and potentially reaps greater financial reward for the firm, said Brady.

Under this plan, a client only pays half the cost of the attorney up front and assumes no additional risk or charges, according to Brady.

If the case recovers any funds, the firm splits it with the client on a percentage basis; if the case does not recover any money, the client is off the hook for paying any more.

Law firms must be able to show value to the customer or risk losing them, said Brady. He added that many firms skipped rate increases this year for loyal clients, but still adjusted rates upward for new accounts.

Brady expects real estate cases to pick up by the end of this year. New healthcare regulations and a growing interest in energy projects will also keep the firm busy well into 2011.

“The new healthcare bill creates a need for more hospitals, doctors and resources, which means new jobs in different industries that have regulations to follow,” said Brady. “Healthcare will represent a major practice for legal experts for at least the next 10 years.”

While many firms in Greater Hartford shed workers, consolidated resources or shut down altogether, Axinn Veltrop & Harkrider LLP in Hartford is one firm that bucked the local trend. The intellectual property and complex litigation firm added three partners and plans to add several associates later this year.

Jim Veltrop, a partner at Axinn Veltrop & Harkrider, says the firm’s patent litigation practice is flourishing. The firm represents generic drug makers Actavis Group and Mutual Pharmaceutical Co.

“If a drug on the market earns $500 million in annual revenue, the brand-name pharmaceutical is going to dispute a generic coming out on the market,” said Veltrop. “Once the generic hits the market at a cheaper price, it drives down the brand-name company’s earnings.”

Veltrop said he isn’t fazed by the economy or recent news that Pepe & Hazard merged its operations with New Jersey’s third-largest firm, McElroy, Deutsch, Mulvaney & Carpenter LLP. The deal creates a firm of nearly 300 attorneys — more than 240 from McElroy Deutsch — that will work out of nine offices from Boston to Philadelphia, including three in Connecticut.

“Our long-term goal is to build strong, valuable relationships with each one of our clients,” said Veltrop. “We have stayed focused on our business plan and achieved what we set out to do. We’re not going to deviate from our strategy.”

Still, evidence of dark clouds looming over the industry is everywhere.

According to the National Law Journal, the number of attorneys working at the nation’s top 25 law firms fell by 5,259 in 2009, the worst year for the legal profession in more than 30 years.

Bonuses for those who still have a job are dwindling while an increasing number of firms now compensate associates based on grades for performance rather than automatically advancing them on the salary scale, according to Law Shucks, a blog that tracks legal industry trends.

That doesn’t bode well for new law graduates coming out of school this year.

“If you are a graduate coming out of law school in 2010 and you don’t already have a job lined up, good luck,” said Robert Giunta, a senior partner with Murtha Cullina in Hartford. “We have fewer slots available and more competition today.”

Many firms have reduced — if not eliminated — the schools they visit during the fall as part of the recruiting process. Some firms are even doing away with summer associate programs where second-year law students work full-time as an associate to gain hands-on experience and a job offer.

“I’ve heard of law firms in big cities like New York, Los Angeles and Chicago doing away with college visits and formal summer programs,” said Robert Morris, chairman of Pullman & Comley in Bridgeport. “We haven’t eliminated our summer program and I don’t know of any firms around here that have.”

In 2008, Morris visited George Washington University to meet with jobhunters. He said more than 20 attorneys were talking with various students about opportunities. This past year, only two attorneys showed up.

“It’s a challenging time right now,” said Morris. “There is nothing worse than an associate sitting around in the office with nothing to do. It’s bad for the morale and it’s hard on the attorney. You want people to show up happy to be there, ready to be productive and fully engaged with what’s going on.”

 

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