Change at the Top By Gina Passarella

A number of the nation’s largest law firms have new leadership at the helm. What do they expect from 2017 and what can the industry expect from them?

Together, they oversee $5.7 billion in market share and employ nearly 7,000 attorneys worldwide. They’re dealing with deep-seated business challenges, ranging from stagnant demand to the imminent loss of the industry’s most experienced talent, at a time of global uncertainty. And they have less than three months’ experience in their roles.

It will be interesting.

But when we checked in with a new crop of leaders at eight of the country’s largest firms, most voiced optimism about the future, as well as a commitment to building on their firms’ existing strengths. Many of them have been groomed for their new role for months or years—making them something of a welcome anomaly in a profession that often doesn’t do succession planning well. The leaders they replaced brought their partners through the Great Recession and often shifted the firms’ operations to better align with changing client demands. In doing so, they set up their successors to capitalize on those improvements and a stronger economic outlook.

At least, that’s the theory. Among the specific issues that these new law firm leaders must grapple with, consultants say, are baby boomer retirements [“Out the Door,” September 2016], flattening revenue, and increased competition for top-tier practitioners [“No Book? No Problem!” February]. As market consolidation continues, there’s also the increasingly pressing question: to merge or not to merge? New management will have to assess whether a large-scale merger truly fits within the firm’s strategy, says consultant Lisa Smith of Fairfax Associates.

Threaded throughout core management issues is the broader, perhaps more elusive question of innovation, suggests consultant Joseph Altonji of LawVision Group. When these new managing partners or chairmen eventually leave office, their firms will be different—perhaps unrecognizable. “It’s not just buying technology to speed things up,” Altonji says. “If that is the sum total of what innovation means, then we haven’t figured it out yet.”

Mark Morris (left) and Mark Silow

Fox Rothschild

Philadelphia-based Fox Rothschild announced last September that longtime managing partner Mark Silow would be stepping into the firm’s chairman role on April 1 while real estate partner Mark Morris takes over as managing partner. Under Silow’s 12-year watch, Fox Rothschild employed a strategy of mini-mergers, opening in new locations by picking up small boutiques, with the aim of building out each location to at least 25 lawyers. That strategy expanded to include a deal last year with 80-lawyer Minneapolis firm Oppenheimer Wolff & Donnelly, an acquisition that helped propel Fox Rothschild into The Am Law 100.

“I have seen a significant uptick in our opportunities in terms of getting involved in larger matters for larger clients on a more sort of preferred attorney or preferred counsel role,” Morris says. The expansion has also brought a new focus on interoffice collaboration, he adds. “One of my jobs ... is to stir that pot and get people to focus on where they have common ground,” he says.

But challenges remain, Morris admitted, including finding ways to drive greater efficiency, improve productivity and address overcapacity—while trying to hold true to the firm’s original values.

“We like to think of ourself as a smaller firm in a big firm’s body,” Morris says. “We try not to be, ‘Produce or out!’ but there is pressure there.”

Stuart Ingis

Venable

New Venable chairman Stuart Ingis is betting on a practice mix steeped in technology and innovation to propel the firm forward. “There is always a demand for stuff that is unique and really, really good legal service that other people don’t have the experience or background in,” he says. “So demand or rate pressures or president, none of that impacts this.” Ingis, who leads the firm’s work in privacy, advertising and internet law, notes that some of his colleagues are leading counsel in the driverless car and cybersecurity arenas.

“We think that positions us well for the long haul irrespective of the trends in the legal marketplace,” Ingis says.

Meanwhile, traditional practice areas such as products liability and commercial litigation are humming along, Ingis says, despite a general slowdown in litigation industrywide. The firm’s 10-year-old Los Angeles office, now up to 100 lawyers, is the base for a growing entertainment practice as well.

Ingis says his biggest challenge is to “be able to ... stick to what we do in the face of what is happening all around us.” As more firms merge, for example, Ingis increasingly has to ask whether that is right for Venable and its culture.

Once before, Ingis voted with his feet against a transformative merger, as one of about 40 lawyers who made their way to Venable from the former Piper Marbury, after the latter firm became global giant DLA Piper. Many of those lawyers are now, like Ingis, part of Venable’s management.

Thomas Froehle

Faegre Baker Daniels

Thomas Froehle already has 10 years of experience running a law firm. He was the head of Indianapolis-based Baker & Daniels before its 2012 merger with Minneapolis-based Faegre & Benson. In the combined Faegre Baker & Daniels, Froehle took over as chief operating partner while Faegre & Benson chairman Andrew Humphrey served as managing partner and chair. On March 1, Froehle will step into the managing partner and chair role while Gina Kastel will become chief operating partner.

Froehle says that his focus will be adapting to rapid-paced changes that are taking place within clients’ operations. “That starts with the business, but pervades the legal department as well,” he says. Businesses are consolidating, the role of the legal department is shifting, and more companies are using procurement or legal department operations professionals on pricing, he says. For law firms, that means more sensitivity to price and value and thinking differently about how services will be provided. Froehle says he is counting on Faegre Baker’s collaborative, collegial, Midwestern culture to connect with clients.

And after the 2012 merger, he adds, the firm’s lawyers are already used to change.

Faiza Saeed

Cravath, Swaine & Moore

Mergers and acquisitions star Faiza Saeed is the first woman ever to lead Cravath, Swaine & Moore or any Wall Street firm, and, as the daughter of Pakistani-American immigrants, she’s one of only a few Asian-Americans to lead an Am Law 200 firm.

In taking over from predecessor C. Allen Parker, Saeed was seen by partners as the consensus choice. One of her biggest management challenges is likely to be ensuring that the firm can still keep top talent in a lockstep system. Last April, a major M&A rainmaker, Scott Barshay, left for Paul, Weiss, Rifkind, Wharton & Garrison. But Saeed has voiced commitment to firm traditions such as lockstep compensation. “We all really do believe that lockstep is a key part of our culture,” Saeed told The American Lawyer at the time of her election in July. “It’s really what makes the place such a collaborative platform, which we think enables our partners to really deliver the whole firm to our clients. That is the secret, over the decades, of why we have these really long-term client relationships.”

Ira Coleman

McDermott Will & Emery

Chicago-based McDermott Will & Emery is now led by Miami-based partner Ira Coleman who beat four other contenders to succeed co-chairs Jeffrey E. Stone and Peter J. Sacripanti.

Coleman said he’ll focus on ensuring the firm is indispensable to its clients and only in the practices where it can bring a value-add. If a practice doesn’t meet that threshold, the firm shouldn’t have it, he said.

For McDermott, those core practices are what Coleman calls “power alleys.” The firm’s health care, tax, private client, and white-collar and litigation groups are the places Coleman says McDermott is a leader—and all ones that could see an uptick under the new administration in Washington.

Growing profitability is another key focus for Coleman, who says it’s not to pad the partners’ pockets, but to ensure the firm has the money to go after and retain key talent. But 2017 will be an investment year, too, with money going toward technology, infrastructure and business processes, he says.

Aside from the numbers, the jovial Coleman is also focused on what he calls the “happiness factor.”

“I want our teams to have a lot of fun and bring that to everything they do,” he says. “When you can show that to clients, it’s a differentiator.”

Michael Caccese (left) and James Segerdahl

K&L Gates

As Peter Kalis leaves the helm of K&L Gates on Feb. 28, after a 20-year run, it marks the end of an era at the firm. Kalis transformed the firm from a regional Pittsburgh-based operation to an international presence with nearly 2,000 lawyers across 46 offices. Stepping in to fill his shoes are Michael Caccese and James Segerdahl, who will fill the positions of chairman of the management committee and global managing partner, respectively.

Both Caccese and Segerdahl have served as vice chairmen, and they come from two of the firm’s strongest global practices. Caccese is based in Boston, where he is credited with growing the 113-lawyer office as well as the firm’s 145-lawyer investment funds practice. Pittsburgh-based Segerdahl is a co-founder of its insurance coverage practice.

The last year of Kalis’ tenure saw some notable ups and downs for the firm. In February 2016, the firm collected $210 million in contingency fees—just $55 million shy of 2015’s entire net income—as part of a $750 million patent suit settlement for Carnegie Mellon University. In the year leading up to that recovery, K&L Gates saw more than 100 partner departures; sources said many of these were planned as the firm worked through integrating mergers that had helped it grow.

Michael Gerstenzang

Cleary Gottlieb Steen & Hamilton

Cleary Gottlieb Steen & Hamilton started off 2017 with a new managing partner as private funds attorney Michael Gerstenzang took over for international antitrust partner Mark Leddy, who had held the role since 2011. Gerstenzang brings a background in corporate work, experience that consultants say can lend itself well to running a major business, like a law firm.

Only two of Cleary’s 16 offices—New York and Washington, D.C.—are in the United States. Given his firm’s heavy international presence, Gerstenzang will be paying close attention to the fallout from the United Kingdom’s Brexit vote and other political shifts in Europe, Asia and the United States that could impact global business.

“Those can be challenges because there is a lot of uncertainty about the nature of the changes both political and economic,” Gerstenzang says. “But I think for the top law firms, those can also be opportunities because our clients will be looking for guidance.”

David Dekker

Pillsbury Winthrop Shaw & Pittman

David Dekker had one of the longest run-ups to becoming chairman of any of his counterparts. He assumed the role of vice chairman of Pillsbury in late 2015, and it was announced at that time that he would take over as chairman in January 2017. He has taken over for Jim Rishwain, who served as chairman since 2006.

Dekker, based in Washington, D.C., says that lead-up time was especially helpful to him, having only joined Pillsbury in 2011.

Dekker is charged with finding ways to grow revenue and improve profitability while maintaining the firm’s culture. He says the focus is to grow in existing offices and practices, though it is possible the firm will close an office or two and open in other locations.

“We are not big enough to be all things to all people,” Dekker says. “We have some very strong practices. We will focus a bit more narrowly on growing those practices and have a bit tighter industry focus as well.”

While practice groups have long focused on growing revenue, Dekker says he wants to see more of a focus on revenue growth from an industry group perspective.

The U.S. presidential election has also created some management challenges. The firm has some partners tied to the Trump administration, but it has also seen more lawyers interested in doing pro bono work on causes that oppose Trump’s policies, Dekker says. In addition, the election has shifted the firm’s approach to hiring in Washington, he says.

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