Brobeck, Phleger & Harrison LLP, a San Francisco law firm whose fortunes soared with the Internet boom, set up shop in Northern Virginia two years ago, attracted by the area's growing technology industry.
Soon it had 30 lawyers here. Then came the downturn. Deals evaporated, clients vanished. Brobeck cut jobs and endured defections by key partners. On Thursday the 77-year-old firm announced it was collapsing under heavy debt. Its big bet on technology clients and expensive real estate leases were the main culprits.
As a result, the remaining nine lawyers working out of the Reston and D.C. offices will be out of work. Kevin J. Lavin, who manages Brobeck's Reston office, said word of the firm's demise came quickly and surprised its East Coast lawyers. "I'm clearly sad to see what's happened at Brobeck," Lavin said. "It's an unfortunate combination of the down tech market and maybe just not having the institutional glue we needed."
Across the Washington region, business law firms, from the Silicon Valley firms that ventured east to the old-line Washington powerhouses, are retrenching and sometimes reinventing themselves to deal with the tech bust, with varying degrees of success. The shift in strategy is helping to reshape the legal community and realign the center of power within law firms, from the dealmakers to the litigators and bankruptcy lawyers.
This is just the latest phase in the evolution of the Washington legal community, which for generations was intensely focused on the federal government. In the mid-1990s, local firms took on more corporate work as their leaders acknowledged the groundswell of emerging Internet and telecommunications companies in the region. After the tech bubble burst and the economy slowed, Brobeck and other law firms took the dramatic step of laying off lawyers and staff and looking for new areas of focus.
The question, according to D.C. legal recruiter Charles Garrison, is whether those measures will be enough to carry law firms through lean times this year, or whether more cutbacks are around the corner.
Cooley Godward LLP, a San Francisco firm that announced more than 100 layoffs in August 2001, has hired a professional business development manager for its Northern Virginia outpost and has snagged new clients from firms that have retrenched in the region. Cooley's employee benefits group, which handles confidentiality agreements and legal advice surrounding layoffs, and its intellectual property lawyers are particularly busy, said Michael R. Lincoln, a partner in the Reston office.
Pillsbury Winthrop LLP, an 800-lawyer firm with headquarters in California, has made a huge push in intellectual property. Pillsbury has recently been hiring lawyers for its patent and trademark work. It is also trying to cultivate more defense industry clients, according to Dale S. Lazar, who runs Pillsbury's McLean office.
Meanwhile, the District's Shaw Pittman LLP, which has laid off lawyers in the past 18 months, recently brought in a new manager to run the firm.
sOther firms are trying to remake themselves to appeal to a wider array of clients, as are lawyers themselves, including some of the area's most prominent.
For example, Stephen W. Comiskey, a counselor to leading lights in the tech community, including AOL Time Warner Inc. executive and Washington Capitals hockey team owner Ted Leonsis and Proxicom Inc. founder Raul J. Fernandez, recently moved into the lushly carpeted Washington office of Morgan Stanley as a financial adviser. Comiskey and some of his wealthy clients developed an idea for their own money management shop a few years ago. But the plan was put on the back burner when hard times struck and those clients were forced to focus on their own businesses.
Comiskey, who bought an indoor lacrosse team in 2000 that he sold last year, said his move to Morgan Stanley is part of a "natural progression" for him and his clients. Along with colleague Holidae Hayes, who manages money for AOL co-founder James V. Kimsey, Comiskey is targeting wealthy people who need investment advice.
"This is where I see the future of my practice," said Comiskey, who recently passed exams to become a registered financial analyst. He will also continue to practice some law.
Edwin M. Martin Jr., the son of a diplomat and a longtime adviser to the Mid Atlantic Venture Association, one of the most prominent meeting places for Washington area investors, now networks in a new arena. He has been introducing clients to some of Piper Rudnick LLP's latest additions, such as former House majority leader Richard K. Armey (R-Tex.).
Like many area law firms that made steep investments in technology, Piper Rudnick has shifted junior lawyers into bankruptcy, litigation and government projects. They've also moved lawyers out of the District to Northern Virginia to consolidate and save on costly leases.
Martin is rewriting his five-page resume to include more references to his work for traditional public companies and fewer to his success at brokering deals for start-ups. Martin's venture capital transactions group handled 75 deals in 2002, down from 125 at the height of the boom. "It is a process of reinvention; there's no question," Martin said.
Harry M. Glazer, a Northern Virginia attorney at Greenberg Traurig LLP and an active participant on the Northern Virginia Technology Council, decided to leave law altogether. He is now an executive at Sherwood Partners, a Los Angeles-based company that advises technology firms, investment bankers and venture capitalists -- a job that lets him "into the kitchen" when the big decisions are made, Glazer said, a role he'd always wanted to fill.
"I was a businessman trapped in a lawyer's body," said Glazer, who co-founded MindShare, a forum for executives at some of the region's top start-up companies.
Reggie K. Aggarwal, a former associate at Shaw Pittman and chief executive of the Arlington event notice company Cvent Inc., said lawyers have not suffered nearly as much as their clients.
Aggarwal, a founder of the Indian CEO High Tech Council, noted that many large firms still pay starting lawyers more than $120,000 -- nearly twice what he earned coming out of law school in 1994 -- and the firms have not cut their fees much. That could mean more pain for law firms if the economy does not improve, he said.
Steve Nelson, a legal recruiter at the McCormick Group in Arlington, said he does not believe many firms are in "imminent" danger of meeting Brobeck's fate. But he said he's hearing that the financial performance of law firms in 2002 was weak, something that "could put pressure on partners to evaluate whether they are in the right place."
"If you have some influential partners leave, everything can change," he said.
Brobeck's Lavin said his office has been flooded with calls from law firms and headhunters, leading him to believe the lawyers will get jobs quickly.
"I think 2003 is going to be as bad as 2002," said Edmund S. Ruffin, who heads the three-lawyer Reston office of the Venture Law Group, a Silicon Valley-based firm specializing in tech deals.
But, he added, "Lawyers are pretty good survivors in general."