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Large firm leaders say 2010 wasn’t so awful after all

By RICK BRUNDRETT, Special to Lawyers Weekly

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North Carolina suffered some hard economic punches in 2010, but the state’s top law firms weren’t knocked out of the ring. In fact, they say they were well-prepared for the fight.

Lawyers Weekly surveyed managing partners or other top leaders at 10 of the Tar Heel State’s biggest firms to find out how they fared in 2010 and their predictions for 2011.

Generally, commercial real estate and development work continued to suffer from the lingering effects of the recession, though those losses were offset by strong creditors’ rights and bankruptcy practices, managing partners reported. And new government regulations resulted in plenty of work for health care, financial services and energy industry attorneys.

Still, none of the firms surveyed claimed the double-digit growth patterns that were more common in the pre-recession years. But all of them indicated they were holding their own, and some announced specific expansion plans for 2011.

“At the end of 2010, people have a different reality check than in 2007,” John Sowards, Nexsen Pruet’s board chairman, told Lawyers Weekly. “Now, you’re failing if you’re not maintaining. Expectations have been changed.”

Following are the year-end perspectives of the 10 surveyed law firms. Lawyers Weekly will publish its annual survey of the state’s 25 largest law firms in April.



Scott Vaughn, the managing partner of McGuireWoods’ Charlotte office, said new federal or state regulations in the financial services, health care and energy industries kept his office and the firm’s other two offices in Raleigh and Wilmington very busy in 2010.

Mergers and acquisitions and corporate work have been “more active than what we thought they would be” this year, Vaughn said. He added it doesn’t hurt that several of the firm’s practice leaders are located in the state, including, for example, the head of financial litigation services.

No attorneys in North Carolina have been laid off at the firm because of the recession, though “we had two or three people” transferred from the firm’s real estate group to other practice areas, Vaughn said.

McGuireWoods is managed “very conservatively,” he said. The American Lawyer magazine recently ranked it as having the having the third best “Recession Performance Index” among the world’s top law firms from 2007 to 2009.

“We don’t borrow any money significantly,” Vaughn said. “We’re very well capitalized.”

Vaughn said despite the tough economic times in recent years, the North Carolina operation has continued its summer intern program. As for 2011, Vaughn said he “could see us adding to the financial litigation and debt financing group,” though he didn’t provide specific numbers.


K&L Gates

Gene Pridgen, an administrative partner who manages K&L Gates’ Charlotte office, is a firm believer that law firms need to be diversified in their practices. “It is that mix of practices that provides that stability in up and down cycles,” he said.

The firm’s N.C. operation has “very active” health care, employee benefits, bankruptcy and IP practices, Pridgen said. Other practices include litigation, corporate, real estate, trust and estates, finance and government relations.

The real estate practice has been the most “adversely affected by the downturn,” though that has been offset by a strong bankruptcy practice, according to Pridgen. The firm’s health care and employee benefits practices “continued to grow” in 2010, he said.

 The N.C. offices also saw more growth in mergers and acquisitions in 2010 compared to the previous year, he said. “We represented and closed a transaction this fall worth over $2 billion,” Pridgen said. He declined to name the client, though he described it as a “large” foreign client involved with “buying a company in the South.”

The client was represented by K&L’s Chicago office, Pridgen said, adding that his office handled the transactional side, while the firm’s Washington, D.C., office dealt with regulatory matters. It’s what Pridgen describes as the K&L’s “larger practice platform.”

“We would not have even heard about it (the $2 billion deal) had we not been part of K&L Gates,” he said.

Overall, 2010 was a “better year than we thought it could be, both for North Carolina and across the firm,” Pridgen said. “We’re continuing to expand,” he said.


Alston & Bird

John Baron, partner-in-charge of Alston & Bird’s Charlotte office, said 2010 was a “much better year than last year,” mainly driven by IP and patent litigation. Of the 105 attorneys in the Charlotte office, half are devoted to the IP practice area; the balance of the work is “largely transactional,” he said. The approximately 15 lawyers in the firm’s Research Triangle office are “pretty much into patent prosecution and financial services litigation,” Baron said.

On the corporate side of the N.C. operation, the firm handled several “very large” merger-and-acquisition transactions, while the banking practice area was involved with “a lot of workouts,” he said.

“We’ve seen an uptick in lending in the last few months of the year, which is a good sign for next year,” he said. “Private equity firms are still in the market, and that’s mainly whom we would represent.”

As for hiring more attorneys in North Carolina in 2011, Baron replied: “We’re looking at areas where there is growth. Clearly on the lending side is one of them.”

He added that although firms “aren’t hiring like they used to,” his firm’s litigation area has “added people over the course of the year to deal with heavy workloads.”


Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan

Carl Patterson, managing partner of Smith Anderson, said that overall in 2010 “we’ve been stable with modest growth across the firm.”

Creditors’ rights and health law work were “up compared to last year,” Patterson said, though he added he wasn’t surprised by those results. His attorneys also kept busy with construction projects involving airports, highways and rail systems, he said.

“That was a little bit surprising – against the norm,” he said.

The firm’s commercial real estate and office building practice areas have been “down for a couple years,” Patterson said. But other areas, such as mergers and acquisitions and government affairs have picked up recently, he said, adding that he thinks the firm’s capital markets practice will “open up a little bit” this year.

The firm laid off no attorneys in 2010 and had its “biggest (new class) in quite awhile” with eight hirings, he said.


Brooks, Pierce, McLendon, Humphrey & Leonard

Edward Winslow, managing partner of Brooks Pierce, said the firm’s banking, litigation, environmental and media practices were “very strong” throughout this year, with corporate and transactional work beginning to “pick up in a significant way” toward the end of the year.

Real estate and development work has been “way, way off” for the firm because of the recession, Winslow said, though he noted that it hasn’t resulted in layoffs of attorneys or paralegals in that area.

“We have fewer people doing real estate work, but all of those people are doing different things,” he said.

Winslow said his firm plans to add attorneys in 2011, though he declined to specify a number, saying only, “We’re actively searching for the right lawyers in the right areas.”

Asked for some predictions for 2011, Winslow said he expects growth in several practice areas, including complex litigation and “innovative banking strategies.” He added that environmental work also “seems to be pretty strong.”


Ward and Smith

Kenneth Wooten, co-managing director of Ward and Smith, said his firm plans to add seven lawyers this year to its 80-attorney N.C. operation. That’s on top of the three additional attorney hires in 2009 and four in 2010, he said.

Still, Wooten stressed that Ward and Smith is “into conservative growth.”

Creditors’ rights proved to be the strongest area for the firm this year, he said. Business Court litigation and trusts and estates work also increased, he said. And the merger-and-acquisitions division of the firm’s business section has “shown steady improvement” during each quarter this year, he added.

Commercial real estate and development work was down this year, though that was offset by an increase in foreclosure cases, Wooten said. The firm’s financial institutions practice “decreased a little bit” with moves by community banks to reduce operating expenses, he said.

The firm maintained its large community association practice in 2010, though work shifted from acquiring new clients to the “collections side of things,” he said.

Overall, Wooten said 2010 was “better than what we projected it would be.”


Hunton & Williams

Michael Nedzbala, who manages Hunton & Williams’ Charlotte office, and Mary Nash K. Rusher, who manages the firm’s Raleigh office, said the lingering effects of the recession have kept the more than 50 attorneys in the North Carolina offices busy in 2010 with litigation, workouts and corporate restructuring work.

“A lot of our attorneys who typically have closed new deals have been working on existing deals,” Nedzbala said. “It’s sort of been a good hedge for us during this downturn.”

The capital markets, mergers and acquisitions, and transactional practices have been hurt by the recession, Nedzbala and Rusher said, with Rusher noting that the sharpest drop occurred in the late 2008 and early 2009.

“All deals just stopped,” she said.

The good news, however, is that the firm in recent months has seen an “uptick” in capital markets and mergers and acquisitions, Nedzbala said.

He said the Charlotte office, which has about 30 attorneys, “downsized to a limited extent” after the recession hit several years ago. But he said that within the past year his office has “really held and maintained” its size, adding, “We’re actually recruiting now.”

“I really think we are feeling much more optimistic than we have in the past couple of years,” Nedzbala said. “Our (client) relationships have not suffered at all.”


Williams Mullen

Thomas Frantz, president and chief executive officer of Williams Mullen, said he expects that financially speaking, 2010 will be “a little ahead of last year” for the firm’s three North Carolina offices in Raleigh, Research Triangle Park and Wilmington.

“What we’ve seen in health care is that it has been growing very significantly” because of recent changes in federal law, Frantz said. And, in a bit of a surprise, real estate work in North Carolina has “rebounded in the past couple months,” he said.

Corporate transactional work, however, has been relatively flat as general counsel for companies are “more challenged than ever to keep their costs within budget,” Frantz said.

On the other hand, Williams Mullen’s governmental affairs practice in North Carolina, Virginia and Washington, D.C., has grown over the past couple years, as has its economic development practice, Frantz said. And the firm’s domestic and international taxation practice continues to be “very big with us,” he said.

Frantz said he expects that the N.C. operation will pick up more government contract work with the announcement that two major Army commands will locate at Fort Bragg, bringing at least 3,000 soldiers and civilian employees.


Nelson Mullins Riley & Scarborough

Noah Huffstetler, the managing partner of Nelson Mullins Riley & Scarborough’s Raleigh office, said the health care, government relations and bankruptcy practices did well this year. Huffstetler, who concentrates on health care law, noted that in the last six months of this year, capital projects and acquisitions in the health care sector have been “coming on strong.”

Commercial real estate and development projects have “definitely been off” in 2010, Huffstetler said. But the firm’s Raleigh office hasn’t been hit as hard, mainly because of the influence of the Research Triangle, he said.

Huffstetler said his office has been fortunate to avoid layoffs this past year, though hirings of summer associates and first-year lawyers have slowed.

Still, Huffstetler said there are plans to increase the size of the Raleigh office to the “40-to-50 range” in the next five years.

As for 2011, Huffstetler predicts that the health care practice is “going to continue to boom” with recent changes in federal law. And he sees plenty of work ahead for his office with a projected $3 billion hole in the state budget.

“Government is going to have to restructure,” he said. “A whole lot of oxes are going to be gored, and a whole lot of businesses are going to be affected. I think it will be a real interesting time for our government relations attorneys.”


Nexsen Pruet

John Sowards, board chairman of Nexsen Pruet, said he is excited about plans for the firm’s Raleigh office, the firm’s newest in the state.

The Raleigh office, which opened three years ago, has seven attorneys. “We want to double our Raleigh office presences in the next six months,” Sowards said, adding later, “Nexsen Pruet’s growth for 2011 is focused on North Carolina.”

Sowards said the goal in doubling the number of attorneys in Raleigh is to develop it as a more full-service practice, as in Charlotte and Greensboro.

“If you want to be a full-service firm, you have to have more bodies than that,” he said of the Raleigh office. “There is the notion that bigger is not necessarily better, but what I’m saying is that sometimes to be better, you need to be a little bigger.”

The additional attorneys in Raleigh will allow that office to offer more services in key practice areas, including health care, litigation, corporate, construction, immigration, economic development and government relations and public policy, he said.

Although the main focus this year will be on Raleigh, the other offices won’t be neglected, Sowards said, noting that it’s “very likely” that one or two attorneys will be added to the Charlotte office, and “very possible” one or two will be added in Greensboro.

Editor’s note: Brundrett is a freelance writer for Lawyers Weekly.

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