he law firm business has taken a licking in recent years. The traditional model, fueled by clients coming in the door, has been turned topsy-turvy. Demand is down, as is attorney hiring. Clients, who today hold the leverage, are demanding alternatives to billable hours and more value. New York area-based Lowenstein Sandler, listed by The American Lawyer as the nation’s 128th-largest firm, ranks 50th in profits per partner and 33rd in its pro bono work. Firm Chairman/CEO Gary Wingens talked with U.S. News about the changing law business and his firm’s growth strategy in austere times.
Your firm has grown when many law firms are struggling. Where and how have you grown?
We are a national, full-service firm with nearly 300 attorneys in three offices in New York City, New Jersey, and Palo Alto, Calif. However, we focus on a handful of industries. What has been helpful in the last very turbulent four years is making sure we strike a balance between our practice areas, not letting any one practice get too far ahead. Growth has ranged from our fund transactional and tech practices—including an emerging company and venture capital practice—to our distressed debt and bankruptcy practice, and our white-collar criminal defense and securities litigation practices, which have all seen significant growth.
How has the law firm business changed in recent years?
I began as managing partner in February 2008, about a month before Bear Stearns collapsed. Our industry has changed in many of the same ways as the economy. At the macro level, there is a general sense of insecurity. The core belief that next year will be better than last has really been tested inside and outside the legal industry. People are buying less legal services than before 2008. There is softening demand for new lawyers coming out of law schools, yet there is still a pretty hefty supply of lawyers. Moreover, there has been real devastation in the funding of legal services for the poor and underserved, disproportionate to what private law firms felt.
What are the fundamental challenges of running a large law firm today?
We view things in three ways, through our people, our clients, and our community. The challenges are in all three areas. Challenge one is communication to your people, and making sure you recognize how nervous they are. So in April 2008, I started doing semi-annual town hall meetings where we could present the firm’s financial statements and talk about exactly how we’re doing. Our numbers demonstrate that we are doing well, and we’re all in this together. That gives our people a sense of security. The next challenge is clients. In a world of softening demand, it’s a buyer’s market. Keeping very close to our clients, constantly talking to them and being more than just scribes. We want to understand their businesses intimately and be part of their ecosystem to contribute more. We want to be seen as providing more value. Third, we have a real commitment to our community. In mid-2008, with things getting bad, we started the Lowenstein Center for the Public Interest, putting our pro bono work and all our public interest initiatives under one roof to better target our human and intellectual capital to the needs of the underserved.
How has Lowenstein Sandler adjusted to the new realities of the market?
Many firms in this environment got smaller or reduced hiring. We actually leaned in over the last four years and didn’t cut down our law school recruiting programs. There are fewer firms vying for great talent and we’re seeing some of the best law students we’ve ever seen coming through those programs. Responding to clients’ needs, we have tested alternatives to the billable hour, alternative fee arrangements (AFAs). Within the community, we have expanded our pro bono and community service practices.
Law firms have become more strategic to survive and to grow. What strategic moves has Lowenstein Sandler made to grow and increase profitability?
At the start of the recession, our strategic plan involved doubling down on our strengths. We didn’t look to pull back. It was a lesson I took away from the early days of the crisis when seeing some law firms fail. For example, in late 2008, we opened our Palo Alto office, focused on our venture capital and technology practice, an industry really important to us. That seemed crazy to many people. We also brought in partners to our bankruptcy practice, which has been booming since. We enhanced our New York white-collar practice on what turned out to be the eve of the SEC bringing some of its largest and most systematic enforcement actions in the securities area.