Verdicts & Settlements Breaking News
Jury: Pension plan error cost Ex-Market House
MTA worker $135K. tenants seek millions.
Page 5B Page 3B
Maryland Lawyer
Monday, June 8, 2009
News and analysis of legal matters in Maryland
THE
Money ISSUE
Over 40 Not rich or famous
Financials for nine law firms with How to live the lifestyle you want on
$40 million or more in revenue. a public-interest salary.
Page 9B Page 15B
Golden opportunity
Big firm deferrals lead to AG
The bubble bursts fellowship program.
Page 13B Transition time
Our third annual salary survey for Tips for buying and selling a solo
incoming associates. law practice.
Page 12B Page 16B
From Perry Mason to president
union; the wages were better, and the boss
Cardaro to lead MSBA demanded a certain level of professionalism that
BY BARBARA GRZINCIC appealed to the young Cardaro.
barbara.grzincic@mddailyrecord.com Even so, he never intended to make the
butcher shop his career.
om Cardaro can remember the first time
T
“I remember always wanting to be a truck
his job required him to wear a tie. driver, like my dad. And that’s true right up
The place was Giant Food, and he’d just through high school, when my dad convinced me
been promoted. that … he wasn’t going to let me go on the truck
To fish-cutter. with him or any of his buddies unless I tried at
“It was a big promotion,” said Cardaro, the least one semester of community college first,” MAXIMILIAN FRANZ
next president of the Maryland State Bar he said. “And if I didn’t like that, he’d get me a job Thomas C. Cardaro, an economics major in college, says the
Association. He’d been working the Rockville current conditions will effect his year at the helm of the state
store’s gas pumps, but the butcher shop was See cardaro 8B bar ‘quite dramatically.’
THE
Money ISSUE
Monday, June 8, 2009 • MARYLAND LAWYER • Page 9B
Riding out the downturn
Even for big firms, the
soft market could turn
into a shakeout
BY CARYN TAMBER
caryn.tamber@mddailyrecord.com
L
aw professor William D.
Henderson sees the
recession forever chang-
ing the law firm land-
scape.
Henderson, who stud-
ies law firm economics,
said he believes many
big firms will not
survive, at least
not in their pre-
sent incarnation.
“There’s going to be a shakeout in
terms of, we’re not going to have 250
large firms that are claiming to offer
the same basket of services,” said
Henderson, of the Maurer School of
Law at Indiana University.
MAXIMILIAN FRANZ
Perhaps 50 or 60 will be left, he
said. Sage Policy Group CEO Anirban Basu says a decline in economic activity will cause Maryland’s legal market to remain soft. ‘I think that
there’ll still be great challenges for many attorneys to meet their annual billable hour objectives,’ he says.
He pointed to the now-defunct
large firms whose names have become
“Maryland is losing jobs,” Basu Firms will begin to hire more model.
synonymous with the economy’s toll
said. “The Baltimore metro area is los- lawyers who will not be on the part- “I don’t know which way the mar-
on the legal market: Heller Ehrman
ing jobs. Businesses often need attor- nership track, he predicted. Firms will ket is going to break, but we definitely
LLP, Thelen LLP, Thacher, Proffitt &
neys when they are expanding, when be able to recruit these employees need innovation and this is going to be
Wood LLP and Wolf Block LLP. All they are acquiring other firms or when from lower-ranked law schools and kind of a violent paradigm shift,”
have met their demise in the past year. they are generally active, and this is a pay them far less, he said. Henderson said.
On a local level, one economics relatively inactive period for many Speaking last month (before DLA He said laws should be changed to
expert said he thinks Maryland, like area businesses.” Piper US LLP announced its move permit outside investment in firms,
the broader legal market, will continue
away from lockstep compensation for something allowed in Australia and
to be “quite soft.” Hiring changes associates), Prescott also said many the United Kingdom. Expanding a
“I think that there’ll still be great
Blane R. Prescott, a consultant and firms had already shifted to merit- firm’s pot of money would allow the
challenges for many attorneys to meet
senior vice president at Hildebrandt based pay, and he predicted a broader firm to plan for the long-term rather
their annual billable hour objectives,”
International Inc., said he sees firms move in that direction. than focusing on short-term profits to
said Anirban Basu, chairman and CEO
adjusting to the new reality by chang- Henderson suggested more radical keep rainmaker partners satisfied, he
of Sage Policy Group Inc., a
ing the way they hire. changes to the big-firm business
Baltimore business consultancy.
See market 10B
Based on information from public
THE DAILY RECORD’S REVENUE RANKINGS FOR 2008 records, interviews and, where possible,
the law firms themselves. For a full expla-
nation of the methodology, see page 10B.
FIRM/HQ LEADER(S) EQUITY NON-EQUITY OF ASSOCIATES ALL MARYLAND LEVERAGE REVENUE REV. PER PROFIT MARGIN
PARTNERS PARTNERS COUNSEL ATTORNEYS ATTORNEYS LAWYER
DLA Piper Francis B. 237 374 140 606 1382 155 5.82 $1.178B $852,511 $490M 42%
US LLP/no Burch Jr.
official
headquarters
Hogan & J. Warren 292 202 54 559 1107 47 3.79 $923M $833,785 $431M 47%
Hartson LLP/ Gorrell Jr.
Washington, D.C.
Venable LLP/ James L. 152 118 36 197 520 184 3.43 $349M $670,638 $154M 44%
Washington, D.C. Shea
Ballard, Spahr, Arthur 175 52 47 233 515 45 2.94 $283M $550,000 $79M 28%
Andrews & Makadon
Ingersoll LLP/
Philadelphia
Saul Ewing LLP/ Stephen S. 79 52 22 75 228 49 2.89 $120M $526,501 $46M 38%
Philadelphia Aichele
Miles & John B. Frisch 92 31 26 72 218 200 2.37 $93M $426,606 $28M 30%
Stockbridge
P.C./Baltimore
Ober, Kaler, John A. Wolf 42 45 14 34 135 91 3.12 $80M $610,687 $28M 35%
Grimes & Shriver
P.C./Baltimore
Whiteford, Taylor Albert J. 74 17 20 37 149 119 2.01 $60M $402,685 $20M 33%
& Preston LLP/ Mezzanotte Jr.
Baltimore
Shulman, David A. Pordy 35 20 7 32 94 94 2.69 $44M $468,085 $13M 30%
Rogers, Gandal
Pordy & Ecker
P.A./Rockville
*Headcounts are full-time equivalents as of 8/31/2008
THE
Money ISSUE
Monday, June 8, 2009 • MARYLAND LAWYER • Page 10B
Methodology: Tracking down the numbers
These charts are the culmination of nearly five We looked at public records, like bankruptcy mation.
months’ work by our most senior legal affairs writer, claims and fee awards, for rates. We searched for As for the rest, the responses were more incendi-
Caryn Tamber, who covers the business of law. information that the firm had disclosed earlier, ary than informational.
And work it was: for the most part, the law firms either on its Web site, to The Daily Record, or to We gave it one more try: We went back to those
we surveyed were not willing to share their num- other organizations or publications. who said our figures were off, and asked that they
bers. And we talked to people — some of whom were provide us with their data.
The process began in January, when we deter- intimately familiar with the firms we asked them None did.
mined which firms to survey. To insure that a firm about, others who were familiar with the business of Each, in one way or another, asked us the same
had a significant Maryland presence, we limited our law, accounting and financial benchmarks. question: Why would you do this thing?
list to those that had at least 45 lawyers in the state. For some categories we would have liked to Here’s why.
That gave us 16 firms, which we later winnowed include, like the profit per equity partner and This is a tool, useful for those in legal practice at
down to the nine you see here. Early on, we elimi- staffing levels, we had to admit defeat: there was no a time when metrics — any metrics — are pretty
nated the only plaintiff-PI firm to make the list. way to come up with a publishable figure without important. And as the economic climate continues to
Ultimately, we set the cut-off at $40 million in rev- the firms’ cooperation. Reluctantly, we excised shift, we think such tools are increasingly important.
enue for 2008. those columns. Moreover, this is a tool that’s local to Maryland,
Getting to revenue, though, didn’t win us many Otherwise, we tallied the figures, checked in one we hope to expand in the future; one The Daily
friends in the legal community. again with a benchmarking expert and sent the Record is uniquely able to provide in this state.
Borrowing the format and categories from a sim- results to the firms that had not completed the sur-
We hope you’ll agree that the results are worth
ilar report our sister paper, Missouri Lawyers vey, and asked for confirmation or correction.
the effort. Either way, please let me know what you
Weekly, has published for four years, we asked the In one instance, the firm told us to publish the
think.
16 firms in February to disclose a great deal of numbers. In another, the firm corrected our head- — Barbara Grzincic, Managing Editor/Law
(admittedly sensitive) information about their 2008 count but declined to provide any further infor- barbara.grzincic@mddailyrecord.com
performance: revenue, profit, full-time equivalents
for lawyers and staff, number of partners, and other
categories reflected in the charts.
We promised the firms that the sources of our
information would remain anonymous, whether
they provided the information or we determined it
through our own reporting. We also advised them
Market >> Size, brand name will matter
that we, not they, would determine which firms the Continued from 9 B large volumes of price-insensitive legal work; now,
final report would include. In other words, not filling he said, it turns out that there is a limited supply of
said.
out the survey would not keep them out of the With that new freedom, firms could experiment such work.
paper. with alternative billing and intensive training for Henderson said he thinks that a few firms will be
Firms that missed the initial deadline were asked young lawyers. As it is, partners are unlikely to want able to ride out the downturn without making any
again for the information in March and April. to take money out of their own pockets to produce drastic changes.
About one-fourth of the firms surveyed eventual- potentially higher profit down the road, Henderson “The bottom line is that some firms are going to
ly did provide the information we sought. said. survive by not tinkering with their business model,
For the others, our search was on. Firms have engineered themselves to handle by sheer size and brand name,” he said.
Gross Revenue, 2008
DLA Piper US $1.178B
Hogan & Hartson $923M
Venable $349M
Income received from the
Ballard, Spahr, Andrews & Ingersoll $283M practice of law. Figures are
rounded to the nearest million.
Saul Ewing $120M
Miles & Stockbridge $93M
Ober, Kaler, Grimes & Shriver $80M
Whiteford, Taylor & Preston $60M
Shulman, Rogers, Gandal Pordy & Ecker $44M
Source: The Daily Record
Revenue per lawyer, 2008
DLA Piper US $852,361
Hogan & Hartson $833,333
Venable $670,561
Ober, Kaler, Grimes & Shriver $610,687 Revenue divided by full-time
equivalent number of lawyers.
Ballard, Spahr, Andrews & Ingersoll $550,000
Saul Ewing $527,189
Shulman, Rogers, Gandal, Pordy & Ecker $468,085
Miles & Stockbridge $426,606
Whiteford, Taylor & Preston $402,685
Source: The Daily Record
THE
Money ISSUE
Monday, June 8, 2009 • MARYLAND LAWYER • Page 11B
Source (all): The Daily Record
Profit, 2008
DLA Piper US $490M
Hogan & Hartson $431M
Venable $154M
Ballard, Spahr, Andrews & Ingersoll $79M Income minus expenditures.
Figures are rounded to the
nearest million.
Saul Ewing $46M
Ober, Kaler, Grimes & Shriver $28M
Miles & Stockbridge $28M
Whiteford, Taylor & Preston $20M
Shulman, Rogers, Gandal, Pordy & Ecker $13M
Leverage, 2008 Margin, 2008
DLA Piper US 5.82 Hogan & Hartson 47%
Hogan & Hartson 3.79 Venable 44%
Venable 3.43 DLA Piper US 42%
Ober, Kaler, Grimes & Shriver 3.12 Saul Ewing 38%
Ballard, Spahr, Andrews & Ingersoll 2.94 Ober, Kaler, Grimes & Shriver 35%
Saul Ewing 2.89 Whiteford, Taylor & Preston 33%
Shulman, Rogers, Gandal Pordy & Ecker 2.69 Miles & Stockbridge 30%
Miles & Stockbridge 2.37 Shulman, Rogers, Gandal, Pordy & Ecker 30%
Whiteford, Taylor & Preston 2.01 Ballard, Spahr, Andrews & Ingersoll 28%
Number of full-time equivalent lawyers divided by number of FTE equity partners. Profit divided by revenue.
THE
Monday, June 8, 2009 • MARYLAND LAWYER • Page 12B y Mon
The bubble bursts Our third annual incoming-associate salary survey
BY CARYN TAMBER Chairman and CEO Barry F. Rosen
caryn.tamber@mddailyrecord.com said the firm believes that’s a “more
realistic” number than others he’s
One year ago, law firms were reluc- heard about.
tantly raising associate starting “We think people coming out of
salaries again, wary of bucking the law school are talented, but they don’t
upward-trending salary market even have accomplished skills, and so
as they watched the economy take a we’ve tried to set our pay scale closer
nosedive. to their skill level, and I’m not sure if
This year, The Daily Record’s annu- some of the other firms did that, at
al starting salary survey shows that least the last couple of years,” Rosen
almost no one is increasing. Several said.
firms are holding steady at 2008 salary Morris and Astrid Schmidt, direc-
levels and three of the largest with a tor of law career development at the
Maryland presence, DLA Piper US University of Baltimore School of
LLP, McGuireWoods LLP and Miles Law, both said they see the new,
& Stockbridge P.C., are scaling back. lower salaries as a correction to a
In a first, many of the firms sur- more reasonable pay scale.
veyed are telling their associates not “Everyone wanted to set them-
to report for work in September, but selves apart and they were talking
instead to find something else to do about bonuses that match 100 percent
for a few months, a year or more until pay,” Schmidt said. “This is not a sus-
the firm needs them. tainable business plan.”
“I guess the bubble has burst,” said Experts disagree about whether
Dana Morris, assistant dean for career the new attitude toward salaries will
development at the University of outlast the recession.
Maryland School of Law. William D. Henderson, a law pro-
“Unfortunately, it’s burst in a way fessor who has researched and written
that’s so drastic and so unexpected about the economics of law firms, said
and tragic, but it all gives us experi- the days of salaries increasing by tens
ences that we can learn from.” of thousands of dollars each year — as
Gordon, Feinblatt, Rothman, they did during the technology boom
Hoffberger & Hollander LLC is of the late 1990s and the real estate
among the firms holding starting RICH DENNISON boom of the mid-2000s — are over.
salaries steady at last year’s rates. In Recent law grad Roberto Vela says his soon-to-be employer did the right thing by “It’s unlikely that those kind of
fact, Gordon Feinblatt has not moved cutting salaries across the board. ‘If it keeps anybody in the firm from losing their job,
salaries from $100,000 in years. it’s worth it,’ he says. See salary survey 14B
Information supplied by the firms unless otherwise specified.
Firm Starting salary Starting salary Percent change Percent change Annual billable
for fall 2009 last fall from 2008 to 2009 from 2007 to 2008 hour minimum
Ballard, Spahr, $140,000* $140,000 plus 0% 8% Would not disclose
Andrews & Ingersoll LLP $5,000 bar expenses
DLA Piper US LLP $145,000 $160,000 -9% 10% 2,000
Gordon, Feinblatt, Rothman, $100,000 $100,000 0% 0% 1,750 billable hours
Hoffberger & Hollander LLC goal, with $10,000,
$5,000 and $5,000
bonuses for achieving
1,750, 1,850 and 1,950
billable hours, respectively
Hogan & Hartson LLP Not yet determined $160,000/$137,500 Not yet determined 0/10% 1,800
McGuire Woods LLP $130,500 $145,000 -10% 7% 1,950
Miles & Stockbridge P.C. $125,000 $140,000 -11% 12% 1,850
Ober, Kaler, Grimes Not yet determined $120,000 Not yet determined 9% 1,800
& Shriver P.C.
Saul Ewing LLP Not yet determined $135,000 Not yet determined 0% 1,900
Tydings & Rosenberg LLP Not yet determined $100,000 Not yet determined 5% 1,800
Venable LLP $160,000 $160,000 0% 10% 1,800 for first-years;
1,900 for other associates
Whiteford, Taylor $125,000 ($100,000 $120,000 ($100,000 4% 26% 1,850
& Preston LLP base plus $25,000 for base plus $20,000 for
exceptional performance) exceptional performance)
*According to NALP Directory, which aggregates data submitted by the law firms
**According to reports elsewhere
ney ISSUE
y Monday, June 8, 2009 • MARYLAND LAWYER • Page 13B
Deferrals spell opportunity for OAG Baltimore because his wife, a doctor,
First to offer fellowship will do a residency here, said he heard
for first-year associates about the attorney general’s program
through Harvard’s Office of Career
BY CARYN TAMBER Services. He said he hopes his experi-
caryn.tamber@mddailyrecord.com ence there — he hopes to be placed in
the criminal investigations or criminal
The Office of the Attorney appeals division — helps him when he
General will be getting some top- starts as a litigator at Ropes & Gray.
notch talent this fall — for free. “I think it will give me an opportu-
Some large law firms have nity to get some hands-on litigation
promised to pay their deferred first- work that will help me out, make me a
year associates a stipend if they find a better lawyer down the road,” he said.
job in public-interest law, meaning So far, it looks as though the attor-
that many smart new law school grad- ney general is alone among Maryland
uates want to get temporary work agencies in developing a large-scale
with government or nonprofit agen- program for deferred associates:
cies. • A spokeswoman for the U.S.
Since they are already being paid Attorney’s Office for the District
by their firms, the agencies do not of Maryland said Department of
have to shell out any of their own Justice regulations prohibit hiring any-
money. MAXIMILIAN FRANZ
one who is being paid by a private law
That sounded like a great deal to Deputy Attorney General John B. ‘J.B.’ Howard hopes the fellowship program will benefit firm.
the Maryland attorney general’s office, not only his agency but the first-year associates who want temporary public interest • A spokeswoman for the Office of
said Deputy Attorney General John B. work in order to claim a stipend from their future employer. the Public Defender said her office
“J.B.” Howard. The office is now education on what kinds of work the coming weeks as more firms delay has had some requests from associ-
accepting applications for fellowships. attorney general’s office does. Howard start dates. ates who want to spend their defer-
The opportunity “sort of dropped said he thinks it will be a good oppor- Scott Lemmon was supposed to ments there, but so far none has had
out of the sky,” Howard said. “I feel tunity for young lawyers to see how start working in the Washington, D.C., criminal law experience.
very sympathetic to their predicament government law works; the attorney office of Ropes & Gray LLC this fall, • A spokesman for the Legal Aid
but am glad that we’ll be able to give general’s office generally does not hire but he will instead spend a year at the Bureau said one firm, Ballard,
them a good experience while they’re lawyers without three to five years of Maryland attorney general’s office. Spahr, Andrews & Ingersoll LLP,
waiting to start.” experience. Lemmon, who graduated from contacted the bureau about sending
Howard said the program is target- “If you want to be a public lawyer Harvard Law School in 2008 and has associates, but no one has expressed
ed toward those who have been in Maryland and you’re not interested been clerking for a judge on the interest.
deferred from their big-firm jobs, but in criminal work, you don’t have a lot Massachusetts Supreme Judicial • Kristine Dunkerton, executive direc-
anyone is eligible. The office will ask of options,” Howard said. Court, said his firm told its associates tor of the Community Law Center,
that students commit to spending at The attorney general’s office has that they could start in January 2010 and John Nethercut, executive direc-
least 10 months at the office. already gotten a few résumés and sev- or, with the firm’s financial support, tor of the Public Justice Center,
The job will involve research, writ- eral phone calls about the positions. find a public-interest law fellowship.
ing and document review as well as Howard said he expects more in the Lemmon, who will be moving to See ag 14B
Clerkship bonus? Number of Delayed start? Deferral stipend? How many How many
Maryland associates starting in
lawyers starting total? Maryland?
Would not disclose 49 Sept. 2010** $45,000** Would not disclose Would
not disclose
$10,000 for federal court; 155.2 Jan. 11, 2010 $10,000 plus $5,000 94 8
$35,000 for federal per month up to one year
appellate court for those who get a public
interest fellowship
$2,500 71 No NA 1 1
.
Not yet determined 45 November 30, 2009; November 2009: Two $4,000 stipends; 63 1
option to voluntarily defer optional salary advances up to $12,000;
to December 2010 Judicial clerks who join on Nov. 30,
may take up to $10,000 in advances
between completing their clerkship
and start date. Those not clerking
can voluntarily defer until December 2010.
December 2010 starters have been paid
$4,000 and will get a $75,000 lump
sum payment in September 2009.
$20,000 for federal 36 No NA 48 2
or highest state court
No 190 No NA 7 7
Progression credit 99 No NA 3 3
Yes, amount not disclosed 52.58 Until at least January 2010 Yes, amount not disclosed 9 2
Case-by-case basis 44 No NA 2 2
$10,000 for federal court; 183.6 Jan. 4, 2010 $10,000 31 8
$5,000 for highest
state court
$2,000 125 No one required to delay $3,500 per month to 5 3
but associates may choose associates who choose
to start anytime between to defer
Sept. 2009 and Jan. 1 2010
THE
Money ISSUE
Monday, June 8, 2009 • MARYLAND LAWYER • Page 14B
Still no offer? Try working for free
BY CARYN TAMBER Civil Justice Executive Director
caryn.tamber@mddailyrecord.com Phillip Robinson said the opportunity
will help students learn about small-
Dana Morris is urging new gradu- scale law practices.
ates without jobs lined up to consider “Maybe that will develop into a
unpaid work for now. paid opportunity,” Robinson said.
The assistant dean for career “They can add to their résumé and
development at the University of make themselves more marketable so
Maryland School of Law said that that they’re not just waiting tables or
in this tough job market, graduates doing non-legal work.”
“need to continue to keep their skills Astrid Schmidt, director of law
sharp.” career development at the
Students should “take any oppor- University of Baltimore School of
tunity possible, whether it’s paid or Law, said Baltimore, too, is trying to
non-paid, to get the kind of experi- connect students with job opportuni-
ence that’s going to get them in prac- ties, even if they are unpaid. The
tice,” she said. school has been contacting its non-
The school is trying to help stu- profit and government agency con-
dents get that experience by placing tacts to see if students can volunteer
some of them in unpaid positions their time.
with Maryland’s clinics. The school is The school is also calling employ-
also working on getting nonprofit FILE PHOTO ers who accept unpaid interns who
organizations to accept some of the ‘This is such an unusual situation…,’ said Dana Morris, assistant dean for career devel- have just finished their first year at
unemployed students. opment at the University of Maryland School of Law. ‘We’re trying to be very creative.’ Baltimore to see if they would also
“This is such an unusual situa- accept new graduates, Schmidt said.
tion,” Morris said. “We’ve never dealt Morris said Maryland is working unpaid jobs with Civil Justice However, the school only did that
with it before. We’re trying to be very with Civil Justice Inc. on a program Network members, who are primari- after the first-years had found place-
creative.” that would place new graduates in ly solo and small firm practitioners. ments, she said.
Salary Survey >> Delayed start dates, lower associate pay may be temporary measures
Continued from 12 B firms.
heady days are going to return,” said Many firms have postponed first-
Henderson, of the Maurer School of year associates’ start dates from
Law at Indiana University. “The entire September 2009 to November 2009,
economy is paying the price for those January 2010 or September 2010. One
kind of heady market run-ups.” firm, Saul Ewing LLP, has told its
But Blane R. Prescott, a consultant associates that they will be deferred
and senior vice president at until at least January, possibly much
Hildebrandt International Inc., said longer, with associates being called
law firm salaries are determined by back as they are needed.
supply and demand. Right now, law The firms that are deferring associ-
firms are holding salaries steady or ates are paying them monthly or year-
rolling them back because they can; ly stipends. At least one firm with a
there are too many lawyers on the job local presence, DLA Piper, is tying part
market and not enough legal work. of the stipend to associates getting a
“If demand comes roaring back, I fellowship in public-interest law. (See
have no doubt law firms will be back related story, page 15B.)
to dramatically raising salaries,” The large Baltimore-based firms
Prescott said. have not announced plans to delay
Thomas S. Clay, a principal at legal associate start dates across the board,
consultancy Altman Weil Inc., said a though at least one, Whiteford,
new survey by his company indicates Taylor & Preston LLP, is giving asso-
that 41 percent of law firm respon- ciates the option of starting any time
dents — Altman Weil gathered between September 2009 and January
responses from more than 200 firms — 2010.
say the change is temporary. Among Clay said 20 percent of the firms
the largest firms, which tend to set Altman Weil surveyed reported delay-
market rate, 57 percent said the new ing associate start dates, but delays RICH DENNISON
salary paradigm is temporary. were far more common among the Graduating students with deferred offers are taking the delays in stride, said Astrid
Roberto Vela, who graduated last largest law firms. Of firms with more Schmidt, director of law career development at the University of Baltimore School of Law.
month from Maryland and is set to than 1,000 lawyers, 86 percent are
head to Miles in the fall, said he was delaying.
not disappointed to learn that his Among firms of 100 to 250 lawyers
future firm is cutting salaries across
the board, including for new associ-
ates. Vela, who said Miles has
— a category into which Saul, Miles,
Whiteford and Ober, Kaler, Grimes
& Shriver P.C. fall — only 22 percent
AG >> Deferral fellowships’ downside
always struck him as “the way I have delayed. Among the smallest Continued from 13 B Astrid Schmidt, director of law
imagined a good law firm to be,” said firms, those under 100 lawyers, only 4 both said their organizations would be career development at the
he was pleased that the firm had percent have delayed. happy to take in deferred associates University of Baltimore School of
taken that step rather than making “Other than the big, big, big firms, but have not yet signed up anyone. Law, said the glut of young lawyers
drastic layoffs, as have many larger there’s a lot of business as usual going • Phillip Robinson, executive director willing to work for government or
firms. on,” Clay said. of Civil Justice Inc., said he would be nonprofits for free may hurt those
“I think it’s great,” he said. “I think Students who have been deferred interested in accepting deferred asso- who want to be paid.
it’s amazing. If it keeps anybody in the are not too upset about it, Schmidt said. ciates. But, he said, associates from Deferred associates scrambling for
firm from losing their job, it’s worth it.” “They’re so grateful of even having certain firms, such as Ballard Spahr, these positions are “closing the market
Vela said he is relieved to be start- a position, even if it’s been deferred, would be ineligible because their for our students who [are] genuinely
ing on time, unlike the rest of his that they’re not at all panicky,” said employers frequently face off against interested in public interest, public
friends who have jobs lined up at large Schmidt. Civil Justice. sector,” Schmidt said.
THE
Money ISSUE
Monday, June 8, 2009 • MARYLAND LAWYER • Page 15B
All the lifestyle that Legal Aid wages can buy
One public interest
lawyer’s guide to
financial planning
BY CARYN TAMBER
caryn.tamber@mddailyrecord.com
When Janine A. Scott started at
the Legal Aid Bureau more than 10
years ago, her salary was $28,000 a
year.
She soon discovered that she
loved the work, but the money was a
sticking point. How could she have
the kind of life she wanted on such a
paltry salary?
“I wanted to stay, and so I became
motivated to make the salary work
within what my expenses are,” said
Scott, 38, who is now the supervising
attorney for the domestic law unit at
Legal Aid.
Scott, who briefly worked as an
accountant before going to law
school, sat down and made a list of all
of her financial goals. There were a
lot of them: She wanted to pay down
her law school and credit card debt,
buy a house and travel once a year.
MAXIMILIAN FRANZ
But those were all lofty goals.
Scott wanted to start with a relatively Janine A. Scott, a supervising attorney at Maryland Legal Aid, says there’s a simple secret to living well: Pay attention to every dollar
you make.
easy goal, something that would
make her feel successful right away.
“I looked at one and stated that I and figuring out how much more than ing, but she had not been as careful as a year and start keeping at least
wanted to basically be able to just go her monthly rent she could afford to she could have been. $10,000 in emergency savings at all
out to eat, attend plays, movies, do pay for a mortgage. “I wasn’t buying, like, the plasma times. (She almost reached that last
local entertainment whenever I want- At the time, she was paying $700 screen TVs or the bling laptop,” she goal once but was virtually wiped
ed,” she said. in rent, and she calculated that she said. “It was dinners out, oil changes, out when, within a few days, her 13-
At the time, if a friend asked her to could afford monthly mortgage pay- dry cleaning, a shirt at Nordstrom, year-old car died and her basement
go check out a new restaurant, “it ments of no more than $850. gas for my car. It was small amounts flooded.)
would have been either, can’t go “I had several Realtors laugh at that just compounded over time.”
because I have no money, or yeah, I me,” she said. She finally paid off the debt on She wrote the book
want to go — charge it, adding to my One, though, told Scott that they New Year’s Eve 2004. At 10 p.m., she Scott said that a few years ago, co-
credit card debt…,” she said. could make it work. In 2003, she drove to the post office, her last pay- workers started asking her how she
She looked at her going-out closed on a townhouse in Windsor ment check in hand. She got out of had managed to afford her comfort-
spending habits and determined that Mill. The mortgage was $877 — more the car to drop the check in the mail able life on a modest salary.
she should create a “fun account” and than Scott had intended to spend, but and did a little dance.
That’s when she decided to write
keep it at $250 at all times. It was not acceptable because, after calculating That was also the year she was
a book on doing well on a do-gooder’s
hard to get to that amount quickly. the $850 figure, she got a raise. promoted to supervisor. Until then,
salary. The book, which she self-pub-
Scott started paying for her purchas- “As a result of looking where I she was making all of $41,000 a year.
lished and plans to market at confer-
es with only paper money, putting the was financially, having a set amount, (She declined to give her current
ences and bar events, is called “Legal
change into her fun account. That now that we’re in this financial crisis, salary.)
my life hasn’t changed a beat because She is still working on paying Aid Wealth: Surviving and Thriving
move alone netted her about $20 a
my mortgage is not even $950,” Scott back her law school loans. on the Salary of a Public Interest
month.
Next, Scott started saving for said. Scott said she has achieved her Attorney.” It came out last month.
retirement by opening a 401(k). She She also started working on trav- goals by meticulously charting every Scott emphasizes that there is no
started off contributing 5 percent and eling yearly. She started a separate bit of money that comes in and goes catch to her financial success.
has been increasing that rate ever account for travel and puts money out. She waits for sales on clothing “I’m not married,” she said. “I’ve
since. When she gets a raise, she usu- into it all year. Her goal is to make and discount deals on travel, and she never been married. My parents do
ally increases her contribution. sure that by the time she goes on would not dream of buying snacks not give me any money. As I always
“If you don’t have access to the vacation, she has already paid for it. from a vending machine when she tell people, I do not have an account
money, you manage with what you In the last several years, she has trav- could get them in bulk from Target or at the Bank of Mom and Dad. They do
actually do have,” Scott said. eled to several Caribbean islands; Wal-Mart for so much less. Before not give me money. I am not a trust
Next came buying a house, which next year, she plans to go to Hong she receives a tax refund or stimulus fund baby. I have not received an
Scott did during “the crazy seller’s Kong. check, she knows exactly where the inheritance. I have not won the lot-
market,” when prices were wildly All along, Scott had been working money will go. tery.
inflated. She did it by reviewing her on paying down her credit card debt, Next, she would like to open a “I paid attention to every single
spending — to this day, she keeps amassed post-college. She had not Roth IRA, get her yard professional- dollar that I made, and that’s really
track of every purchase in a ledger — exactly been reckless in her spend- ly landscaped, up her travel to twice what it came down to.”
If you could get a ‘do-over,’ would you go to law school again?
In its Question of the Week feature, The ABA Journal recently asked lawyers whether, Web poll
given a “do-over,” they would still choose law school.
We were curious about whether Maryland lawyers would make the same career choice if No: 44%
they had to do it all over again. Yes
Yes: 33%
Here’s what our readers said. Yes, but I’d go to a different
No
law school: 16%
One commenter, Legal Lady, wrote: Yes, but
Yes, but I’d practice a
I would definitely go to law school again and I’d go to the same school. Based upon different area of law: 7%
what I do now, I would have taken that 8:30 class in my third year that I was sure I Yes, but
would never use.
THE
Money ISSUE
Monday, June 8, 2009 • MARYLAND LAWYER • Page 16B
Tips on buying a law practice
BY SYLVIA HSIEH Look at the receivables and the bank
Dolan Media Newswires reconciliations. Confirm with the bank
that the IOLTA account really has
Thinking of buying a law practice? $250,000 in it [like the seller
You’re not alone. promised],” said James Cotterman of
“It’s a buyer’s market, not only Altman Weil Consultants, a legal con-
because of the economy, but because sulting firm in Orlando, Fla.
there are so many lawyers in the baby In some instances, a firm may have
boom generation that want to retire so additional value to a particular buyer. For
there is almost a flood on the market,” example a financial planner that buys a
said Ed Poll, owner of LawBiz law firm may be able to sell additional
Management in Venice, Calif. services to existing clients of the firm.
Here are some tips on buying a law
practice: Terms
Non-compete agreement As an old saying goes, a buyer can
get price or terms, but not both.
If it’s allowed in your jurisdiction, be “The buyer has to propose terms of
sure there is a non-compete agreement, the sale that will be reasonable and
so the seller cannot practice within a fair to the seller,” said Poll.
certain distance of your new practice. Typically, the purchase of a law
Each state has different rules: firm will require a 10 to 30 percent
some prohibit a covenant not to com- ISTOCKPHOTO.COM down payment, he added.
pete, others build it into the sales Another suggestion is to negotiate work in progress and calculate the “Often times the seller wants sig-
agreement to benefit the buyer and a transition period during which the number of hours required times the nificant cash down, if not total pay-
others say that the limitation must be buying attorney can come into the billing rate. ment, for the purchase price - espe-
geographically reasonable, said Poll. office and start working and be intro- The value of work in progress is cially in this economy - and buyers
duced to new clients by the outgoing typically discounted by about 25 per- don’t have that kind of money laying
Transition is key attorney. cent; contingency fee cases are typi- around, so financing is necessary,”
Keep in mind that once a letter of cally discounted by 50 percent, said said Poll, who recommended going to
intent has been signed, the seller may Pricing Pratt. a bank with a Small Business
lose interest. Ask if the firm has a buy-sell agree- A buyer should also take a forecast Administration financing program.
“It’s really incumbent on the buyer ment that allows a buyout of a depart- of revenues and expenses projected Although a buyer may want to pay
to move forward as soon as possible, ing lawyer. over the next five years and use a dis- based on a percentage of fees collect-
because the seller is going to take the “A buyer should not pay more than counted cash flow approach based on ed, Poll said a seller may not agree to
foot off the accelerator,” said Poll. the valuation clause [states] in the a desired rate of return, said Pratt. such an arrangement.
One option is to include warranties buy-sell agreement,” said Shannon Look through the books and see “I think that gets close to sharing a
in the agreement stating that the seller Pratt, CEO of Shannon Pratt what the collection records are. legal fee, which is illegal,” he said.
will continue to run the practice with Valuations, a business valuation firm “Go in and kick the tires. Examine Instead, he recommended a fixed
the same energy and keep the same in Portland, Ore. the underlying contracts, like the fee paid on a monthly basis secured by
hours as before, Poll suggested. A buyer should also look at the rental agreement for office space. collateral.
... or selling a law practice
BY SYLVIA HSIEH valuing their practices and making a Cotterman recommends planning Another issue is conflict of interest,
Dolan Media Newswires smooth transition to a buyer. at a minimum one year in advance, but because the prospective buyer may be
Below are some tips from experts more realistically three to five years, a lawyer on the other side of litigation
Like many attorneys these days, on selling your practice: to allow existing clients to become handled by the firm, said Ostertag.
you may be thinking of selling your comfortable with their new attorney.
law practice. Plan ahead “If the buyer is an associate at the Valuation
Whether the reason is the sagging firm, the hand-off could happen quick-
economy or the retirement of baby Selling a law practice is more than When it comes to valuing a prac-
just negotiating a transfer of property, ly, but if the buyer is a colleague from tice, small and solo firms have their
boomers, the number of law practices the other side of town, the client may
for sale is rising. so planning ahead is crucial. unique challenges.
not know [him] at all. It takes time to “If they don’t have institutional
“The calls I’m getting to help sell a “Law is a professional service. It’s
build up trust,” he said. [clients], it can become a problem
law practice has increased at least about hands-on relationships with
The sale of a small or solo law firm because there’s not a lot of repeat busi-
three-fold since the beginning of the clients,” said James Cotterman of will often include a period of time dur-
year,” said Ed Poll, owner of LawBiz Altman Weil, a legal consulting firm in ness. The value of a law firm is a function
ing which the seller becomes part of of the income over the course of years,
Management in Venice, Calif. and the Orlando, Fla. the buyer’s firm to ensure continuity
author of a book on how to sell a law This is especially true for small what the likelihood is that the clients will
in the change-over. remain after the sale and what type of
practice. firms and solos, where the relation-
Small firms and solo owners have ships between lawyer and client are work they do,” said Ostertag.
Know the rules A starting point for valuation is
particular concerns when it comes to highly personal and based on trust.
The sale of a law practice in using a multiple of anywhere from 0.5
Maryland is governed by Maryland Rule to 3.0 times the firm’s gross revenue,
MRPC 1.17 — SALE OF LAW PRACTICE of Professional Conduct 1.17; other
state rules vary. Only four states cur-
said Poll.
But he added that valuation is an
(a) Subject to paragraph (b), a law other counsel, to take possession of rently prohibit the sale of a law prac- art, not a science.
practice, including goodwill, may be the file, and to obtain any funds or tice, said Poll. Whether the firm has “institution-
sold if the following conditions are other property to which the client is
satisfied: entitled; and One concern is keeping a client’s al clients is only one factor, and [not
(1) Except in the case of death, (D) the fact that the client’s secrets from prospective buyers. having them] doesn’t leave you out in
disability, or appointment of the consent to the new representation “That’s a major problem because the cold,” said Poll, who added that
seller to judicial office, the entire will be presumed if the client does someone who wants to buy a practice most of the small law firms he has
practice that is the subject of the not take any action or does not oth-
sale has been in existence at least erwise object within sixty (60) days wants to know the clients and go helped sell have not included institu-
five years prior to the date of sale; of mailing of the notice. through the files,” said Robert tional clients and have sold success-
(2) The practice is sold as an (b) If a notice required by paragraph Ostertag, a partner at Ostertag, fully.
entirety to another lawyer or law (a)(3) is returned and the client can- O’Leary, Barrett & Faulkner in “You look at geography, finan-
firm; and not be located, the representation of
(3) Written notice has been that client may be transferred to the Poughkeepsie, N.Y. cial history, the practice area and
mailed to the last known address purchaser only by an order of a court However, Poll said that under the whether everything in the office
of the seller’s current clients of competent jurisdiction authorizing ABA rule, there is no waiver of confi- has a system in place so someone
regarding: the transfer. The seller may disclose
(A) the proposed sale; to the court in camera information dentiality because the buyer stands in can come in and take over,” said
(B) the terms of any proposed relating to the representation only to the shoes of the seller. Poll, noting that the more saleable
change in the fee arrangement; the extent necessary to obtain an He also noted that client identities practice areas at the moment are
(C) the client’s right to retain order authorizing the transfer. can be protected by redacting their labor and employment and intellec-
names where necessary. tual property.