The Panel

• P. Richard "Rick" Anderson, Jr.

Managing Partner: Greenebaum Doll & McDonald PLLC--Louisville.
Notable clients: Ashland Inc., Atria Communities Inc., Humana Inc., Papa John's International Inc. and Toyota Motor Manufacturing North America Inc.

• Stewart E. Conner

Managing Partner: Wyatt, Tarrant & Combs-- Louisville.
Notable clients: Alliant Health System Inc., Churchill Downs Inc., Jefferson County Public Schools, PNC Bank Kentucky and Ford Motor Company

• C. Edward Glasscock

Managing Partner: Brown, Todd & Heyburn PLLC--Louisville.
Notable Clients: Bank One Kentucky, Brown & Williamson Tobacco Corp., Louisville Water Co., Unidial Communications Inc. and Vencor Inc.

• Kennedy Helm III

Managing Partner: Stites & Harbison-- Louisville.
Notable Clients: Brown-Forman Corp., KFC Corp./Tricon Global Restaurants Inc., Regional Airport Authority of Louisville and Jefferson County, National City Bank Kentucky and Kentucky Medical Insurance Co.

• William M. Lear, Jr.

Managing Partner: Stoll, Keenon & Park-- Lexington.
Notable clients: Columbia Gas of Kentucky, Fifth Third Bancorp, Keeneland Association, Lexmark International and SuperAmerica Group, Inc.

 

The legal profession, along with other businesses and industries, have become regional in nature. In fact, these and other entities have evolved on a national and international level. In this issues' Editor's Survey, The Lane Report focuses on the trend of regionalization in the ranks of the legal profession. We spoke with managing partners at some of the largest Kentucky-based law firms and asked them a series of questions pertaining to the regionalization of legal services. Here's what they had to say.

Is the regionalization of legal services a new phenomenon or has this trend been established for some time?

Anderson: It's actually been established for some time; we're probably just beginning to notice it here in our area. There have always been law firms with national practices that responded to the demands of their national clients, and I think we're seeing the regionalization here and elsewhere over the last 10-15 years due to a variety of factors. First, there has been growth in the number of lawyers and correspondingly the size of law firms. Plus, competition has heated up in markets of our size, especially for high-end transactional and litigation. But the real driving force behind the whole thing is client demand and the realities of our modern economy. Clients have become more regional, national and even international and it is simply the law firms' way of meeting their clients' demands and expectations.

Conner: It kind of depends on your definition of regionalism. We certainly think that our view of regionalism is something new compared to regionalism, or national law firms -- that concept has been with the industry for as long as I can remember. We came up with a defined geographic area that we concentrate on as our region, as opposed to having offices everywhere, which becomes very expensive. Within that region we have enough offices to service the clients but have them strategically located throughout the region.

Glasscock: It's a trend that has been commonplace in the larger U.S. markets over the past decade. However, in our region, it's a more recent issue, having an impact on law firms in Kentucky for the past three to four years. With that said, Brown, Todd & Heyburn's legal services have actually grown much beyond the regional structure. We developed a practice that is able to respond both on a national and international level. We see this as the future wave of business, and one for which we are positioning ourselves to respond.

Helm: I really don't think that regionalization is the news story any more. I think in the early '80s, the issue was statewide law firms and we, for example, merged in 1981. In the latter part of the 1980s, we moved into southern Indiana, and I think in the early '90s the story was regionalization. Now the story is -- at least with our firm -- we are practicing nationally. Last year, we represented clients from 45 different states. If anything, it's international as well. What's more, we've tried jury cases in over 40 states. I think for Stites & Harbison, the story isn't about regionalism anymore, it's about being a national law firm.

Lear: It is somewhat new to Kentucky, but it is not new at all nationally. There have been firms with offices all over the country and all over regions for a long, long time. But we're now starting to see firms from Kentucky establish offices in other states, and firms from other states establishing offices in Kentucky -- that really is a phenomenon of the last four or five years.

What advantages does the regionalization of your services provide for your clients? Are there any disadvantages to being regional?

Anderson: On the advantage side, I would say that clients probably, and typically, would say that a large regional firm would be more cost-effective for high-end work than if they had to go to a large market law firm. The clients benefit because as they regionalize and need regional service providers, the law firm follows them and is able to meet the needs of the client. The other thing for law firms is that if you have multiple regions you're serving, it gives you some insulation from localized economic swings. That helps you weather the storm in one market, because you have a good port of success in another. Clients like it because it's one-stop shopping -- it's covering a large area of the country.

Conner: The biggest advantages to the clients of a regionalized firm are: one, you do get a consistency, not only in the quality of the legal service but also the sense of urgency with which that legal service is rendered. Two, it gives us this possibility of what we've called 'centers of excellence,' of actually having some expertise at one office that isn't necessarily available in another office.

Like anything that has upsides, there are downsides as well. To the client, some of the disadvantages can be -- and believe me we fight this every day to make sure that it doesn't happen -- that the larger you get, the more problems you have with the possibility of clients viewing their relationships with the firm as being impersonal. We try to instill in our lawyers and our staff that that can't happen. Ultimately, we are in the service business, and service means you have to serve every client that you are working with as though that was the most important client for the law firm. But, it's a lot easier to do when you have 10 lawyers in a firm that you can talk to every day and build a culture, than when you have, as in our case, 225 lawyers in over three states and eight different offices.

Glasscock: Closer proximity and access to their lawyers for the clients, and technology is extremely helpful in this regard -- more resources, broader scope of services through mergers with firms that provide complimentary and yet different services. In other words, one-stop shopping for our client; more creative and flexible work schedules, giving the client greater access to their team of attorneys; alternative billing structures made possible with the addition of bigger and more efficient accounting resources; more opportunity to choose the lawyers with whom they want to work with in an organization. We really don't feel that there are many disadvantages for our clients. They really want to be aligned with a law firm that is planning to provide a broader range of legal services.

Helm: The reason clients look to us to do their work, both regionally and nationally, is because they've become comfortable and reliant on how we do business and how we practice for them. The last thing you want as a client, if you are pursuing a business opportunity or if you need to solve a business problem, is uncertainty and not knowing what you are going to be getting. We have developed an image, a brand if you will, for consistent quality and high levels of service and our clients want to take that with them wherever their business has taken them.

Lear: The principal advantage for clients is that many clients operate in a number of different locations and they can stay with a single law firm, and yet have lawyers close at hand wherever they are operating. With modern communications and technology, that may not seem to be as important as it is, but still there are a lot of occasions when face-to-face contact is important. I don't think there are any disadvantages to clients in terms of firms. Managing any organization that is spread out in a number of locations presents some challenges that aren't there when you are in one location, or locations that are close together.

Does regionalization increase competition between firms? Why or why not?

Anderson: I think it does increase competition. As new firms move into markets, the number of firms competing for clients and potential clients and for their most challenging and sophisticated work increases. We have experienced regional competition coming into our markets, and we have been a source of competition going into other regions where we were not formerly. The lawyers in those regions where we sort of "invaded" clearly view us as additional competition because we view the regional firms that move in here [Louisville] as additional competition. For the client, that brings more expertise and more sophisticated specialization to compete with other firms. It's a boon for the client.

Conner: It certainly increases competition with other firms who are like-minded and want to regionalize -- expand beyond merely a local business. Law firms, like all other industries right now, are going through this period of consolidation. All consolidation isn't good, all consolidation isn't bad, it really depends on what you end up with. We have tried to be very careful in our consolidation efforts so that we don't ever grow just for the sake of growing. Frankly, the difference between having 225 lawyers and 342 lawyers just isn't a lot. From a management standpoint, it's nightmare once you have more than two. Ultimately, it does increase competition. When you consolidate, that means one thing: you're cutting down on the number of competitors, and any time you cut down the number of competitors, obviously, competition can start to go up until you reach a point -- unless you're Microsoft -- and we're not quite there yet.

Glasscock: Regionalization does increase competition, even between industries. In Europe, the competition has increased among not only lawyers but also between the big accounting firms and law firms. It will not be long until that competition is felt more significantly in the U.S. Many clients, especially larger organizations, want a more centralized one-stop shopping approach to their legal needs. So, service providers must be willing to provide what the client wants, which has, in many ways, driven this trend for regionalization.

Helm: I hope so, because we can really compete effectively with larger firms in larger markets. We're attracting lawyers from the same quality law schools that they are, and we're training them the same way that law firms in bigger cities are. But we can deliver services less expensively because we're delivering them from sort of a 'mother ship' that's based in Kentucky. And one of the things that we're blessed with here is the lower cost of doing business. You don't need to be in a lot of other larger markets to have a computer terminal, or laptop, or Internet access, or whatever it takes. How we've tried to face the challenge of being in lots of different places at once is through technology and energy.

Lear: I would say it does. Instead of one firm being in one location or one state, it puts that firm in multiple locations and two or more states.

Arguably, the perception of the general public is that the legal profession is highly saturated in terms of the number of attorneys practicing law. Is this perception of saturation a product of regionalization? Why or why not?

Anderson: I think it is just a perception. The facts are, the number of lawyers has stabilized over the past few years and is no longer growing exponentially as it was in the 1980s. In fact, within the specialized niches of practice there can be areas in which there are too few lawyers to serve the needs of the market. In the 1980s perhaps there was a saturation and a glut of lawyers, however there has never been a glut of excellent lawyers.

Conner: I'm sorry to say that it's more than just a perception. We probably are, in the United States, turning out too many lawyers. By the year 2000, the prediction is that we are going to have a million lawyers in the United States. Compared to any other civilized or uncivilized world, nobody even comes close. That basically means that we are going to have one lawyer for every 300 residents including men, women and children in the United States -- that's ludicrous. It's not just a perception, it is a reality. I don't think regionalism has caused that and, indeed, it may be part of the solution. The consolidation in the legal business may be part of the solution in that you are going to start building these firms in one area, and therefore the ability to get into the market as a solo practitioner or a small firm is getting more limited every day.

Glasscock: There has never been a greater demand for talented attorneys. Law firms across the country have experienced record revenues and employment levels. That's largely because of the sustained expansion of the U.S. economy. There is a perception there, but it's more in terms of the marketing of legal services, seeing the ads on TV and seeing mailers from some of your personal injury lawyers. I think that leads to the perception in terms of the saturation.

Helm: That perception has to do with lawyers who are providing commodity services, maybe. That's not where we are. We are doing difficult litigation, complex regulatory matters, sophisticated business transactions and at our part of the market, there isn't saturation. Our work is not a commodity, it's not repetitive. Each deal is different, each problem is unique and that's what people are hiring us to do -- to solve their toughest, most complicated, most difficult problems. There's always going to be a role for people who do that.

Lear: I think it's a product of two things. One, there was an enormous growth in the legal profession in the '80s. The great wave of mergers and acquisitions, the huge expansion in real estate development in the '80s produced a lot of new attorneys. That, plus the emerging legal areas. Then it was environmental law, now it's healthcare and intellectual property law. The rapid expansion in the number of attorneys that we saw in the '80s has somewhat slowed down in the '90s. The other thing that makes people believe that there is more saturation is there has been a huge increase in the amount of advertising. The law was essentially a very quiet profession for hundreds of years. The professional code of conduct would not allow advertising. Now, you've got people doing outright advertising, and you've got firms that do more subtle advertising like public image sort of things. People are a lot more aware of the number of different attorneys and the number of firms than they were before.

John Gaver is editorial director of The Lane Report.