Law Firm Works to Regroup After Core Clients Dwindle

By AMANDA BRONSTAD
Staff Reporter

When Peter Ezzell joined Haight Brown & Bonesteel LLP in 1973, 80 percent of its clients were insurance companies.

But in becoming managing partner last year, Ezzell took the helm of a firm that, like many companies deeply invested in a single product line that starts to dry up, was scrambling to develop new practices.

"We're sort of betwixt and between," Ezzell said. "We have not and don't intend to abandon insurance companies. What we're trying to do is get complex cases, where they think of us when they're in big trouble."

Ezzell is not the first managing partner to address the dilemma. For the past 15 years, as insurance firms began to bring litigation functions in-house, Los Angeles-based Haight Brown has been pushing to grab non-insurance clients in its product liability and commercial litigation fields while trying to maintain its core practice.

Haight Brown traces its roots to 1937, making it one of the city's oldest firms. By 1948, its precursor firm had evolved into Moss, Lyon & Dunn, and by the 1980s it was known as Haight Brown & Bonesteel. Fulton "Bill" Haight stepped down in 1988, though Michael Bonesteel continues to practice at the firm.

At about the time Haight handed over the reigns, the attempt at evolution was underway.

Cuts planned, and not

It has proven elusive. Despite nailing down big-name clients like Italian tire maker Perelli SpA, the firm began a six-month restructuring in late 1999, bringing in several outside consultants, Ezzell said. It relocated from the pricey Water Garden office complex to the Howard Hughes Center and began to "right-size" in May with a staff reduction and a rate increase.

Not all the "right sizing" was intended. In April, partner Bill Sayers left with eight other attorneys to join McKenna & Cuneo LLP's L.A. office. Sayers, who was chairman of Haight Brown & Bonesteel's environment law department, took its asbestos clients with him.

Then, last December, partner Thomas Moore and nine other lawyers left the firm to open the L.A. office of Philadelphia-based Drinker Biddle & Reath LLP. Moore took with him such clients as breast implant maker Bristol-Myers-Squibb Co. and pharmaceutical firm Warner-Lambert, which merged in 2000 with Pfizer Inc.

With the defections, the firm is down to 91 attorneys compared with 152 at its peak in 1998 and a partner-associate ratio of 1.3:1, down from 2:1. Those efforts kept Haight Brown & Bonesteel's profits-per-partner in 2001 on par with 2000, despite the economic downturn, Ezzell said.

But having a flat profits-per-partner didn't prove to be enough to retain at least one partner. "The reason for my leaving is inextricably linked with my financial goals," Moore said. "I figure very logically that if I'm in a place that gives me the best vehicle to service my clients, the natural outcome is an improvement in my overall financial situation."

Rebound seen

The loss of the two practice groups and their client bases could have a significant impact on the firm, according to Elliott Olson, managing partner of the L.A. office of San Francisco-based Sedgwick Detert Moran & Arnold, a competitor to Haight Brown.

"I think we used to be more similar," Olson said. "They have lost most of their medical device or pharmaceutical-type practice, and I don't know if they'll be that effective in that area anymore. They are having difficulty in their insurance coverage bad faith department, at least maintaining the leverage you need. They're smaller and have lost some important clients."

But Ezzell disputed the impact of the departures. He said both of the practices that left were already losing profitability, largely because cases surrounding their clients had been wrapped up in large settlements. Moore's group was down 40 percent, he said, from the high point of the breast implant cases.

"If I had my way, at 54, 20 years from now I would like to see the firm a little bit bigger than now and doing the same things: business litigation," he said. "We think we can try any case anybody brings to us."

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