Lawyers May Flee Restructuring at Arter & Hadden

By AMANDA BRONSTAD

Staff Reporter

Attorneys at the local offices of Arter & Hadden LLP began sending out their resumes after the firm’s Cleveland-based executive committee met June 16 to discuss ways in which to restructure the firm.

Firm Chairman Dan Bailey declined to address specific restructuring options, but said that the firm was seeking to renegotiate long-term office leases, its largest fixed cost.

Several local attorneys aren’t sticking around to see which offices make the cut.

“There are people partners, associates and staff who are actively looking,” said Julie Stamato, a former Arter partner now at Miller & Holguin. She said some former colleagues had contacted her about moving in the past two weeks. “Bottom line is, they’re not so confident it may work out, and they’re exploring other options in case it doesn’t. Nobody wants to be the last one standing.”

Bart Kessel, managing partner of the L.A. office, did not return phone calls.

The 250-attorney firm opened in L.A. by merging with Lawler Felix & Hall in 1990. It has 37 attorneys, including 17 partners, at its downtown office. The firm also has seven attorneys in Woodland Hills, 24 in Irvine, four in San Diego and 13 in San Francisco.

On June 16, the firm’s executive committee in Cleveland met to consider various restructuring options. Bailey said the firm took on too much office space as part of a rapid growth spurt in the late 1990s that has been followed by an equally rapid reduction.

Since 1999, the firm has lost more than a third of its lawyers, either by resignations or layoffs, Bailey said.

“We’ve had a fairly significant contraction, but we are left with a lot of overhead,” he said. “It’s a matter of matching up our cost structure with the size of the firm we are now.”

Michael Waldorf, a legal recruiter and president of Waldorf Associates Inc., said Arter & Hadden’s local office, primarily a litigation shop, still has profits below $300,000 per partner, well under the competitive standard in L.A., he said.

That could make the job prospects for its attorneys more limited than they were for the 47 L.A. attorneys at Brobeck Phelger & Harrison LLP, which dissolved in February, he said.

“Brobeck had huge debts, and I don’t know that Arter’s are as high,” he said. “But Brobeck had more people with a considerable practice.”