When a small Los Angeles law boutique specializing in white-collar cases merged with a national firm earlier this month, it pointed out a trend.
The merger of the seven-attorney Lightfoot Vandevelde Sadowsky Crouchley Rutherford & Levine LLP with national firm Crowell & Moring LLP was added evidence that white-collar defense boutiques are feeling more pressure to join larger firms, which have been stocking up their white-collar defense departments.
In January, for example, the white-collar boutique firm of Beck De Corso Daly Kreindler & Harris LLP disbanded, and most of the firm’s lawyers split between the L.A. offices of Chicago-based Mayer Brown LLP and San Francisco-based Orrick Herrington & Sutcliffe LLP.
In this post-Enron world of much greater scrutiny of company financial practices, white-collar defense work has grown not only more abundant but more complicated and specialized. That means that bigger law firms tend to have the edge because they can employ many lawyers with different specialties.
White-collar defense work has gotten more lucrative, too, because the cases are often high-stakes matters involving corporations and their executives. Litigators in the practice area can demand billing rates upward of $700 an hour.
Among the most prevalent of white-collar cases in recent years was a spate of prosecutions involving executives accused of improperly awarding themselves stock options at bargain prices. Being that the accused were wealthy, firms could charge top dollar.
“White-collar litigation has become a profitable source of revenue for firms now,” said Alan Miles, founder of Santa Monica-based Alan Miles and Associates Inc. “Because of the onslaught of backdating cases and other not-so-kosher behavior white collar has enjoyed a boom.”
In recent years, large law firms have aggressively recruited high-profile litigators to expand their white-collar presence in Los Angeles. Randall Lee established an L.A. office for Wilmer Cutler Pickering Hale and Dorr LLP in September 2007 when he joined the firm after serving as a regional director for the Securities and Exchange Commission. Last year, Kirkland & Ellis LLP hired white-collar litigators Mark Holscher and Jeffrey Sinek to increase the firm’s capabilities in Los Angeles. A hiring spree in 2006 resulted in Los Angeles stalwarts Gibson Dunn & Crutcher LLP and Irell & Manella LLP hiring former U.S. Attorney Debra Wong Yang and former Enron prosecutor John Hueston, respectively.
This heightened competition for clients, coupled with the expanding scope of white-collar cases, is leading L.A. boutique firms to join forces with their national brethren.
“The business has changed,” said Janet Levine, a partner in the newly established L.A. office of Washington, D.C.-based Crowell & Moring. “The specialization of the cases got greater, and we were dealing with things that just weren’t local anymore.”
White-collar boutiques focus their practice on both civil and criminal white-collar defense. Oftentimes, this means representing companies and individuals during investigations by the SEC. While those investigations can result in a civil lawsuit, the U.S. Attorney’s Office may simultaneously be investigating that same company or individual for criminal activity. In both cases, the company calls in a white-collar attorney to represent the target of the investigation, because legal action against the company could result. The attorney can represent the individual and the company.
Lightfoot Vandevelde partners have been involved in several high-profile cases, including the investigation of Katrina Leung, an alleged double agent who was indicted by the U.S. Department of Justice for copying national defense information for the People’s Republic of China. Partners Levine and John Vandevelde convinced a judge to dismiss the charges based on prosecutorial misconduct. The firm’s partners were also involved in representing former Los Angeles City Commissioner Leland Wong, who was sentenced to five years in state prison earlier this month for his role in a “pay-to-play” corruption scandal that plagued the administration of former Mayor James Hahn.
But some boutique firms are withstanding the pressure to merge.
Bird Marella Boxer Wolpert Nessim Drooks & Lincenberg LLP is one of the few local white-collar boutiques still standing. The Century City firm’s partners say they are a well-established profitable boutique, and don’t feel the need to be part of a behemoth law firm.
“I disagree that you have to be part of larger, international firm in order to effectively represent clients,” said Terry Bird, a founding partner of Bird Marella. “It comes down to the individual lawyer.”
However, many other white-collar firms believe there’s strength in numbers.
Lightfoot Vandevelde partners said the cases they were working on were becoming more specialized, and required the legal advice from attorneys who practice in such areas as health care or tax and multiple specialties are best supported by bigger firms.
Vandevelde, who is now a partner at Crowell & Moring and is managing the L.A. office, said that since he and his partners are part of a larger firm, they can immediately call up another Crowell & Moring lawyer who specializes in a particular area or industry and consult with them on a case.
In addition, the desire to be part of a larger infrastructure also increased as Lightfoot Vandevelde’s cases became more labor intensive because of the electronic discovery demands that require lawyers to sift through thousands of e-mails or search company computers.
As lawyers from Lightfoot Vandevelde develop a camaraderie with their new partners, the litigators recognize that they are giving up the autonomy they once enjoyed as a boutique firm. But that isn’t necessarily a bad thing.
“It was the right time, practice- and personalwise,” said Levine. “We thought we could serve our clients better and enjoy practicing more.”