The silver lining for legal firms

For nearly a dozen years, Alan J. Hoffman headed Blank Rome's litigation department and spearheaded recruitment of new partners.

Then in July he took over as cochairman of the firm, sharing that post with T. Michael Dyer, who is based in the firm's Washington office.

With a recession looming, the 554-lawyer Blank Rome is cutting costs and hedging some bets. Yet the 60-year-old Hoffman, a former Justice Department prosecutor, says the downturn likely will generate new business. Litigation, he says, is flourishing as businesses look toward lawsuits as a potential source of income in tough times. As other law firms downsize, especially those deeply involved in financial transactions that have ground to a halt, Hoffman says Blank Rome expects to pick up top talent.

Question: This is a time of some nervousness about the economy among law firms. What steps are you taking to make sure the downturn doesn't create great difficulties for you?

Answer: Well, we view it as an opportunity, actually. We continue to attract [recruits]. Where certain firms are not doing as well as we're doing, we will be able to pick up lateral partners from other firms. Obviously, the legal industry is going to have its difficulties, But there's also opportunity.

Q: As cochairman of the firm, what are your projections for how harsh, how difficult this economic downturn will be? What are you expecting in the next six months to a year?

A: Well, I think the economy is difficult, obviously, from everything that we hear from our clients. And the legal industry is no different. We're not going to hit the profit numbers that we've hit in past years. And I doubt anybody in our industry will hit them. We will hit last year's revenue number, and perhaps exceed last year's revenue number. But we're not going to, I believe, hit the same profit levels we hit in 2007 because expenses are up.

Q: So are you on budget?

A: We will not hit the revenue figure that we budgeted for 2008. We'll be short of that revenue figure. We will exceed the revenue figure we had for 2007. A lot of law firms, from what I hear, won't even reach their revenue level in 2007. They'll be flat or down on the revenue side.

Q: What are you cutting?

A: I'll give you one example. We usually have a firm-wide retreat in early October. This year it was scheduled to be in the Chesapeake Bay area. We bring in partners from all over the world. We decided to postpone that retreat and instead do it in what we call three mini retreats.

Q: The number of your first-year associates was the same this year as last. Did you bring them in on schedule?

A: We did two things. We have 32 first-year associates. And we brought them all in on time when they were supposed to be here. We were so busy in certain areas that we actually brought 11 of them in early.

Q: What about next year's class of summer associates?

A: The summer associate positions for next year are, I think, going to be more difficult. The summer associates that you hire for summer of 2009 are going to be the fall associates in 2010. And I think law firms are being a little bit more conservative in what they've done in past years. However, we always view our summer program as an important area for future stars in the law firm.

Q: So you're not going to cut back on summer associates?

A: We will cut back, but not significantly. We're not going to have 50 percent reduction of summer associates.

Q: What will be the impact of the federal bailout of the financial industry on law firms?

A: That is going to produce a lot of work for the legal industry, not only in terms of representing clients before congressional bodies or regulatory agencies, for example, but also in the financial-services industry as a whole. And I think that with the election coming, whether it's going to be [Republican John] McCain, or [Democrat Barack] Obama, there's going to be opportunity there in the first part of the year.

Q: What kind of opportunity would there be for a law firm when administrations change in Washington?

A: You're going to see health-care reform. So there are going to be clients who are going to need our counsel and attention with that. I think that there are going to be certain changes in the environmental laws, maybe a greater emphasis inside the EPA and the administration, with respect to climate change and CO2 emissions.

Q: You have a lobbying and government relations business in Washington, in addition to your legal work. Will this help cushion the firm from the downturn?

A: I think that it does provide opportunity and cushions a little bit. I think litigation is another area where we have a very significant practice. When the economy is good, people litigate, when the economy's bad, people litigate.

Q: Philadelphia law firms so far have not been as hard hit as some of the other firms around the country. Is there something about the legal business here in Philadelphia that insulates the city's legal community?

A: In general, when you look at certain firms, particularly the New York firms that are very heavily weighted towards the corporate [mergers and acquisitions] practice, those are the firms that are going to suffer the hardest when the credit markets dry up. Those M&A deals are not occurring. I think in Philadelphia, you don't have a firm that's so heavily weighted in that area.

Age/Birthplace: 60, Philadelphia

Occupation: lawyer, cochairman,

Blank Rome L.L.P.

Hometown: Bryn Mawr

Education: Temple, undergraduate; Villanova University Law School

Personal: Wife, Julie Goldman, three children, two stepchildren

Hobbies: coaching youth sports

Astute Observation: "When the economy is good, people litigate. When the economy's bad, people litigate."EndText

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