Tech Puts Law Firms on Defense

By Stefanova, Kristina | The Washington Times (Washington, DC), March 6, 2000 | Go to article overview

Tech Puts Law Firms on Defense


Stefanova, Kristina, The Washington Times (Washington, DC)


Washington-area law firms are starting to make an important decision: raise salaries and offer more benefits, or lose their lawyers to the region's growing high-technolgy industry.

"In '99 we saw a greater number of attorneys leaving our firm to go in-house with our clients than we ever had before," said James Burns, managing partner at Brobeck, Phleger & Harrison, a California law firm with offices in the District and another opening soon in Northern Virginia.

Lawyers at the firm received a 55 percent pay increase this year, raising starting salaries from $100,000 to $155,000. The firm also buys and offers its associates stock in client companies to counter stock options many technology companies use to lure employees.

"We want to make it as attractive as possible for our attorneys to stay and make their careers at Brobeck," Mr. Burns said.

The high-tech lure has prompted many lawyers to trade their high salaries for the Internet companies' stock options, which could be worth millions of dollars in the next few years.

"It's a trend," said K. Jill Barr, director of career services at American University. "You hear about it all the time. But it's hard to know in terms of data."

Law firms in California were the first in the nation to raise their salaries and add benefits to compete with Silicon Valley's tech companies. Boston and New York, both areas with major high-tech presences, are following the lead. Washington - with strong law and high-tech sectors - is facing the same issue.

National firms with local offices already have started giving their associates raises. Skadden, Arps, Slate, Meagher & Flom, the nation's largest law firm with offices in Washington, raised salaries 40 percent last week. And Davis Polk and Wardwell raised salaries by 25 percent.

Many firms are hoping their lawyers will stay instead of jumping ship to hot Internet companies.

But search firms specializing in the legal field hear about lawyers moving to the Net all of the time.

"I hear constantly of lawyers leaving firms - it's very hard to compete with the stock options [Internet] companies offer," said Jackie Finn, partner at Finn and Schneider Associates, a Washington executive search firm that specializes in finding lawyers.

"This phenomenon is just hitting Washington," Miss Finn said. "It's new here, so at this point firms are trying to decide whether or not they want to increase their compensation."

The highest profile example of a lawyer who left a law firm to join an Internet company is Paul Cappuccio. Now general counsel for America Online, the world's largest Internet provider in Sterling, Va., he used to work for Kirkland & Ellis in the District.

Clint Smith is another example. A former associate at downtown's Steptoe & Johnson, he is now deputy legal counsel for UUNet Technologies, the Internet service provider arm of MCI WorldCom.

"It was a chance of a lifetime," Mr. Smith said. "And with stock options you have a stake in the outcome of your work - that's not available at a law firm."

Mr. Smith said he took a "considerable" salary cut when he joined the Ashburn, Va. company. But the long-term returns from stock options - which he is already enjoying - were worth it.

"I have no regrets. At Steptoe I worked with brilliant people who made me into a better lawyer, but at UUNet all my energy is focused on one client, and making that client succeed," he said. "And that to me is more rewarding than working for multiple clients at a large law firm."

Other attorneys have left law firms and started their own Internet companies.

Sheila Walsh, her husband Michael, and three other attorneys left their jobs at local law firms to team up and start infirmation.com, an on-line career center for lawyers.

Ms. Walsh, a former tax attorney at Chadbourne & Parke, said she does not miss her old job. …

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