In only a five-year span, Reed Smith has nearly doubled in size and profitability while making big splashes into the California and London markets with large mergers.
The firm is now led by the dynamic Gregory Jordan, a 45-year-old Reed Smith lifer from the Pittsburgh home base who has accepted the mission of taking the firm to the next level.
The Philadelphia office has seen a particular amount of change, as the faces that had come to symbolize the firm’s presence — David Auten, Michael Browne and Richard Glanton — have given way to a new generation of leaders bent on running the firm in a more businesslike fashion.
But changes such as these create casualties. In the past few years, several partners in the Philadelphia office have left for various reasons, not always on the best of terms. Several legal headhunters and partners at other firms say they have heard the Philadelphia office at Reed Smith has been virtually ignored in recent years while the firm concentrates its growth on other markets. Reed Smith management hotly disputes any such contention, saying the Philadelphia office is coming off its best financial year in its more than 20 years of existence.
Jordan succeeded longtime Chairman Daniel Booker in January 2001 after what some say was a bit of a power struggle with Browne, who for eight years was the Philadelphia office managing partner. Browne, a rainmaking corporate insurance lawyer, simultaneously was replaced as head of the Philadelphia office by litigator Robert Nicholas.
Jordan named Philadelphia corporate partner Michael Pollack, 48, to the newly created position of director of strategic planning. The two set a course for expansion and increased profitability, and have basically delivered over the past four years. As Jordan started his new job, a merger with 60-attorney London firm Warner Cranston took effect. Jordan’s first year ended with the addition of 26-attorney Parker Duryee Rosoff & Haft to Reed Smith’s already 35-attorney New York office.
That acquisition, which doubled the size of its New York site, played a key role in luring Oakland, Calif.’s Crosby, Heafey, Roach & May, a 220-attorney firm that had offices in Southern California as well. That merger became effective in January 2003 and Jordan said the firm has retained all but one of the original Crosby Heafey partners that joined the newly merged firm.
It’s hard to argue with the firm’s financial results during Jordan’s tenure. Reed Smith’s revenue per lawyer has increased from $325,000 in 2000 to $553,000 in 2004, according to Jordan. Profits per equity partner have increased to an even greater degree, from $335,000 to $662,000 in 2004. And according to Law.com affiliate The National Law Journal’s annual NLJ 250, from 2000 through 2004, Reed Smith grew from 612 to 957 attorneys, while the Philadelphia office has grown slightly, from 111 to 121 lawyers during that same time span.
But some former partners say Reed Smith management has used a singular focus on bottom-line profitability in an attempt to become more like a New York firm. In the process, they argue that the firm has picked up some of the New York culture — making equity partnership a more difficult goal and de-equitizing partners that don’t have a strong book of business.
In November 2002, two months before the merger with Reed Smith became effective, Crosby Heafey stripped 30 partners of their equity status. Half the partners who were de-equitized left the firm.