Changing Times

Managing partners from Denver offices of national firms discussed legal industry trends for 2018

On Nov. 28, Law Week Colorado managing editor Tony Flesor met with Kilpatrick Townsend & Stockton Denver office managing partner Gene Bernard, Gordon & Rees Denver office co-managing partner Franz Hardy and Snell & Wilmer Denver office managing partner Curt Reimann to discuss the legal industry’s defining trends of 2018 and what to look out for in 2019. 

LAW WEEK: We have a range of practices between your offices. Will you each describe what your Denver office focuses on?

REIMANN: In Denver, really the full spectrum of what we do in the firm is commercial litigation, commercial finance and real estate with more of a heavy focus on a national leasing practice. We also do a fair amount of construction litigation and product liability litigation. 

We’ve had nice growth this year, which has been consistent with the firm. So I think the economy has continued to be robust. I think we’ve benefited from that firmwide and, particularly, in Denver. We’ll get to this later, but I’m not sure that I feel that way about next year.

BERNARD: Our office in Denver is primarily focused on intellectual property. We do patents, trademarks copyrights — both on the prosecution side and on the litigation side — and client advice in those areas. 

The firm as a whole, however, has many other practice areas. I would say about a third of the firm does IP, but we also do things like construction litigation, we have complex commercial litigation, we have a white collar practice, we have a government relations practice, we have a Native American practice. So a lot of different practice groups, which we tried to tie together with a strategic focus for our clients on IP and ancillary IP issues for them. 

HARDY: I’m one of two office managing partners here in Denver, along with John Palmeri. Gordon & Rees is a full-service firm with over 40 offices and 800 attorneys across the country.

Locally, we’ve got about 30 lawyers with a heavy focus on litigation, and I’d say, broadly, all aspects of litigation, some construction, some commercial litigation, intellectual property, insurance, professional liability to really run the gamut.

The Big Picture and Economic Impacts

LAW WEEK: I think we have a lot across the board in terms of representation here. I want to start off the conversation getting a broad picture sense of whether there’s anything that you’ve seen develop in 2018 that has been a continuing trend or anything that you’d say stood out to you within the past year on the business side.

REIMANN: From our standpoint, if you look at the just the broad business of law over the last five years, it’s been a pretty consistent trend where really the firms at the top of the AmLaw 100 have continued to do well, and the next 100 firms, it’s very “next.” I think there’s been a general trend where they’ve been either flat or down, led by litigation, because a lot of big litigation just has gone away, you’re just not seeing as much of it.

What surprised us this year was we were up across the firm and all our offices in a number of different areas. One of which was litigation, which was somewhat surprising. The real estate practice has continued to be very strong, which means our commercial finance, which is heavily based on real estate finance, has been very strong. On the litigation side, financial services litigations been fairly active. 

I think that we’ve seen the benefit of a strong economy, and now we’re starting to think about what’s coming next and making sure that we’re prepared for that. 

But as far as how the year went, it was a pleasant surprise. And it was strong in areas that have struggled recently and have been part of the reason why some years have not been as robust as they have in the past.

BERNARD: I would second what Curt said with respect to the economy and how it’s affecting the business of our firm in general. We’re having a good year, and we’ve had progressively good years in the last two or three years. This year, it’s been, I’d say, particular good. 

But it looks very good with respect to a specific trend that’s really come into focus this year. I think data privacy and data protection this year has become a really big topic. There are parts of it that come in from big social media companies under the microscope because of things like the election. Also the data privacy laws that have been passed in Europe are getting a lot of our clients [in Europe] asking us about that. And I expect that trend is going to come into even sharper focus and with a lot more activity in the U.S. next year or in the next couple of years. 

Based on what I’ve been hearing, I’m pretty convinced that we’re going to have some sort of laws or regulations passed on data privacy. Whether or not they’re going to be exactly the same as what has gone on in Europe I don’t know, but there’s going to be new laws, and whenever there are new laws, there is going to be a need for a lot of advice on how to comply with the laws, what you can and can’t do under the laws and things like that. 

REIMANN: We’ve done the same thing over the past four years in developing that practice. … That’s really a growing area.

HARDY: I just want to add on a trend. I think that Gordon & Rees has seen this over the last 10 years since the recession, and coming out of the recession, that we’ve really grown. I think we saw the recession as an opportunity.

There was a comment about the difference between the AmLaw 100 and the AmLaw 200. It seemed like either you’re growing or you find yourself somewhat on an island. I think Gordon & Rees’ model has been to continue to grow, establish itself as a national firm that could provide services somewhat as a one-stop firm for a client’s various needs and really take advantage of the opportunities an economy that’s been down that has trended up has provided. I’ve seen a lot of firms do the same thing. It’s a trend that I’ve seen, I think is a trend that’s going to continue.

REIMANN: I think you’re right. I think that what you’re starting to see in some markets — particularly middle to larger size legal markets where you might have very large, maybe local firms or regional firms — they’re getting very nervous now. 

You see this stuff a fair amount in Texas. You’ve got some of these old long-time fairly large local Texas firms that are seeing all these other national firms come into the market, and they’re getting nervous in terms of their ability to compete. And now where they would normally say, ‘we’re not interested, we want to stay independent,’ their focus has shifted to, ‘do we need a merger if we want to survive?’ 

You didn’t see that before the recession. And now, as the economy has picked up and sustained and firms have gotten back into the growth mode, where do we find opportunities? I think that one of the things that the recession did was really make firms focus on cost reduction in managing profits by reducing costs. Now I think a lot of firms have squeezed about as much as they can. So now they’re having a look at top-line growth, and can we get more from our existing clients. Or do we need to broaden our markets and find other practice areas, practice groups or firms, whatever it is.

HARDY: That’s a great point. I think the last 10 years have required firms to manage costs, because clients are not going to allow for the de facto rate increases year after year. And you’re right, Curt, I think if you have a well run firm, you’ve done a good job of doing that. But at some point in time, you have to look at alternatives to generate revenue. If you can provide a lot of services to the same client, that’s one way to do it, and the sophisticated firms have figured that out.

Cost Management

LAW WEEK: That differentiation you’re talking about between the AmLaw 100 and the rest, is there anything that you think is driving that? 

BERNARD: What I’ve observed is that it’s the ability of the larger firms to invest in their infrastructure, especially their IT infrastructure that smaller firms are really struggling with. 

Curt Reimann (left) and Gene Bernard. Bernard said the increasing expectations for data security are pushing small-firm or solo attorneys back to working at larger firms. / Hannah Blatter, Law Week

Then when you add on top of that the expectations about data security, which is becoming a huge issue for not just law firms, but for everybody, that is an unavoidable cost that is a lot easier to bear if you’ve got it distributed over a much bigger platform than a smaller one. 

Anecdotally, for me, I’ve seen this with a change in the mindset of patent attorneys. Ten years ago, I would have thought it was only a matter of time before every patent attorney was going to be working for themselves out of their basement because the IT infrastructure was there to do that — you just connected to the internet and voila, right? You didn’t need an office, you didn’t need support staff anymore. That could all be done by computers. 

Fast-forward 10 years later, and we’re getting a lot of résumés from individuals at small firms or solos who want to come work at a larger firm. I always ask them why, and they say, ‘well, because our clients expect so much in terms of our IT capabilities.’ And they ask a lot about data security, and they say they don’t have really any investment in that, we can’t afford to hire an IT person much less an IT department. 

As a result, I think you’re starting to see a migration back from smaller firms — I mean really small firms — and larger firms are becoming the beneficiary of that because they can afford to make the investments that sometimes smaller firms just cannot but have to because the clients are demanding it.

HARDY: One thing that size gives you an advantage of is you can leverage certain cost centers within a firm, like HR. 

If you have a 20-person firm, 100-person firm or 1,000-person firm you need an HR department. It becomes a lot more cost-effective with 1,000 lawyers than it does with 20, and multiply that by IT, administration, equipment, rent and all of the expenses that we incur that overhead, you just absorb that a lot easier as a large firm. And that’s just simple economics.  

Another trend with that is office space. And I think there’s been a trend to smaller —

REIMANN: One-size —

HARDY: One size, more nimble offices. We redid our space recently to one-size offices. We’ve gone to the concept of front-of-the-house, which is nicer and has conference rooms, and back-of-the-house, which is one-size offices and functional. It’s just a way that we’ve been forced to save costs. 

That hasn’t ended. I think the trend is going to continue to hotel officing, office sharing, no office, virtual office and giving employees and lawyers the flexibility to work in different ways that facilitates what they want to achieve, but also is effective on costs. I see that as a big trend that’s going to increase.

REIMANN: I think that’s a good point. If you look at trends in technology, you’re always focused on improving your technology. But there’s now an added reason. 

It used to be it would make you more efficient. Now it’s becoming that you need to create ways for lawyers to work remotely and in a more flexible environment, because that’s what the new generation of lawyers want. They don’t want to come in and sit in a big office all day and do work. You have to give them the flexibility of ease of connectivity but also protect the security aspect. 

We spent a lot of time and money this year doing that. So far, people have really liked it, because they like the ease of connectivity and the ability to be mobile and to work, and it makes them happier. Happier lawyers and more productive lawyers. But that’s definitely, I think, a trend that will continue because if firms don’t continue to focus on the technology aspect for their lawyers, they’re going to lose lawyers. Their lawyers are going to go find other places to work that are easier or meet their needs, and you’re going to lose talent. And that’s not something you want to do.

BERNARD: And not even just lawyers, that’s staff too with that expectation. 

One of the consequences of this trend is that I used to compete for staff with other firms in Denver; now, I compete nationally, and sometimes even internationally for that staff. There are firms with no offices in Denver that are willing to hire those folks and have them work from their house and maybe just once a year come to the office in Minneapolis or in Texas or something like that. That firm, which was never on my radar before as a competitor for my talent, is now on my radar, because they are trying to recruit my folks in Denver — not to come live somewhere else but to stay in Denver and work for them there. So it’s a big issue. 

One thing I will say about the working remotely trend, which I completely agree with Franz and Curt, is having email isn’t enough to get these people collaborating with each other and to feel like part of the firm. You need to have much more robust IT tools and other kinds of communication tools available than just being able to send emails back and forth. If it’s that impersonal, our experience is that it’s only a matter of time before that lawyer just goes somewhere else. If all they’re doing is working at their desk at home and sending emails out, it really doesn’t matter. There’s no sense of culture belonging that way, and that is important too.

Generational Differences

REIMANN: The other trend we saw at the end of the year was some of the AmLaw 100 firms raising starting salaries to [$190,000]. 

The Denver market is very interesting because you have national firms, you have regional firms, you have local firms, so your starting salaries for first-year associates range from $190,000 to $110,000 for some regional firms. That’s a very broad market. 

The interesting thing is there were two parts I’ve never seen: Firms did that, and whether it’s the New York firms or the California-based firms, they jumped in. But a lot of firms didn’t follow because I think the perception is that the users of the legal services aren’t going to accept it just because they know how it works. 

If you raise starting salaries, you’ve got to trickle that up through your classes, which means your overhead just went up, which means you’ve got to capture that somehow because you’re not making that decision with the understanding that all the partners are going to make less money. It was interesting to see the firms that did it and the firm’s that didn’t do it and how it happened in some markets and not other markets. But it was somewhat surprising that it happened.

BERNARD: Yeah, we were one of the firms that did it. There are a couple interesting observations about this one, which I think reflects maybe even a generational difference. 

When I first came into the legal profession, some guys might remember Gunderson Dettmer raised to $125,000 — this is the dot-com boom period. And we were ecstatic. All our salaries are going up, we couldn’t wait. If we had to work more, fine. We were just ecstatic about the raises. And they kept coming.

Flash-forward about a generation, and what was interesting when we did the raise wasn’t the [dollar] number, but the surprising number who were pushing back against giving a raise because they knew it meant they had to bill more hours. And they really didn’t want to bill the hours. They said if you’re going to make me bill 50 more hours for another $10,000, I’d rather you just keep me at $180,000 and not give me the 50-hour increase. 

I think that’s really reflective of the generational difference that surprises people like me — I don’t want to sound like I’m too old here, but a generation came in a generation before where we wanted to make as much money as we could. And we would be willing to work really hard, as hard as we could for that. And we were gunning to make partner and we were all excited about the tournament going from associate to partner. A lot of our associates now aren’t really interested in that tournament to make partner anymore. 

And as a consequence of that, we have a lot of non-partner track positions in the firm that we couldn’t have filled 20 years ago now.

REIMANN: Well, you wouldn’t have considered it. That’s not the law firm model. 

BERNARD: Right, it was then seen as kind of like, a failure position — maybe I’m being a little bit too harsh to say that — if somebody got off the track. 

Now the expectation is, I’m not on a partner track, I don’t want to be a partner track, I want to be on a department attorney track where I get good pay for steady work, but I don’t have all these other things that I have to do that a partner does to maintain a book of business and on top of that, put in the hours and everything else. So I think you’re seeing big generational differences at firms these days. That’s a trend that will only continue, too.

LAW WEEK: And then how do you see firms accommodating that? Are you doing anything specific?

BERNARD: Well, we’re developing a lot of non-partner track positions in the firm. And that’s actually helpful to keep costs down. And it keeps the people where 20 years ago, if you told a bunch of people you’re no longer on the partner track, you’re now going to be department attorneys, they would have all left within a year now.

REIMANN: Because they would have thought they weren’t wanted. Now I think it has a different connotation. 

The other thing is the staff attorney model has really become more popular, and it’s had two benefits: One, you can get good people who are good lawyers, and they can be at any stage of their career. That’s the way they want to work. And they want the floor to be low, which they’re fine with, and they just want to make sure that if they work more than what they agreed to do, that they get paid for it. The other thing that it does is it gives you the ability to compete for work that may be more commoditized work that you wouldn’t do before, because you couldn’t make it work financially. If you have staff attorneys, it’s a different financial model. And so you can make that work profitable, which I think has helped. 

The firms that have embraced that have figured out a way to make it work financially, and they’re benefiting from it. The firms that have chosen not to go down that road, maybe they’re doing fine, but depending on their market, they might be missing some opportunities.

HARDY: I don’t know if it’s changed or stayed the same. But you have to work hard to keep the talent that you have worked hard to attain. And even though there’s these trends, Tony, to working remotely or having smaller sized offices or generational differences, I’ve found you still have to invest in people. You still have to spend time with people. 

Like you said, Gene, if it’s faceless and nameless, it almost doesn’t matter what the name is on the wall, they’re just going to want a paycheck for work done. We all want more than that, we take pride in a professional industry to have more than bricks and mortar. It’s an esprit de corps, it’s a culture, and that just takes an investment of that senior leadership with the younger group to know that they’re appreciated and wanted and that they can grow and mature in an environment that wants them there. So I don’t know that that’s changed. But it seems like maybe there are new challenges to get that across as changes take place.

REIMANN: Right. And that’s the rub. They want flexibility and not the expectation that they have to be there. But at the same time, they need to be trained and mentored and integrated into the culture and becoming a part of the culture and a part of what makes a law firm a good place to be. There’s a balancing that has to take place. But I agree, Franz, that those principles still hold true today in terms of a firm being a group of men and women working together with a common goal of serving your clients, supporting each other, respecting each other, and enjoying being a partnership as opposed to, you know, just a bunch of silo solo practitioners that are just by themselves.

Corporate Social Responsibility

LAW WEEK: So there’s a push and pull there. And it seems to me that there’s also been a greater focus on corporate social responsibility. You have attorneys who might just want to work from home and not necessarily be at their desks every day, but they also want to have that law firm or that workplace that is going to be an environment that is not just a workplace, too. How do you think that plays out? Is that something that’s shifted from your perception?

BERNARD: Oh, we’ve invested in it. For example, corporate social responsibility, that’s an umbrella term, and I would include diversity in that. We’ve hired this year a diversity officer for the firm as a whole, and that person goes around to all of our offices. In addition to having diversity dialogues, we also try to figure out ways to structurally change the firm so that we can  attract and retain more diverse attorneys. 

In Colorado, that can be a little bit of a challenge, especially at a firm like ours, our office that’s so IP focused that frankly, it’s hard to find candidates other than white men, sometimes. So we work very hard at trying to attract and retain those candidates. And we’ve had some success, so we’re very pleased with that. But that’s huge. I don’t ever recall anybody talking about hiring a diversity officer when I was starting out as an associate, and now that’s fairly common. 

LAW WEEK: Or innovation officer.

REIMANN: Yeah, I think that whether it’s law students that are looking at clerkship or lateral hires, or whatever, definitely there is much more of an awareness and a focus on who the firm is, in terms of how diverse is the firm and how engaged in the community, how socially responsible are they, what sort of things is the firm doing and what sort of opportunities will I have as a lawyer to do those types of things. I’m not going to say they weren’t issues, but they weren’t at the forefront like they are today, which is a good thing. It’s a good thing, and firms have to adapt and adjust to that or they’re just, they’re going to lose a lot of good opportunities to hire good people.

BERNARD: And they’re going to lose business from clients. Because a lot of our clients are expecting us to be more diverse, and they will do something about it if we are just talking the talk but not actually doing anything about it. 

There’s a number of big companies that ask what kind of diversity you have at your office and your firm. And so if you didn’t take it seriously before, you certainly are when your clients are asking a lot about it. 

REIMANN: And law students coming out of law school, they’re savvy. You can have a diversity committee, you can have a diversity officer, you can have all those things, but if you’re not diverse, they get it. 

There’s a difference between having those things because you think it’s the right thing to do and embracing and being diverse because you know it makes you better, and I think law students know the difference. The firms that have embraced that, I think, are becoming more diverse, are finding better talent, are succeeding in the eyes of clients. It used to be where you could satisfy a client like you said, with having that diversity committee. Now, that’s not good enough. So, they’re demanding more, as are the students coming out of law school, which is a good thing.

HARDY: I’d be remiss not to pick up on the diversity topic because I also serve as co-chair of our firmwide diversity committee. For firms, it used to be a drop-down on the website and a glossy brochure to satisfy that the firm was doing something. The clients have demanded more, for sure. 

I agree with the attorneys half, and it’s beyond statistics and the graph. It’s looking around the office, and either you have it or you don’t. If you don’t, it’s not a neutral thing, it’s a negative. And we in leadership positions have to be very careful to understand that is a dynamic that’s not even a bonus anymore. It has to be there, and it has to be ingrained. 

And same with the social responsibility aspects. Pro bono has been around for a long time, it’s not just about doing pro bono work, it’s what is this firm’s culture about? What do we believe in? Do we have a committee that’s committed to doing good work in our community? 

And those are the type of things that just need to be embedded within the office or, again, I don’t even know if it’s necessarily a positive, it’s just that you’re playing in the game by having those things. It’s changed, that generation has really been into those issues, rightfully, it holds law firms accountable to doing the things that need to be done.

BERNARD: It’s been put in a very sharp focus these last few years, also by politics more than it has in the past. 

Client-Driven Changes

LAW WEEK: Is there anything changing in your interactions with clients in terms of the types of expectations that they might have or that you might do to meet their needs? You’ve mentioned the IT investment, the diversity initiatives. Is there anything else that’s been driven from the client side, that is changing what you do?

HARDY: I was just going to jump in and mention, Tony, that from 2007 or 2008, business clients have been internally required to do more with less, and they’ve reflected that moniker on outside counsel. 

Franz Hardy said he has seen business clients have to ‘do more with less,’ and that expectation has been passed on to legal service providers, as well. / Hannah Blatter, Law Week

I certainly feel the pressure to do more with less, and I don’t think it’s going back. If it is going back, it is gradually going back. My sense is it might even be getting more so the case that our clients are required to do more with less resources, and in turn, they’re going to push that down on their service providers. That’s something that over a decade, maybe you thought would be a U, I think it’s just continued to be that way. And I don’t know if that’s going to change. 

BERNARD: I don’t think it will. I’ve never heard of a commodity business coming back to become a prestige business, right? Wheat futures, corn futures, they aren’t suddenly becoming ‘Oh, I’ve got to have a luxury bushel of wheat, so I’ll be willing to pay three times as much for it.’

I think Franz is absolutely right about clients’ expectation about costs, and I think that’s not going to go back to the days where you just send a bill every month for how much you’ve been doing on the project, and we’ll just pay it. 

Now budgets are arranged beforehand. We actually have people at our firm who are CPAs and accountants who try to figure out whether we’ll make or lose money on this negotiated budget deal. And that goes on in most of our big engagements. Now, some of our smaller ones, like patent prosecution, the clients already have a fee schedule, and we’re held to that for the bigger litigations, it’s a negotiation in advance about the budget.

REIMANN: One of the things that the recession did, and the slowness of the legal community and legal services in coming back goes back to what Gene said. We’re selling widgets, it’s a commodity. So client service becomes more and more important. 

I think lawyers have realized that you have to make an investment in your client, and you have to get close to your client. Because if the demand has stayed relatively flat, and the supply has increased, you’ve got more lawyers going after the same work, so you have to distinguish yourself by being very close to your client. That means helping them self-solve their problem of doing more, with less, not being on the clock every time they want to talk to you or they need advice or they want some guidance. 

We do events with our clients all the time, every 18 months we do what we call a corporate counsel formal. We invite all of our largest general counsel clients to a single location, and we spend three days with them, we do CLE for them so they get something out of it. But there’s a lot of social interaction just to deepen and build those relationships. 

That wasn’t the case in 2005 or 2006, when you could just raise your rates 6 percent a year and you got more work and everything just continued. The dynamics have changed. You really have to be focused on client relationships, not just client development.

BERNARD: I agree with that, Curt. I think it actually helps distinguish law firms that are willing to invest in those relationships from people working out of their basement just wanting the next project to show up in their inbox. 

We also invest a lot in that, and I think it’s almost a given these days that you have to understand your client’s business as well as provide them with their legal services. That’s the expectation, and that’s where you get more business now and keep those clients around.

HARDY: It’s interesting that almost takes us full circle, because it gets back to costs. When your client comes to your office, having one-size attorney offices, it demonstrates that you understand what they’re going through. And this isn’t just about raising rates so you can get nicer and nicer space, it’s you realizing that you need effective space because your clients are going to appreciate the fact that you’re cognizant you’re willing to take on somewhat of that burden that you have to do more with less. 

I think that drives everything. Just like Curt said, we started doing national conferences in the last few years just to deliver that additional layer of information and engagement to them at no cost because we want to demonstrate that we’re a value add. And this isn’t just about .1s and 1.0s and a bill every month there. There’s an expectation of more. There’s a marketplace that requires more.

 Looking Ahead

LAW WEEK: Is there anything that stands out to you as something big that you’re expecting to shift for next year?

BERNARD: I’ll just go back to data privacy, data security. 

I think in the U.S. we’ve only started to see that become an issue the way it has been in Europe. I think Europe’s at least a year, if not more, ahead of us on that. But I think we’re going there. 

But by and large in terms of the business of legal services, my analogy is it’s kind of like watching the minute hand on a clock it, when you look at it, it immediately doesn’t look like it’s moving. But over time, it’s definitely moving. And I could say I’m not expecting any revolutionary changes in 2019, I’m just expecting a continuation of the trends we’ve been talking about.

REIMANN: This is the first time I think I felt like the next economic downturn is on the horizon. And it seemed like every year for a number years, it was just two years away, it’s two years away. Now you’re hearing a lot more and you’re seeing more with interest rates creeping, and that is already having a direct impact on the residential homebuilding market. 

And I do work for a lot of bank clients and lend into production builders and lot bankers and lot developers, and they’re getting nervous. I think that from our standpoint, I’m going to assume that whether it’s the third or the fourth quarter of next year or it may spillover to the first quarter of 2020, I would expect some softening in the economy. It’s going to happen eventually, I’d just as soon have it happen and get it over with. 

But what that means for me is we need to be thinking about what that means for our legal services. And what do we have to be prepared for? One of those things is going to be more of the workout, the bankruptcy, those types of things. And are we staffed up appropriately for that, and are we ready so that we can meet the needs of our clients when those things happen? And it’s hard because you don’t want to gear up today for something that’s going to happen 10 months from now, but at the same time, you don’t want it to happen and not be ready. So it’s something we’re just going to be watching as we go into the middle of the latter part of next year.

HARDY: I agree that the economy for the first time in several years feels a lot more uncertain. And what I’ve learned over 18 years is that’s not necessarily a bad thing for law firms. For law firms, there’s opportunity in down markets, opportunity to get talent opportunity to expand your client base.

It’s the law firms that are flexible and nimble enough to take advantage of those opportunities that will succeed whether the economy’s going up, and I think more so that really distinguish themselves when the economy is not doing so well. I don’t know what 2019 holds. But if it is downturn, you expect law firms to be on top of it and use it to its advantage to their market advantage.

BERNARD: I’m sure I watch the same websites and read the same papers as you guys. It seems like there’s a consensus developing that there are storm clouds on the horizon. I don’t think they’re going to affect us this year. But next year, at some point, it sounds like we’re going to have an economy that’s significantly softer than now, to Curt’s point. 

To Franz’s point, I also agree that law firms in that environment are probably the best positioned businesses to be in. Another is litigation. I find companies that would let conflicts slide and not litigate them in a good economy, when things start to go into a more contractionary mode, well, they’ve got plenty more time to try to make some money by winning some conflicts with their competitors.

LAW WEEK: Do you think the national merger frenzy that we’ve been seeing in the legal industry is going to continue in that direction? 

REIMANN: I think it will. I think it might be more at those large, global firms that are worried about being able to compete. Maybe particularly more so if the economy is going to soften, the big national firms merging or where you were taking a 600-lawyer firm and an 800-lawyer firm and becoming a 1,400-lawyer firm, I don’t know, I don’t, I don’t know how many more of those there are. But I think there’s still a lot of room for the 100- to 200-lawyer firms either merging with a co-equal or getting acquired, so to speak, by a much larger firm with a much larger footprint that they see a benefit in terms of their ability to continue to thrive.

BERNARD: I fully agree with Curt on that. We’re doing that, we’ve opened offices recently in Houston and Dallas and Austin, because to your point earlier in the conversation, there’s a lot of smaller firms in Texas that are nervous right now looking to catch up with big firms. So we’ve been a beneficiary of that, and maybe creating part of the concerns that they have to begin with, that if they don’t do that they’re in trouble.

I think for law, unlike other businesses, there is a natural limit on how big a firm can get because of things like conflicts and ethics rules and just interdisciplinary issues that are inter-jurisdictional issues. That just gets so ridiculously complicated that it just doesn’t make sense to have like one or two giant law firms in the country, I don’t see that ever happening. I’m sure there will be some big firms merging. 

But what’s interesting is how does that affect the Denver market? Because it seems like we’ve had a lot of big national firms come into the market in previous years, but right now, I don’t see like a lot more than that. I’m not expecting it. 

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