The largest firms in Pennsylvania have long called Pittsburgh and Philadelphia -- and sometimes both -- home, but their focus on growth opportunities has long been outside Pennsylvania's borders.
That may start to change.
In the past decade or so, area firms have focused on national and global expansion because local offices were more mature with deeper bench strength. And the business opportunities in the state's two largest markets weren't considered as strong as those in places like New York or Washington, D.C., or markets in the Mountain States and Pacific Coast.
While these firms aren't doing away with global expansion plans, particularly now that the economy is starting to rebound, the recession has pulled them closer to their roots.
Since the start of the year, Reed Smith was able to hire mergers and acquisitions attorney Howard L. Shecter from Orrick Herrington & Sutcliffe's New York office in part because Reed Smith had a Philadelphia presence. This week, Reed Smith added Morgan Lewis & Bockius corporate partner Brian C. Miner.
Miner was a member of Morgan Lewis' mergers and acquisitions and securities practice groups, as well as a co-leader of its infrastructure mergers and acquisitions initiative. Though based in Philadelphia, Miner's practice is international. And according to a statement from Miner, it was Reed Smith's international reach that attracted him to the firm. It's his local ties, however, that are indicative of area law firms' interest in expanding closer to home.
Philadelphia office managing partner Ajay Raju said that as the firm focuses on operating in nearly every key financial and industrial hub in the world, it is looking to nurture and expand its local and regional relationships as well.
"Whether we're helping a small company get started or facilitating an established firm's entry in a new regional market, Reed Smith is able to tailor our services, our fee structures and the overall scope of the relationship in a way that clients would typically expect only from a regional firm," Raju said.
Reed Smith isn't alone in its efforts to capitalize on regional clients. The health care, pharmaceutical, financial, energy and education industries that have a historic presence in Pennsylvania are increasingly pointed to as business opportunities by area firms.
And as the recession diverted attention away from global expansion and toward revenue generation wherever it could be found, firms are going home again.
"The other acquisitions or new offices were taking a tremendous amount of time and resources away from where they thought they were strong and stable," Lori Carpenter of Pittsburgh-based Carpenter Legal Search said of firms' focus outside of the region. "In recession times, we all tend to pull back a little bit to our roots to say, 'What has made us successful?' and, 'These are the people who have made us successful.'"
The renewed focus by Pittsburgh firms on local offices, she said, has more to do with solidifying existing business opportunities than creating new ones. Several out-of-state firms that don't even have offices in the city are starting to court the Fortune 500 companies based in Pittsburgh, she said.
"Pittsburgh needs to be careful and really keep their focus on their relationships and continue to cultivate those and not assume" that those relationships are there to stay, Carpenter said.
Duane Morris is headquartered in Philadelphia and has a growing office in Pittsburgh. Chairman John Soroko said the firm's growth spurt between 1997 and 2007 was focused almost 100 percent outside of Philadelphia, if not outside the state entirely.
But after adding more than 50 Wolf Block lawyers in 2009, many of whom were in Philadelphia, Soroko said his eyes were opened to the possibilities in the area. He said the firm has made it a stated goal to expand across the state.
REVENUE IS REVENUE
With little else to do in the way of cost cutting, most managing partners have said the focus in 2010 has to be on driving revenue growth.
Frank D'Amore of Attorney Career Catalysts said the best sources of revenue were typically found in markets like New York or other large cities. But as nearly every firm has cut rates during the recession, Philadelphia all of a sudden became a more cost effective place to find revenue opportunities.
D'Amore said the handful of area firms that are still driven by rates and profitability will continue to focus on expansion efforts outside of their home offices. But for other international and national firms based in Pennsylvania, the local markets are coming into sharper focus as they hustle to build revenue sources, he said.
And for regional firms based elsewhere but with a presence in Philadelphia, the city has also become an attractive growth opportunity, D'Amore said. If those firms are looking up and down the East Coast, the Philadelphia market has been one of the most stable of the large cities along the Atlantic, he said.
Raju said the global economy is shifting more to the east -- countries like China, India and Russia, as well as other areas like Brazil. He said that as clients move in that direction, so too will the firm. But on the flip side, law firm management is shifting and requiring the use of alternative fees and other value propositions, he said. Having offices across a variety of geographic markets can allow the firm to spread out labor in a cost effective manner and offer the same quality of legal services at better price models than those firms that avoid smaller markets. The goal is to have global reach with local ties, Raju said of the firm.