Defections Mark Big Changes for Two Firms
Lathrop gains transactional attorneys at Blumenfeld's expense
by Heather Cole
Missouri Lawyers Weekly — March 21, 2007
In early March, Brent Baldwin had a problem other law firm managing partners might envy.
Baldwin, the managing member of Lathrop & Gage's St. Louis operations, had seven attorneys from Blumenfeld Kaplan & Sandweiss starting at Lathrop's Clayton office in two weeks. Lathrop, however, didn't actually have a Clayton office.
Baldwin, who until then had been leisurely scoping out office space in Clayton and points farther west, hastily arranged the lease of 11,000 square feet in the Pierre Laclede Building . By the middle of last week, the lease still wasn't signed, but the deal for the new attorneys was sealed, with the lawyers set to start today.
The attorneys' move makes for a dramatic change for both Lathrop and Blumenfeld Kaplan. Lathrop, which has 21 attorneys in a downtown St. Louis office, anticipates adding another two attorneys in short order to the Clayton office. The firm is taking a big step with the acquisition toward an ultimate goal of around 35 attorneys in St. Louis . Blumenfeld, which also recently saw the exit of four attorneys to another firm, Greensfelder Hemker & Gale, has lost lawyers with an estimated $4.5 million in business within a month.
After quick growth through the acquisition of large groups in the past, Blumenfeld is falling back on a slow-but-steady expansion model, according to President Phil Kaplan. Kaplan disputed the $4.5 million number, drawn from the estimates of officials at Greensfelder and Lathrop, but wouldn't otherwise comment on a figure for the revenue loss.
The attorneys joining Lathrop as partners are well-known zoning attorney John King; Bennett Keller and Scott Malin, whose practices include estate planning; Ira Blank, a labor and employment attorney; Donn Herring, who has a health care and business transactions practice; and Eric Schmitt, who has a real estate and litigation practice. Andrew Hogenson, who also does estate planning, is joining as an associate.
The attorneys, who still were at Blumenfeld as of press time, weren't talking about their moves. Kaplan pegged the departures to a relationship that "didn't work out." Baldwin and Lathrop Chief Executive Tom Stewart said the attorneys probably were attracted by the ability to grow their practices more at a larger firm. Blumenfeld will have 37 attorneys after the exodus. Kansas City-based Lathrop has 275.
The new attorneys have client lists weighted toward wealthy individuals and their private businesses, Baldwin said. The clients include Cingular Wireless, Bachman Machine Co. and Bakers Footwear Group Inc.
The attorneys' combined book of business is "more than $3 million and less than $10 million," according to Stewart.
Adding the core group and opening the Clayton office will help other attorneys make the decision to join, Baldwin said.
Lathrop doesn't have a specific target for a number of lateral hires in St. Louis , but will be looking for small groups that complement the firm's practices, Stewart said. "I think 35 attorneys would be enough of a critical mass."
Lathrop & Gage's acquisition comes with a cautionary tale for law firms, however: Expansion announcements can turn into publicity over departures several years down the line.
That was the case with Blumenfeld Kaplan, which happily announced in 2001 the addition of nine attorneys from Rosenblum Goldenhersh Silverstein & Zafft. Four of the lawyers now joining Lathrop - Keller, Blank, Malin and Herring - were the last of that group remaining at Blumenfeld.
Three others - Jay Nathanson, Marilyn Nathanson and Leonard Vines - were among those who left for Greensfelder. The three have a book of business in excess of $1.5 million, according to the estimate of Eric Riess, manager of the corporate department and leader of the franchise practice at Greensfelder.
Two attorneys, Mark Berry and Mark A. McColl, left last year for in-house positions with clients, according to other former Blumenfeld attorneys.
Vines and Marilyn Nathanson, who is married to tax attorney Jay, said they exited for the opportunity to bring their franchise practice together with Greensfelder's.
"Different people left for different reasons," said Vines, who added that he "was very happy at Blumenfeld."
Vines and the Nathansons were actively pursued by Greensfelder. That wasn't the case with the group leaving for Lathrop. Blank, who had worked in Kansas City some time ago and had some connections to Lathrop, initiated the discussions, according to Stewart. Blank referred questions to Stewart.
Stewart said an attraction for the attorneys' might be the opportunities to "cross-sell" services to specialty areas Blumenfeld doesn't have, such as bankruptcy, intellectual property, and mergers and acquisitions practices. Lathrop also offers strong marketing support, Baldwin said.
Kaplan said he'd seen the fallout at other firms when mergers and acquisitions didn't work out, but it was not usually something that happened at Blumenfeld. The recent departures mark the first time in 17 years that Blumenfeld has lost a senior partner, Kaplan said.
"We're a 60-year-old firm. In our experience people who come here generally stay here," he said.
Blumenfeld Kaplan has been fairly successful at hanging on to attorneys, considering the firm's growth over the past ten years, said Aaron Williams, president of Aaron Consulting Inc., a nationwide attorney search and legal consulting firm based in St. Louis . Williams estimated Blumenfeld had doubled in size in the past ten years.
Blumenfeld hovered at between 44 and 53 attorneys from 2000 to 2005, according to Missouri Lawyers' rankings of the largest Missouri firms.
In addition to the Rosenblum group, Blumenfeld also acquired four attorneys from the former Ziercher & Hocker firm in the last several years. Three of the former Ziercher & Hocker attorneys still are with Blumenfeld, Kaplan said.
"In large practice group acquisitions or law firm mergers it is inevitable that fallout will occur, either at the beginning or years later as the culture of the larger entity makes adjustments and basically asks people to buy in to those adjustments," Williams said. "This worked for a pretty long time with (the Rosenblum) group."
For now, Blumenfeld has no plans for either a merger or acquisition of a larger group, and will stick with steady growth. Three associates are joining this year, and the firm also will have two summer clerks, Kaplan said.
"We're talking to some laterals, as we always do," he said.
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