Chicago Law Firm Finds That NYC Is Its Kind Of Town

Big clients, huge profits for Mayer Brown

David Butowsky, a well-respected Manhattan corporate lawyer, recently did something that would have been unthinkable a decade ago.

He gave up his position as a name partner at his 80-lawyer firm to join the fast-growing New York office of Chicago’s Mayer, Brown & Platt - the nation’s ninth-largest firm.

The decision to leave his old firm, Gordon Altman Butowsky Weitzen Shalov & Wein, was made easier because the average Mayer Brown partner in New York takes home just under $1 million. That’s the same kind of bounty that partners at many of the city’s biggest and most profitable homegrown firms make.

"I needed to have a bigger firm," says Mr. Butowsky, who took two other partners and 10 associates from his former firm with him. "I’ve had clients say, ‘You know, Dave, we would never consider any-one else, but we worry from time to time about your firm’s depth.’"

Not too long ago, a firm like Mayer Brown would have had little appeal for a lawyer like Mr. Butowsky. The firm’s office here was small, and struggling to forge relationships with Wall Street financial institutions.

But over the past decade, Mayer Brown’s Manhattan office, now 165 lawyers strong, has become one of the biggest success stories among out-of-town firms. While New York plays host to a dozen such firms with big local practices, Mayer Brown’s Big Apple office regularly competes with the biggest native practices for high-profile corporate finance, banking, securities and litigation assignments.

Except for Los Angeles-based powerhouse Latham & Watkins, no other out-of-town firm has a New York operation that’s as profitable as Mayer Brown’s, law firm observers say.

"The office has had a phenomenal track record," says Karin Greene, a principal in legal recruiting firm Greene Levin Snyder. "It is a young, very vibrant office, and it’s filled with lawyers who came from the best New York firms."

The seeds of Mayer Brown’s success were planted some 15 years ago, when the firm had no more than 10 lawyers here and most were from Chicago. The firm opened its New York office in 1974 mainly to serve Continental Bank, one of its major Chicago-area banking clients.

When Continental Bank almost filed for bankruptcy in 1984 and faced an uncertain future, Mayer Brown was at a crossroads: It could either shut its New York operation, or stay in Manhattan and try to build a true national practice. Mayer Brown chose to stay and fight for a seat at the table.

However, the firm decided not to build a full-service practice in New York that would try to compete on all fronts with Manhattan’s top firms. Rather, Mayer Brown plays off its strength in commercial finance and banking law, and focuses its attention on building a high-profile corporate finance office.

One of the first native New Yorkers that Mayer Brown recruited was Michael Zinder, a corporate lawyer from Simpson Thacher & Bartlett.

"When I joined in 1985, they were just embarking on a strategy of building a practice in financial services," says Mr. Zinder, co-administrator of Mayer Brown’s national corporate and banking practice. "Our strategy is to be among the very top in the few areas in which we practice."

Most of Mayer Brown’s clients in New York are financial institutions, like CIBC Oppenheimer, Morgan Stanley Dean Witter, Lehman Brothers and the Bank of Nova Scotia. The firm also has developed robust practices in litigation, real estate and bankruptcy. The addition of Mr. Butowsky and his group of lawyers expands the New York office’s expertise in advising mutual fund managers.

"I see firms like ours having a tremendous advantage over very large New York firms and smaller non-national firms," says Steven Wolowitz, a litigation partner who joined Mayer Brown in 1988 from Rosenman & Colin. "Because we are part of a national firm, we don’t have to try to be all things to all people."

As with most out-of-town firms that have big New York offices, Mayer Brown’s operation is no longer a bunch of carpet-baggers. The local office now has only two transplanted Chicago lawyers. The rest were either recruited from other Manhattan firms or hired straight out of law school.

Mayer Brown’s New York office also had the distinction last year of paying top dollar -$105,000 - to first-year lawyers in the city. In the next few weeks, the firm is expected to match the current going rate of $108,000 for starting lawyers. The only real dilemma facing Mayer Brown is the question of whether it can have too much success too soon. As the New York office grows in stature, it becomes vulnerable to having its best and brightest lawyers cherry-picked by rival firms. In addition, the profitability gap between New York and home offices is growing.

Last year, according to The American Lawyer, the average partner in Chicago made $645,000, about $300,000 less than partners in New York, sources say. Mr. Wolowitz dismisses talk of any tension between New York and Chicago partners, noting that the New York operation makes Mayer Brown a healthier firm.

Consultants agree: "If a New York office of a non-New York firm is not outperforming the home office, then that firm’s losing here, because New York is where you get premium work," says Jean Fergus, a principal in recruiting firm Fergus Legal Consulting Inc.

Reprinted with permission from Crain’s New York Business, August 30, 1999.