The Firms

July 7, 2011 6:31 PM

For Holme Roberts, Mass Salt Lake Departures a "Wake-Up Call"

Posted by Brian Baxter

When tax practice chair David Strong left Holme Roberts & Owen for Morrison & Foerster in June, he became the latest practice head to depart the Denver-based firm in a lateral move.

Holme Roberts--which started the year with 192 lawyers and is now down to about 165--took an even bigger hit when 27 lawyers, 16 of them partners, jumped from its Salt Lake City office to Rocky Mountain rival Holland & Hart between March and May. (As of Thursday, one Holme Roberts partner remained in Salt Lake full-time.)

The mass departures helped prompt a leadership change at the firm, with Randall Miller being named the new managing partner in May. Miller took over from Paul Smith, chair of the firm's executive committee, who was thrust into a leadership role in January after his predecessor, Kenneth Lund, left to become chief counsel to Colorado Gov. John Hickenlooper.

In a candid interview conducted shortly before the Fourth of July weekend, Miller told The Am Law Daily that Holme Roberts--a full-service firm whose bread-and-butter practices are litigation, general corporate, and natural resources and environmental work--began retooling its business operations a year ago amid what he labeled "a fluid situation" that has required some operational restructuring.

Earlier this year, for instance, the firm announced that it was laying off up to 15 percent of its 200-person nonattorney workforce. (Holme Roberts previously shed 5 percent of its staff in 2009.)

Randy Miller

Then came the raft of Salt Lake departures.

"The Salt Lake office was not an office we wanted to lose, so that was a pretty big wake-up call," says Miller (pictured right). "That was sort of the pivot point for [the firm] to change and really focus on a more hardcore restructuring. We imported about 20 percent of that office's work, and we've been able to retain most of that. And so while it wasn't a good thing, we were able to overcome the economic impact."

Miller, a 39-year-old Colorado native, joined Holme Roberts in 2001 after returning home from Chicago, where he practiced at DLA Piper predecessor firm Rudnick & Wolfe. Since 2007, he has served on the firms' executive committee. In that capacity--and with the blessing of his fellow committee members--Miller says he used the occasion of the Salt Lake losses to interview an array of outside legal consultants about the firm's strategic direction.

"I wanted something different than, 'Put your 20 goals up on the wall and have a big team hug so we can talk about how great we can be,'" Miller says. "That's not what we needed. We have a great brand, a solid corps of lawyers, and top-notch clients, but our business practices have not been as robust as we've needed them to be."

Miller selected Altman Weil principals Bill Brennan and Ward Bower to advise Holme Roberts on its future. Both, he says, agreed that the firm's culture was strong and that its partnership included some high-performing attorneys. At the same time, Miller says, Brennan and Bower said some changes were necessary.

"Our overhead was entirely out of whack," Miller says. "We had a disparity in performance that a lot of regional firms face, and we had to address both of those issues."

Altman Weil advised Holme Roberts to reshuffle its leadership structure with Miller, a commercial litigator, taking on the managing partner title. Miller says that he started the job on a Monday and within days was acting on recommendations from the Altman Weil consultants.

"By Thursday, we had implemented about 33 percent of the plan," Miller says. "In that first 33 percent, we had pushed our overhead ratios on a numeric and dollar [value] basis into best practices."

Among the key early moves, according to Miller, was renegotiating the firm's leases and its contracts with vendors in light of the reduced lawyer head count and staffing cuts. Now, Miller says he believes Holme Roberts is on the right track.

"Our revenues have remained strong, the corporate group is starting to get busy again, and most of our cost-cutting hasn't actually even triggered yet because of severance deals," Miller says. "Our white-collar crime group just got a huge victory for Xcel Energy in a multiweek, highly publicized trial out here. We've still got a long way to go, but there's a palpable feeling of stabilization and optimization toward the rest of 2011."

Miller notes that the Holme Roberts finance committee informed him that the firm is on track to meet the budget figures drawn up at the start of the year--something he thought was unlikely two months ago.

Asked why the firm took such a hit in Salt Lake, Miller points to the "ongoing cultural stress" of being one of the oldest and largest firms in Denver combined with a commitment to growth outside of Colorado.

Miller says that the firm's California expansion in particular--through offices in Los Angeles and San Francisco--could have had a direct impact on its Salt Lake operations. (The firm also has outposts in Dublin and London, but lost its Munich office to Orrick, Herrington & Sutcliffe in January.)

"The benefits of expanding into California weren't as easily identifiable for partners practicing in Salt Lake," he says. "I wouldn't say we were spread too thin, but we're committed to growing there, which isn't always the easiest process. I think Los Angeles is known as one of the most difficult markets for a firm to establish an office. And that creates some leadership bandwidth issues with some economic ups and downs."

The firm's financial performance still offers some cause for concern. While gross revenue stood at $115 million in 2008, it dropped to $104.5 million in 2009, and inched down to $104 million last year. Profits per partner figures, meanwhile, continue to lag behind revenue per lawyer. Last year, PPP at the firm was $380,000; RPL was $540,000.

"There's a disconnect [between PPP and RPL] that we aim to close," Miller says. "[PPP] is something we can improve, although it's still pretty solid given our peer group and geographic base. But we should be able to achieve a profit ratio that's more competitive."

One consequence of putting new cost controls in place has been the loss of some partners whose practices no longer fit into the firm's strategic direction. While declining to identify specific attorneys in that regard, he says that some of the recent lateral losses--including Strong and ex-M&A practice head Gino Maurelli, who jumped to Brownstein Hyatt Farber Schreck in May--don't fall into that category: "Gino and Dave were my contemporaries, and they continue to be good friends."

Miller adds that he believes some of the internal conflicts caused by the firm's California push have dissipated because "previous factions have recognized the necessity and benefit of being one firm" with a united focus. The Golden State expansion is continuing, Miller adds, noting that each of the firm's California offices has grown by 30 percent within the past month. That doesn't mean Holme Roberts has a set head count that it's aiming for.

"We're not going to grow or shrink just to do it," Miller says. "We want to grow, but it has to be at an organic pace. Our size gives us real advantages over smaller firms, and by the same token we think that getting bigger can help us in today's economy."

In addition to its regional Denver rivals like Holland & Hart and Hogan Lovells, on the corporate side, Holme Roberts has practice-specific competitors for its California operations and for its energy and natural resources work, Miller says.

Asked whether the firm has considered a merger, Miller acknowledges that Holme Roberts has been approached by multiple firms over the years, with the recent tumult spurring a new wave of offers.

"A lot of really great and flattering firms have reached out to us," Miller says. "But we're not currently in active negotiations with anybody, and there's nothing imminent down the road to speak of yet."

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