Baltimore law firm at a crossroads

May 30, 1992|By Kim Clark | Kim Clark,Staff Writer

Frank, Bernstein, Conaway & Goldman, one of Baltimore's biggest and most venerable law firms, will hold a series of meetings this weekend to make crucial decisions about the firm's future, according to people close to the firm.

They said several attorneys at the firm, which is suffering from a downturn in its real estate business, are already making plans to leave the 120-lawyer firm.

Current and former Frank, Bernstein attorneys, as well as others familiar with the situation, have said in the past few days that top partners have held meetings with staff members and clients this week to discuss the 113-year-old firm's financial difficulties. They said the firm's partners are expected to vote tomorrow on how to proceed.

Most of the firm's senior partners either did not return messages or refused to comment this week. Ray Weiss, spokesman for the firm, said he had "no information" about financial difficulties at the firm or a pending meeting.

But Frank A. Adams, president of Grotech Partners, a Timonium-based venture-capital firm that is represented by the law firm, said yesterday that he was told by lawyers from Frank, Bernstein that many attorneys probably would move to other law firms.

And a top partner in another Baltimore law firm, who spoke on the condition that he not be identified, said his and other firms have been holding "hypothetical" discussions with Frank, Bernstein attorneys about the possibility of job offers, depending on what the partners decide at a meeting scheduled for tomorrow.

The attorney predicted that attorneys in downtown Baltimore might be busy Sunday night after the meetings were over. "The phones will be ringing Sunday night as they make their deals," the lawyer said.

The news of impending changes at the well-established firm has been traveling rapidly through the legal community in recent days, surprising many.

"Frank, Bernstein is one of the best-known real estate and corporate law firms. . . . They had a booming, booming practice," said Anne Neal, a headhunter for law firms who said she had heard of the problems over the past few weeks. "What is scary is they did everything right. They didn't have big debt" or overly ambitious expansion plans, she said.

Frank, Bernstein's troubles come at a time when many other law firms are also struggling with the recession, she said. Clients are refusing to pay high hourly fees, are limiting the number of lawyers they will allow to work on cases and are declining to take on the complicated deals that used to generate big fees, she said.

One reason for the apparent financial difficulties of the firm is the expensive leases on its offices -- many of which have large empty spaces because of the company's staff reductions over the past year -- according to one attorney at Frank, Bernstein, who spoke on the condition of anonymity.

The attorney said one of the firm's biggest financial challenges is renegotiating a lease on its 300 E. Lombard St. headquarters, a building owned by a consortium of Frank, Bernstein partners and the Rouse Co., which is a client of the law firm.

This weekend's meeting could represent the culmination of more than a year of financial difficulties for the prestigious firm, which rode the real estate boom during the 1980s only to suffer during the real estate bust, former partners said.

Last summer, the firm laid off seven associate lawyers, saw another seven partners leave and closed its offices in Towson and Columbia. Frank, Bernstein partners also held discussions with other firms about mergers, Shale B. Stiller, managing partner at the law firm, said last July.

Earlier this week, Frank, Bernstein announced it was closing its small Washington office.

As of last week, the firm had about 120 attorneys, according to Mr. Weiss. The firm had as many as 180 attorneys in the 1980s.

In February 1991, Frank, Bernstein lost three of its top bankruptcy lawyers after attempts at streamlining the firm to adapt to the recession caused internal disputes.

Harvey M. Lebowitz, a former bankruptcy judge who left the firm last year for the Baltimore firm Whiteford, Taylor & Preston, said he hadn't expected severe problems but that the downturn in Frank, Bernstein's real estate business probably was to blame for any troubles.

Frank, Bernstein's expertise in real estate transactions brought it plenty of business during the 1980s, and "transaction work brought in large fees," Mr. Lebowitz explained.

"But that's dried up, and they weren't prepared for it," Mr. Lebowitz said. "That's one of the reasons I left. . . . They didn't make provisions for the department that was really going to produce the work."

The troubles are a reversal for a firm that for decades was one of the most prestigious and important in the region.

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