October 25, 2014

Growth Strategy

Smaller, Stronger

Managing Partner Howell Melton is 'eliminating weakness' at Holland & KNight.

Cynthia Barnett | 4/1/2007


Sipping: Rinker Hall at the University of Florida in Gainesville uses less potable water each day than an average home.

In the 1990s, Florida's venerable Holland & Knight grew to one of the 10 largest law firms in the nation as its first elected managing partner, Bill McBride, led a spate of national and international mergers and acquisitions.

Some opined that H&K was growing too far-flung, too fast or that the growth strategy wasn't entrepreneurial enough. While many national firms culled the ranks of firms they acquired and shuttered some offices, McBride's big-tent philosophy tended to keep all offices and employees after the merger.

The firm endured a rough 2001. First came a downturn in business, then its New York office near the World Trade Center shut down for two months in the wake of 9/11, creating an $11-million shortfall. By the time McBride launched his bid for Florida governor in 2002, the big tent was not proving as attractive as he'd hoped for heavyweight clients.

When Howell W. Melton Jr., the second elected managing partner in firm history, took over in 2003, he began to batten down. "I became convinced that in order to be successful competing nationally, we were going to have to reorganize around practice strength rather than geographic strength," he says.

Melton has closed 10 of H&K's 28 U.S. offices, including operations in Seattle, Sacramento and San Antonio, Bradenton, Melbourne and St. Petersburg. In one year alone, the firm shucked 100 lawyers, from 1,170 in 2005 to 1,070 in 2006. In the National Law Journal's most recent annual rankings of the largest 250 law firms in the country, H&K saw the greatest decline in rank among firms in the top 20, falling from 11 to 14.

Melton's reorganization deemphasized generalists in favor of elite attorneys in specialty areas. The specialists were organized into national practice groups. Billing and collections, once monitored by office, are now monitored by group. Instead of offering lower-rate, localized legal services in many offices, the firm is growing the most-lucrative practices in fewer offices. For example, H&K wants to be a go-to firm for higher-rate specialties such as construction, hospitality, mergers and acquisitions and maritime law. "It's a matter of building on strength," Melton says, "and eliminating weakness."

Results, so far, are good. Key financial and client-satisfaction indicators are up. Billable hours, revenue per lawyer and profit per partner all climbed over the past two years as the number of lawyers dropped. In November, a survey by BTI Consulting of more than 250 corporate counsel at Fortune 1000 companies ranked H&K as one of the nation's top three law firms for superior client service.

The challenge for Melton and his management team, which includes COO Darrell Kelley, a longtime confidant Melton hired in November 2005 to improve the firm's planning and business model, will be to keep those elite lawyers happy and add to their ranks. Melton is trying to make H&K a "talent magnet," with perks that include some of the highest salaries in the industry but without the highest expectations of hours billed. "It's one thing to reward people appropriately," says Kelley. "What we need to figure out is how to award them emotionally."

Melton believes the firm is more collegial today than at its peak size "because people feel everyone is pulling their fair share of the load." He predicts the firm will resume its growth strategy by next year, but not in the big-tent style of the past. Look for H&K to "cherry pick" senior lawyers, as well as seek additional mergers in already-successful markets, including Atlanta, Boston, Chicago and New York.

Tags: Politics & Law, Around Florida, Government/Politics & Law

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