Leighton Lord, Chairman of Nexsen Pruet
June 4, 2009
BY: Alan Cooper, Publisher, MidlandsBiz
MidlandsBiz:
How is the economy affecting your law firm and law firms in general?
Leighton Lord:
As a whole, Nexsen Pruet is doing well. Some practice areas are down, but others are up. We exist to serve our clients and to the extent some of them are hurting, that affects us. The legal press tends to be very New York-centric, and more specifically Wall Street-centric in its reporting. Without a doubt, some Wall Street law firms have gone through an amazing transformation and suffered a great deal in this economic downturn. The firms that were very heavily dependent on the Bear Stearns and Lehman Brothers of the world, for example, are the ones that have taken the biggest hit because it left a gaping hole in their client portfolio.
That said, the pain, while not as concentrated to the Southeast, is spread all across the country. The credit markets are thawing now, but the credit freeze over the past year has affected our clients. A large number of firms in this region depend fairly substantially on some form of credit to get things done in their businesses. When the banks froze up, it sent ripples though the entire region.
Two factors shield Nexsen Pruet from the current forces in the economy. First, the big money-center law firms are very highly leveraged when it comes to the number of associates that they employ compared to the number of partners. A big mortgage-backed security department (where literally millions of documents are generated) might see a structure with 3 or 5 partners and as many as 30 associates. That model has collapsed. There are stories out of New York where the associates in entire departments have zero work to do.
Our clients require more direct partner attention, so Nexsen Pruet has closer to a 1:1 ratio of partners to associates (as do many of the law firms in this region, for that matter). We have some associates that are not as busy as they were two years ago, particularly in our real estate and corporate practice groups, but overall there is plenty of work and some are extremely busy. The pure corporate transactional and real estate work has slowed down because of the credit freeze.
The second difference is that Nexsen Pruet has a well diversified client base with no one client accounting for more than 2% of our overall revenue. Most other firms in the Midlands have similar diversification in their portfolio of clients. In contrast, some New York firms had 35% of their business tied up in mortgage-backed securities from one client and those firms have completely dissolved!
MidlandsBiz:
Are there practice areas that pick up in a down economy?
Leighton Lord:
Litigation picks up because there are disputes, and while we would rather be putting deals together, there has been a noticeable increase in the number of workouts that we are doing where the banks and borrowers are hiring us to unwind deals. They are looking for a fresh set of eyes to restructure complicated loan structures that were set in place prior to the downturn.
MidlandsBiz:
What is your background?
Leighton Lord:
I was an army brat who grew up in a small town. My father was stationed in Hawaii where I was born, but I grew up primarily in Delaware. I attended the University of Delaware before getting my law degree at Vanderbilt.
MidlandsBiz:
Why did you choose to go to law school?
Leighton Lord:
I always had a favorable impression of lawyers when I was growing up. In our small town in Delaware, lawyers always seemed to be heavily involved in the community and in government – on the commissions and task forces etc – getting things done.
I was the type of person growing up that could never figure out what I wanted to do. I had a lot of different interests so my philosophy was to try and eliminate the jobs that I did not want to do.
I had an interest in government and thought that I would like to obtain a PHD in political science and teach at the college level. During undergrad, I helped run a political campaign and I was on former Governor of Delaware’s Pete du Pont’s speech writing team – as a researcher. One of my professors encouraged me to apply to a couple of law schools because a law degree would offer me the flexibility to either practice law or teach.
MidlandsBiz:
Outline a brief history of your professional career after law school?
Leighton Lord:
My first break came when I earned a clerkship with the Delaware Court of Chancery, the Court that decides major corporate disputes in this country. (60% of all corporations in the United States are located in Delaware). Within two days, I was staying up all night studying a hostile takeover bid at Dunkin Donuts; three weeks later it was a dispute about a major equity infusion into Genentech. For a young guy with a law degree, these were massive, cool cases to get involved in.
After the clerkship, I took a job at a corporate litigation firm in Wilmington, Delaware as an associate. It was a great experience at a hard charging law firm, but one year later I received a call from United States Senator Bill Roth’s staff about a job as staff council to a Senate Permanent Subcommittee on Investigation into a rogue bank known as BCCI (Bank Credit & Commerce International) that was accused of money laundering and much more. They were looking for someone with corporate experience to assist with the investigation and I thought it sounded exciting. I was very familiar with The Permanent Subcommittee on Investigations and the famous people from Robert Kennedy to McCarthy who had been involved with the Subcommittee. The Subcommittee was also famous for the 1960’s Valachi Hearings into organized crime organized by Arkansas Senator John McClellan. In my office in the Senate, the original organized crime charts that appeared in the Godfather movies were still hanging up on the walls!
The time that I spent in government from 1990 to 1993 really helped me build my confidence and jump started my career. Two months after I arrived, I took my first deposition of my legal career, a four hour marathon with a reputed mobster. That was interesting and kind of scary!
MidlandsBiz:
How did you get to Columbia?
Leighton Lord:
I married a Columbia girl who I had met at Vanderbilt. We had our first child in Washington, DC and started thinking about better, saner places to raise a family. We wanted to move to a medium-sized town, with a sophisticated business community and lots to do from a cultural standpoint and easy access to the outdoors.
Our decision to move to Columbia has been the best we ever made. Columbia is a wonderful town. In fact, outsiders often appreciate Columbia more than those born and raised here. In the 15 years that we have been here, the thing that impresses me the most is that Columbia is constantly improving. When we moved here, the Vista was only the Motor Supply Company and the Carol Saunders Gallery. There is a great energy in the downtown area, particularly right here at Main and Gervais where we are located. There is plenty of opportunity in this town.
MidlandsBiz:
What was your first job in Columbia?
Leighton Lord:
I interviewed with a lot of firms in Columbia and decided that Nexsen Pruet was the right place for me. As I got back into the practice of law, I was looking for a law firm with a solid reputation and a desire to keep moving forward.
MidlandsBiz:
What is the ownership structure of your law firm?
Leighton Lord:
We are a private partnership that is set up as a limited liability company (LLC). We are owned by the current 80 equity partners, or more precisely, members, in our law firm.
MidlandsBiz:
How do you value the shares of the company?
Leighton Lord:
In order to avoid any big swings in the ownership structure of the firm, we have a very detailed budgeting process that takes a 3 year rolling average of the percentages of revenue generated by our members. The value of the shares that a member owns depends proportionately on the amount of revenue that he or she generates. At the end of the year, owners participate in a proportional share of our net income.
MidlandsBiz:
What challenges do you face with this type of ownership structure?
Leighton Lord:
The challenge is to maintain and foster an ownership mentality amongst the members of the law firm as we grow and also as we spread out geographically. We need everybody to think like an entrepreneur/owner, not as an employee, and consistently act in a manner that is in the best long-term interest of the firm. I think we do that very well, but my job is to make sure we keep doing it and we do it better each year.
MidlandsBiz:
As the managing partner, what percentage of your time is spent practicing law, and what percentage is spent running the company?
Leighton Lord:
It’s split about 50/50 between practicing law and management. I was elected by the partners of the firm to the position of managing partner with a main goal of setting the strategic vision of the firm and putting the right people in place to achieve our goals. I have an Operations Managing Partner to assist me with the numbers side of the business. Mike Brittingham, a lawyer who also is a CPA, does an excellent job analyzing the detailed metrics of the firm such as occupancy cost in order to make sure that we are on budget from a revenue and expense point of view. We also have a wonderful non-lawyer professional staff.
MidlandsBiz:
What is the strategy of the firm? What do you do well?
Leighton Lord:
As a full-service law firm, we need to be THE law firm for all of your business needs. While we do work with public companies, our sweet spot client is the middle market, family or privately controlled, growing business. We need to be able to provide all of the services that a business might need during its entire lifecycle: formation, contracts, employment, real estate, litigation, environmental and intellectual property.
We are also always looking to grow and expand our practice areas. We have one of the oldest and most well established healthcare practices in the state, and we are looking to replicate this model in North Carolina.
Our most exciting new practice is the white collar crime/ crisis management practice that we are building around Judge Billy Wilkins, former chief judge of the Fourth Circuit. We saw a real need for this practice in the region and view it as a huge growth area for the firm. Clients get into problems, and they need someone to help pull them out of the ditch. We are very fortunate to have Judge Wilkins with us; he could have chosen to work anywhere he wanted. Although we just started this practice last year, it is doing extremely well under Judge Wilkins’ leadership.
The strength of Nexsen Pruet, I believe, is that we are good at thinking entrepreneurially and being creative about the ways that we can build both our standard and non standard practice areas. Five years ago, for example, we formed a subsidiary called Nextra that focused 100% on a highly efficient system of document review for large cases. The company was so successful that we sold the business and are now rebuilding it, better than before.
MidlandsBiz:
What is the key to success in a law firm?
Leighton Lord:
It is important to reach out to your clients, get to know them and get to know their business, call them informally on the phone, take them out to lunch – off the clock. Go hug your clients before your competitor goes and hugs them, is one of my favorite sayings.
At Nexsen Pruet, we have started free employment briefings for our clients. Connectivity is a real buzzword in all industries these days, but we find that the best client generators at our firm are invariably the ones that are the most connected. Make sure that everybody in your sphere of influence – friends, colleagues, and peers – knows what you do for a living! How are people going to know whether to call you when they need help if they don’t know what you do?
Being connected is more than just Facebook and Twitter. It’s about being on boards of nonprofits, supporting local cultural events, and getting out and doing speaking engagements.
MidlandsBiz:
Talk about your love of triathlons and your nonprofit organization Tribuddies.
Leighton Lord:
I started doing triathlons about 15 years ago. What I love most about triathlons is that you have to be very strategic and deliberate with your preparation; you just can’t show up the day of the race and expect to be successful. Also, the enthusiasm and positive energy at these races are infectious. Triathlons are also the best type of travel there is for me. I have been fortunate to have participated in triathlons in San Francisco (where you get to swim from Alcatraz to the mainland) and in my birth state of Hawaii on the beautiful island of Maui.
Triathlons are about character, confidence and spirit. Having seen the transformation in my son when he crossed the finish line in his first triathlon, I thought that putting together a program that would allow kids in the Big Brother Big Sister program to do a triathlon would be a great way to help them build some much needed self esteem that would teach life skills like planning.
We formed an organization called Tribuddies to assist with the logistics of putting a race together and helping at-risk kids train for a triathlon. We recruited volunteer trainers, asked local bike shops to donate bikes and local pools to donate pool time. Last September, we hosted our first Youth Triathlon and our kids did their first triathlon.
MidlandsBiz:
How has marketing changed for law firms?
Leighton Lord:
We require our lawyers to come up with individual marketing plans; we have each practice area come up with a group marketing plan; and our law firm overall has a marketing and strategic plan. We ask all of our lawyers questions like: What are you doing this month to grow your business?
It’s hard to compete these days on reputation alone. You have to be more strategic about how you market your firm and more aggressive. Marketing encompasses a broad range of activities from advertising, to public relations, to branding, to sales efforts, to building a lawyer’s role in the community.
Law firms are businesses, but they have traditionally shied away from using business terms like marketing, and, heaven forbid – sales! I read the other day that a large national law firm actually has a Director of Sales on staff. I think it’s definitely a trend that you are going to see more of in the future.
We are in the service industry. We need to service our clients or they will go somewhere else. That is the key to staying competitive and the ultimate form of marketing.
MidlandsBiz:
What is your leadership style?
Leighton Lord:
Probably more slow march than bold stroke. I believe every organization, and person for that matter, should be dedicated to constant improvements. Like the tortoise, if you keep at it, you will win the race.
MidlandsBiz:
What are a few of your favorite books?
Leighton Lord:
For non-fiction, I really enjoyed American Creation by Joseph Ellis, about how messy the founding of our great country really was. For fiction, everything by William Gaddis, especially A Frolic of His Own, you have to love a novel that begins, Justice? – You get justice in the next world, in this world you have the law.
By Alan Cooper, Publisher, LowcountryBizSC
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