Large Massachusetts law firms have a habit of launching spinoff companies in arenas that have only a passing relationship with law. WilmerHale and Choate, Hall & Stewart both have their own affiliated financial-advisor corporations, and ML Strategies, a lobbying firm, has long been Mintz, Levin, Cohn, Ferris, Glovsky & Popeo's eyes and ears on Beacon Hill.
But in today's brave, new economic world, are spinoffs the key to survival for big firms?
At least one Boston firm, Prince, Lobel, Glovsky & Tye, where a spinoff limited liability corporation was launched by real estate partner Craig M. Tateronis, is anticipating a bright future for its new satellite operation.
When Tateronis arrived at Prince Lobel in 2004, he brought the makings of an entire real estate practice group and a specialty in a small but lucrative niche industry: wireless telephone companies. It was not long before Prince Lobel was doing business with T-Mobile, AT&T, MetroPCS, Cingular and Nextel and overseeing their real estate transactions.
But, in 2007, Tateronis says, the firm's largest telecommunications client decided that it needed to outsource its network-development work - a move that would have broken the company's ties to its Prince Lobel attorneys. To keep the client's business, Prince Lobel decided to launch its own development company, the Prince Lobel Telecommunications Services Group, and staff it with real estate and construction experts who would procure sites for new cell-phone and telecommunications towers.
Although the telecommunications services group, now up and running, is a separate business entity, it operates out of the Prince Lobel offices, employs Tateronis as its president and, perhaps most importantly, hires Prince Lobel to do its legal work.
"If you're walking around here, you wouldn't know it was different unless you went into our financial accounting database and you were able to see that money that used to come in from the client now comes in from Prince Lobel Telecommunications Services Group," Tateronis says. "I don't know of any other model in the country where something like this has evolved out of a law firm."
The telecommunications affiliate has been integral in keeping Prince Lobel steady in a time of economic stress, Tateronis maintains.
"It was an idea I had toyed with for a number of years, and this was sort of the motivating event," he says. "We had what had been our historically steadiest client relationship take this turn. It was the anchor relationship in terms of this practice … and to see them moving down a different path gave us all the motivation we needed."
Not all law firms seem so pleased with their spinoffs. In late September, just as the financial markets began their swoon, Hale and Dorr (WilmerHale's previous name) Wealth Advisors announced it was changing its moniker to Silver Bridge Advisors after bearing the name of one of Boston's oldest white-shoe firms.
Was WilmerHale, which partially owns Silver Bridge, hoping to disassociate itself from the wealth advisory business? Neither Silver Bridge President Stephen E. Prostano nor Chief Investment Officer Thomas Manning returned calls before press time, so the Confidential Informant cannot know for sure.
November 10, 2008
