By Ross Hanig
The Recorder
August 13, 2001

GOING FOR THE GREEN: Under managing partner Richard Wilson, Ropers, Majeski has gone after higher-end work for its traditional insurance industry clients. Photo: Jason Doiy

Lita Verrier joined Ropers, Majeski, Kohn & Bentley in troubled times.

It was 1995 and Ropers was coming off record growth that swelled its number of attorneys past 180. But the firm suffered as the dot-com and high-tech sectors came into the forefront.

"When I came on, there had been a lot of turnover," Verrier recalls. "And I think a lot of firms were trying to find an identity and were realizing that a lot of insurance defense work wasn't seen as profitable. So the firm was struggling."

Although slowly at first, Ropers started to bleed.

By late 1996, the firm found itself with 170 attorneys, and by the end of the year it lost 17 more when its Santa Rosa branch split off to form Lanahan & Reilly. Factor in some additional attrition, firmwide managing partner Richard Wilson said, and the departures left Ropers with 148 attorneys.

The attrition Verrier remembers has persisted to this day - Martindale-Hubbell recently listed the firm as having just 96 attorneys.

Wilson says the number never dropped that low, and the firm is presently home to 123 lawyers. And the firm doesn't exactly miss some of the people it lost.

To become more competitive with its peers in the Bay Area, Wilson said, the firm traded a seniority-based compensation system for one based more on performance. With that move, the firm showed a number of partners the door.

"Some left because we came to an agreement that they would be better off if they left," he says. "Then there was a small group we wish had not left."

Ropers, traditionally branded as an insurance defense firm, has also moved into more lucrative work in areas like intellectual property. But since the firm bills out a large part of its IP work to insurance industry clients who tend to pay less than market rates, the firm has found itself in a frustrating place.

Ropers has trained a number of attorneys in more profitable areas, but because they can only set their rates as high as the insurance industry is willing to pay, Ropers' lawyers in areas like intellectual property bill below market for their time. The resulting salary discrepancy has left some of Ropers' best talent ripe for the picking.

"I've had offers out here to double what I'm making," says Verrier, a sixth-year associate in intellectual property. She's stuck around, though, for the quality of life and the quality of assignments.

Former partners estimate that average profits per partner at Ropers come in between $200,000 and $300,000. Wilson said first-year associates make between $75,000 and $87,000 depending on their performance plus what he said can be a "substantial" year-end bonus.

Redefining A Niche

In 1993 the firm brought on 35 attorneys - including several lateral partners - to build practices in environmental matters, health care and banking. At the same time, it paid its first-years $10,000 to $15,000 less than their peers at similarly sized firms in the Bay Area.

In 1994, Ropers ranked last in a nationwide survey of associate satisfaction by The American Lawyer, a Recorder affiliate. Two years later, the firm edged up to 149th out of 156. But the showing still indicated that associates at Ropers were the least satisfied of mid-levels surveyed at a dozen Bay Area firms. Associates said morale was declining in part because they saw themselves as underpaid.

At the same time, the insurance industry - which Ropers did and still does depend on for a large chunk of its business - took as much work as it could in-house to rein in costs.

Ropers responded by further diversifying its practice and taking on the higher-end matters insurance companies didn't deal with in-house.

"There will always be a market for that work," said recruiter Avis Caravello. "Maybe in the long run the two or three that hang on to do it will make it."

While Wilson said the firm hasn't necessarily moved away from handling general liability and personal injury matters for insurance companies, he acknowledges that the firm takes on less work in those areas than it had traditionally.

"And we probably do less environmental coverage than we used to," he said. "We, like most firms, I believe, have done less of this."

In the meantime, Ropers increased its practice in handling bad faith matters, which tend to command higher rates from insurance companies.

Ropers has also boosted its practices in business transactions, commercial litigation, appellate and employment work. But the firm may have seen its biggest increase in intellectual property. Wilson estimates that in recent years the IP group at Ropers has edged its way in as one of the six largest practices at the firm.

Under The Radar

"We've been building this over the years, kind of under the radar," said Michael Ioannou, an intellectual property partner in the firm's San Jose office.

Ioannou is quick to rattle off a sampling of three such cases he handled in the last year that all settled. He represented Rite Track Equipment Services Inc. - a company in West Chester, Ohio, that makes products for the semiconductor and thin film head industries - in a copyright infringement suit brought by Silicon Valley Group Inc. Wilson Sonsini Goodrich & Rosati represented Silicon Valley Group. Ioannou served as counsel for LinkSoft Corp., a wholly owned subsidiary of San Rafael's QuadraMed Corp., in a copyright and trade secrets case brought by Madison Information Technologies Inc. Gray Cary Ware & Freidenrich served as counsel for Madison.

Ioannou also handled a cybersquatting claim brought against Range Land USA by Derone Thraser Enterprises. Gray Cary represented Derone.

"Those were all from different insurance carriers asking me to come in," Ioannou said. And while he won't say what his billing rate is, he did note that "carriers generally pay more for complex IP issues."

He also notes that those cases are just a sampling of the ones he's handled and that he's only one of approximately 15 attorneys at Ropers who primarily handle IP work. From 1995 to 1998, the firm was home to between five and 10 strictly IP attorneys.

While Ioannou represents the likes of Fireman's Fund Insurance Co. and Nationwide Mutual Insurance Co., the firm also claims a number of non-insurance, IP-heavy clients. Ropers serves as primary U.S. counsel to HCL Technologies Ltd., one of the largest software companies in India, and its domestic subsidiary HCL Technologies America Inc. In addition, the firm counts California Micro Devices Corp. and Televideo Systems Inc. on its list of clients.

Ioannou said his billing rate for corporate clients generally falls in the same area as it does for clients in the insurance sector. Observers outside the firm say insurers pay substantially below market for IP.

According to legal consultant Gerry Holt, insurers pay between $180 and $220 an hour for the same IP work firms like Wilson Sonsini and Gray Cary charge $350 to $400 an hour for.

"You want to know how they can go about retaining associates and partners when there's more prestigious work at other firms? The answer is they can't," Holt said.

Ioannou acknowledges the attrition.

"We haven't held on to some talent," he said. "We've been poached just like anyone else."

For example, since 1998 Ropers has lost at least three IP attorneys to Fish & Richardson alone. Kelly Hunsaker left as an associate in 1998, Kimberly Donovan as a partner in 2000 and David Miclean as a partner this year. Fish & Richardson's average profits per partner come in at $660,000 a year, according to this year's survey of the top 200 firms nationwide in The American Lawyer.

"They may end up training them in particular areas, and then they leave," Donovan said.

Ropers has managed to keep most of its clients in the face of associate and partner attrition. Holt of San Francisco's Holt Consulting Services said part of the explanation is that insurance companies are some of the most loyal - albeit demanding - clients around.

In addition, many large Bay Area firms shun insurance work because of its low pay and high maintenance.

Staying Faithful

To help keep associates and partners faithful in the face of temptation, the firm put a renewed focus on one of its longtime selling points: the Ropers culture.

"They stepped up the level of associate-partner interaction from the time I've been there in the last six years," Verrier said.

In addition to all the office holiday parties and after-hours get-togethers, the firm boosted its training programs, she said. Every Friday at 8 a.m. associates have to get up in front of an entire office of attorneys - attendance is mandatory - brief them on three or four cases pending in front of the California Supreme Court, and field questions. Verrier said that when she joined Ropers, associates made presentations once a month. Now they brief their colleagues about every week.

"That wouldn't necessarily be called fun by new associates who are scared to get up and speak," Verrier said. "But it's important."

And as it has historically, Ropers tries to breed loyalty in its associates by giving them substantial work early on.

"I knew I was going to get into case management and that turned out to be right," said IP associate Elise Vasquez, who came to the firm after working as a contract attorney at Paul, Hastings, Janofsky & Walker.

Verrier remembers how even in her first years, she got to take depositions and argue motions in court.

"Basically, at Ropers, if you write the motion you can go argue it. If you look at the big ones like MoFo, or Wilson or Skadden, Arps, they're not that way," she said. "And the hours, frankly, are less, and it's worth it to me to stay."

Ropers currently counts 75 associates and 48 partners, and Wilson says the associate to partner ratio will reach 2-1 by the end of the year.

The firm says 16 2001 law school graduates have accepted offers. It's also mulling over whether to hire back some of the associates who left the firm for dot-coms.

The firm recently relocated the majority of its attorneys in the Bay Area to its San Jose office in order to cash in as a subleasing landlord for its space in Redwood City.

Wilson also likes to point out that as other firms talk hiring freezes and look for ways to escape making layoffs, his firm is hiring.