July 31 (Bloomberg) -- For Ron Schiller, quitting DLA Piper LLP, the world’s largest law firm, meant giving up a 48th-floor corner office with a view of Philadelphia’s City Hall. So lawyers at his new firm turned their gym into a corner office with a City Hall view -- just for him.

“I’m a litigator who’s been trying cases for 25 years,” Schiller said in an interview this week on his moving day. “That view is my good-luck charm.”

With 3,600 attorneys and 67 offices, DLA Piper is the world’s biggest law firm by headcount. Meanwhile, Hangley Aronchick Segal & Pudlin, Schiller’s new 50-lawyer firm, is “nimble” and lets lawyers “tweak rates,” Schiller said. The recession has brought it neither layoffs nor a drop in revenue, according to Chairman William Hangley.

Schiller, 49, is the latest veteran lawyer to jump from a global, brand-name firm to a so-called boutique. These smaller, specialty outposts offer a more collegial culture, flexible rates and fewer conflicts of interests, their lawyers say, while larger firms often lose work to conflicts of interest because they can’t represent new clients involved in litigation with existing ones.

Schiller was the head of DLA’s litigation practice in Philadelphia, specializing in complex lawsuits. His clients included Chubb Corp., Zurich Financial Services AG and Motorola Inc., according to court records.

“Conflicts are always an issue in a big firm, especially if you do commercial litigation,” Schiller said. He called Hangley Aronchick “the top litigation boutique” in Philadelphia and said most of his clients came with him, along with six colleagues from DLA Piper.

Wrestling With Conflicts

“Conflicts are a major issue and we wrestle with them every day,” Francis Burch, co-chief executive officer of DLA Piper, said in an interview. “Day in, day out, we win much more business than we lose.”

Burch declined to comment on individual departures.

“There is no partner who could walk out the door and create any material economic problems for the firm,” Burch said. “We are too big, too well diversified, and our business base is too well-institutionalized. Our global revenue for 2008 was $2.26 billion.”

Like other large firms, DLA Piper is cutting costs this year by firing lawyers, reducing partners’ pay and deferring the hiring of first-year attorneys.

“The firm is a lot stronger today than it was a year ago,” Burch said. “This economy has required us to strip away some of the fat.”

Three-Firm Merger

DLA Piper US was created in 2005 by the three-way merger of the U.K. firm DLA, Baltimore-based Piper Rudnick and Palo Alto, California-based Gray Cary Ware & Freidenrich LLP.

Hangley Aronchick is best known for its trial attorneys, and also specializes in corporate law, real estate, bankruptcy and tax and estate planning, according to the firm’s Web site.

Other big firms are losing senior lawyers who generate business, so-called rainmakers. In March, a former Skadden, Arps, Slate, Meagher & Flom LLP partner quit to form BuckleySandler LLP, a financial-services boutique. In May, four litigators quit the New York office of London-based Clifford Chance LLP to set up Chaffetz Lindsey LLP, an arbitration boutique in New York.

“Five years ago, a lawyer with a multimillion-dollar book of business might not consider joining a small firm, for fear that his clients wouldn’t want that firm on their preferred list,” Sharon Mahn, a managing director in the New York office of the legal recruiter Major, Lindsey & Africa, said in an interview.

Smaller Platforms

“In today’s economy, the smaller platforms are becoming much more attractive. At a smaller firm, the client gets more attention and they get lawyers with big-law-firm training at lower billable rates.”

Trademark lawyer Mark Peroff quit 1,950-lawyer K&L Gates last year for Hiscock & Barclay, a 210-lawyer firm based in upstate New York. After switching, the lawyer cut his hourly fees by as much as 20 percent and brought long-time client AstraZeneca Plc with him, according to Peroff.

“In my experience at K&L Gates, the focus was entirely on making money,” Peroff said in an interview. “There was no glue among the partners.”

In addition to being tightly knit, Hiscock & Barclay gives partners flexibility to offer clients a variety of billing options, including fixed fees, Peroff said.

“Being at a small firm has not hampered our ability to attract large multinationals,” Peroff said, “especially European and Japanese clients who are in shell-shock over the cost of litigation in the U.S.”

K&L Gates Spokesman

K&L Gates spokesman Mike Rick declined to comment. General Electric Co. General Counsel Brackett Denniston, AT&T Inc. General Counsel Wayne Watts and Motorola General Counsel Peter Lawson didn’t respond to phone calls and e-mails seeking comment. Pfizer spokesman Chris Loder declined to comment. AstraZeneca spokesman Tony Jewell confirmed that Peroff represents the company.

Mark Berkoff, the former head of DLA Piper’s bankruptcy practice, jumped to a midsize Chicago firm in January, bringing four lawyers and cutting their hourly rates more than 20 percent.

“Certain of my clients wanted rates to be held steady in 2009,” Berkoff, now head of the bankruptcy practice at 200- lawyer Neal, Gerber & Eisenberg LLP, said in an interview.

Berkoff represents the unsecured creditors’ committee in the Chapter 11 bankruptcy of U.S. suitmaker Hartmarx Corp.

Fixed Fees

Some of DLA Piper’s clients do want the firm to reduce rates and take on more risk, according to Burch. For example, the firm does work on a fixed-fee basis for Pfizer Inc., including mass-tort litigation, Burch said.

Darryl Doke, a California deputy attorney general, said he prefers to hire smaller firms because they have fewer conflicts.

“Purity, in the sense of being conflict-free, is the Holy Grail of representation,” Doke said. “They can be the best lawyers in the world, but if they have to leave the litigation because of a conflict, they won’t do you much good.”

In 2003, Doke recalled, California was suing its insurance companies over the cleanup of Stringfellow, a hazardous-waste site in Glen Avon, about 48 miles east of Los Angeles. The state was represented by Piper Rudnick, one of the firms that later merged to form DLA Piper.

A conflict surfaced between the insurance companies and Piper Rudnick, and the firm withdrew from the case, according to court records.

‘Terrible Blow’

“It was a terrible blow,” said Doke. “We had lots of money invested in this case, and we had a trial date in the offing.”

Doke hired Robert Horkovich, chairman of the insurance- recovery practice at Anderson Kill & Olick, PC, a 90-lawyer firm based in New York. Horkovich, who had no conflicts, won $120 million in settlements from the insurance companies, according to Doke.

Horkovich, who worked previously at Skadden Arps and Cadwalader, Wickersham & Taft LLP, both based in New York, thinks smaller is better.

“I don’t need the ego satisfaction of being at a big law firm,” said Horkovich, whose clients have included General Electric and AT&T. “We’re a lot more efficient.”

Schiller, who experienced delays when ordering supplies at DLA Piper, has discovered another small-firm perk.

“When I asked for an extra docking station for my computer,” he said, “the answer was ‘sure.’”

To contact the reporter on this story: Cynthia Cotts in New York at ccotts@bloomberg.net.

Last Updated: July 31, 2009 14:06 EDT