Trusts & Estates Lawyers Are Now Moneymakers: Business of LawEllen Rosen
Trusts and estates lawyers, once second-class citizens at some large corporate firms, have become revenue producers.
And at firms including Loeb & Loeb LLP, McDermott Will & Emery LLP and Katten Muchin Rosenman LLP, the departments, which often include lawyers who specialize in tax as well as trusts and estates, are anything but back-office.
“We are generators of work as well as service providers,” Carol Harrington, the head of the private client practice group at McDermott Will, said in an interview last week.
That work includes estate planning, creating “structures” for charitable giving, and litigation and international work, said Joshua Rubenstein, the head of the T&E practice at Katten Muchin.
In addition, Harrington said, many private businesses are controlled in trust, so these lawyers are often called upon in transactions. To fully advise on deals involving some closely held companies, “You need trust counsel to help with the trust aspects of the business.”
“We’re like Marcus Welby,” Rubenstein said, referring to the iconic family doctor of 1970s television. “We’re generalists: We have to know about areas other than T&E, like tax and real estate. And we have to be able to diagnose people’s problems.”
As wealth escalates among clients, the firms with these practices are also seeing that generalists can be a growth area. The scope of work, whether in forming of trusts, establishing philanthropy or helping in business succession planning in the U.S. or abroad, is expanding.
“To be really good in estate planning you need to be full service to every need a high-net-worth individual might have,” Leah Bishop of Loeb & Loeb explained in an interview last week. She co-heads the firm’s trusts and estates department and charitable giving and tax-exempt organizations practice.
If the T&E lawyers don’t have the expertise, they need to know who to tap within the firm.
With a somewhat limited pool of experienced talent, new lateral hires, with their Rolodexes, are a big deal for these firms. Last week, for example, Loeb & Loeb announced it had hired two attorneys from Caplin & Drysdale Chartered -- Marcus Owens, a former director of the Exempt Organizations Division of the Internal Revenue Service, and Diara Holmes.
Both have joined the firm’s charitable giving and tax-exempt organizations practice, which is part of the trusts and estates practice, as partners in Washington. Loeb & Loeb’s group has approximately 50 lawyers -- out of close to 300 total attorneys.
McDermott Will, for its part, last week said it hired Leigh-Alexandra Basha from Holland & Knight LLP to establish a private client practice in Washington. Basha focuses on domestic and foreign estate and tax planning. Henry Christensen, head of McDermott’s international private client group, said that with the firm’s international and tax practice, Basha’s addition “is a natural fit.”
Lawyers at these firms say the revenue generated by their practices exceeds their headcount.
At Katten Muchin, for example, the approximately 50 people in his group account for more than 7 percent of the firm’s 700 lawyers. The group brings in 12 percent to 15 percent of the firm’s revenue, which doesn’t include cross-referrals within the firm, Rubenstein said.
At McDermott, the trusts and estates lawyers “generate more than 10 percent of the firm’s revenue, but by headcount we are less than 10 percent,” Harrington said. “It’s because we export work to other areas in addition to working hard ourselves.”
Those numbers might tempt other firms, many of which jettisoned their practices years ago, to jump back into the area.
“For the economics to work, you need high-net worth individuals as clients and you need to be a gatekeeper for the rest of their work” to help with whatever needs arise, said Loeb & Loeb’s Bishop. And firms need to understand that these clients don’t want the same “breadth of staffing” that corporate clients will withstand on major litigation or transactions, she said.
In addition, it takes a certain type of lawyer to handle this work.
“We take our clients from birth to death,” Bishop said. “One client told me I was more useful than her therapist. And I do give out my home phone number.”
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