High-end, high-powered, highly skilled and highly regarded are how peers typically describe the Private Client Department of the world's 20th-largest law firm, McDermott Will & Emery LLP. The 40-plus trusts and estates attorneys in this elite brigade represent some of the wealthiest families in the world and are regularly lauded by respected media.

But it may be the respect the practice group commands within its own organization that sets it apart. While some large law firms are downplaying, if not downsizing, their estate planning efforts now, McDermott is steaming ahead.

Last year, iconic international estate-planning attorney Henry "Terry" Christensen III of New York-a city where McDermott Private Client lacked a practice-became available. He was considering leaving the white-shoe firm he had been with for 37 years, where he was the senior estates partner and had many close relationships. It would take considerable initial and ongoing investment to bring Christensen to McDermott to build a private client group in Manhattan and then do the same overseas. So when he came aboard on August 1, 2007, with much fanfare and some mixed emotions, it said as much about where the department stood in its own firm's eyes as in Christensen's.

"Within a law firm, a department or practice group needs to be successful vis-à-vis the other departments in order to be able to grow or receive capital when necessary," explains Quentin "George" Heisler Jr., who headed McDermott Private Client for eight years until ascending to partner-in-charge of the Chicago office in 2006. "Our private client group is very strong internally, but I know lawyers at other firms who are not being permitted to build their groups because they're not deemed to be profitable enough."

Although Christensen left his old firm (and a very profitable practice) for reasons other than group size, he came to McDermott largely because of its history of commitment to estate planning. "Its roots meant a lot to me," he says.

The Firm
McDermott began as a tax law firm in Chicago 74 years ago. "We've always emphasized this area of practice," says Heisler, whereas the typical large firm was probably formed to provide corporate or litigation services. "We are different. From the day we opened our doors we attracted tax work and private-client work from wealthy individuals and owners of private businesses in the Midwest. From day one it was understood that this practice was a cornerstone of the law firm."

That day was February 2, 1934, although the story really begins almost exactly 21 years earlier. Ratification of the 16th Amendment to the U.S. Constitution on February 3, 1913, greatly expanded Congress's income-tax levying capabilities.
During the late 1920s, a young Chicago lawyer named Edward H. McDermott went to Washington to serve as assistant counsel, and subsequently chief counsel, to the Joint Congressional Committee on Taxation. "He really was right at the epicenter of the emerging tax code," Heisler says.

Then along came the Revenue Act of 1932. It significantly increased individual and corporate income tax rates and doubled the estate tax.
"Many years later, Edward McDermott recalled, 'We were somewhat experienced and much interested in the tax field and we hoped that increasing federal tax exactions might lead to some work in that area,'" Heisler chuckles. "I looked on McDermott Will & Emery and Hopkins & Sutter"-where Edward McDermott had briefly worked-"as the two leading tax law firms in the Midwest when I began to practice in the late 1960s. It was a special place for tax lawyers and estate planners."

Eventually the firm moved into law's more traditional areas, and the original tax practice fissioned into three parts: Tax, private client and employee benefits. Today eight departments make up the firm. Heisler's appointment as Chicago head thus further testifies to Private Client's internal stature.

The Practice
Some law firms employ a few estate planners simply to take care of whatever work clients of the firm's other attorneys might need-the CEO of a corporate partner's big account, for example. In these organizations, revenue generated by the estate planners is credited to other practice areas.

Not so at McDermott. Private Client is a profit center. And profitable it is.
It got that way by focusing on the ultra-wealthy and their complex estate-planning needs-service opportunities that command handsome fees. "It comes down to doing non-commodity work," Heisler says. "We find that the most sophisticated, cutting-edge work is required by families with at least $25 million in assets."

But much greater wealth characterizes many clients. Indeed, the chairman of JP Morgan Private Bank Midwest in Chicago, Harvey J. Struthers, frequently bumps into McDermott attorneys in circles where billionaires travel. "They seem to be around that space," Struthers observes.

Modest wealth doesn't really need McDermott's expertise. Consider the skills of Carol Harrington, Heisler's successor as head of Private Client. She is a self-confessed generation-skipping transfer tax "geek" (read: nationally known expert). Harrington devotes significant time to advising about large-dollar grandfathered trusts-irrevocable generation-skipping trusts that are exempt from the transfer tax because they were created prior to its enactment.

"Many clients want to make changes to these old trusts," she explains from Chicago, "but the Internal Revenue Service takes the position that certain changes result in the loss of tax-exempt status."  That could cost a grandfathered trust nearly half its value. So these clients turn to Harrington for advice. Often that involves her preparing a request for a private letter ruling, which asks the IRS how it would view a proposed transaction. "PLRs in this area typically involve very high-stakes issues," she says, with lawyer time costing $40,000 or more.

Service-oriented but also cost conscious is how one client, a small family office in Minneapolis headed by Cathy van der Schans, describes McDermott. This office, like many other clients, frequently has legal needs beyond traditional estate planning. When that happens, other departments are called in, but the case is monitored by the private client attorney and billed through the department, which retains primary responsibility for the client interface.

Van der Schans' point person is Jonathan Lurie, the partner who heads the Los Angeles practice group. "When we call Jonathan with a question that's outside of his area, he will find the person with the exact expertise we need. And there is that person within McDermott because it is such a large firm. For a family office, it's super-important to be able to go to one place for help with pretty much anything legal," van der Schans says.

Size Does Matter
One-stop shopping is a competitive advantage resulting from the firm's heft. Private Client enjoys other benefits because of its size. Forty-plus attorneys is bountiful, even among big law firms, and Harrington says it helps retain client families.

"When lawyers at various levels of seniority work with a large family, the representation can naturally flow from one generation to the next," she says. "The family understands that when the current relationship manager retires, there is another person they have a lot of confidence in who already knows them and their objectives. They don't have to start over with someone new-there is a succession plan for them here. We frequently pick up clients that other firms did not transition properly."

Grand scale also fosters specialization. A high volume of work means that even non-standard planning situations come up relatively often. It further implies that resources are available for attorney training and development and that that expense can be spread over numerous clients.
So the lawyers sub-specialize. (One curious specialty that is a hybrid with McDermott's trial department is described in the sidebar, "Did Someone Say, 'Lawsuit'?")  Cultivating expertise in planning's nooks and crannies only solidifies the department's ability to serve the very affluent. The attorneys share their knowledge with each other. "There is someone to go to here when you have a hard question in the most technical areas," Harrington says.

How To Succeed In Estate Planning
It takes more than just technical smarts or a J.D. from a pedigree law school to be a great estate planner, these attorneys believe. You need people skills, too.

Lurie, the L.A. partner, says, "The single most important factor in estate planning is understanding your clients and having a genuine concern for them. Half of my work is psychology. People are fearful about losing control. People are fearful about death-and taxes-and you have conversations about these issues. It's a strange combination of being very technical and very personal," he says.
Lurie is a native of South Africa who practiced there for nine years before coming to America. He does a lot of international estate planning and says that the social differences that crop up require special handling.

"Other cultures may have very different views of taxation, or different philosophies towards wealth. In some cultures, certain children are to receive more of the inheritance than others-generally not the way of life in the U.S. As the planner, your job is to represent your clients and come up with a plan that is theirs, not yours. You're not here to proselytize your own views," Lurie says.

Going Global
A different type of ingredient for international success is a New York office. Before Christensen joined last summer, private clients on the East Coast were typically serviced by the Chicago practice group. (Only it and Lurie's group existed.)  Heisler says, "We had been attempting for a number of years to find first-rate estate planning help for a New York practice. We knew we had to have a presence in New York-and London-for the kind of true international reputation we wanted."

The Terry Christensen era thus marks a new chapter in the storied practice group's saga. (To peek into the workday of someone of his stature, see "A Day In The Life.")  He says international planning has been a growth area and will continue to be. One factor is that wealthy foreign families are sending their children to U.S. colleges and they, in turn, are marrying Americans. "Then the family has to take into account U.S. tax considerations," Christensen says.

Stateside, the Private Client brass see mountains of high-end work ahead even though they expect Washington to shake the estate tax very little, if at all, from its slated 2009 parameters. The creation of significant wealth in recent decades, particularly at the upper end, portends "a great demand for services as the baby boomers age and eventually die," Harrington says. "Somebody has to plan for the transfer of that wealth and administer the estates and trusts when that happens."

The competition, meanwhile, is flagging. Why Christensen left his previous firm illustrates one reason this is occurring. He explains, "When a firm represents a corporation which gets into a dispute with an individual who is also a client of the firm, the firm cannot continue to represent both. This is becoming an increasingly common problem at very large law firms. I had to resign representation of some very important clients to stay with my old firm, and after this happened a few times over a few years, I decided I just couldn't do it anymore."

Many large firms prefer to focus exclusively on their Fortune 100 clients and avoid individuals altogether, no matter how wealthy. Some have accordingly shrunk or eliminated their private-client groups (although this is not the case at Christensen's former firm, Sullivan and Cromwell). Heisler opines, "I think the end game will be a relatively small number of large law firms-a half-dozen, maybe fewer-with large private client groups working with the mega-wealthy."

McDermott expects to be in that group. In fact, Christensen is looking to double the size of his five-attorney midtown Manhattan office in the not-too-distant future. "I'm talking to a few laterals as potential partners or senior counsel," he reveals. "I'm looking for people who are leaders of the bar in New York who could really complement my practice."

Presumably such a player would be as attracted to McDermott as Christensen was. He calls joining McDermott "a wonderfully serendipitous arrangement. They had the strongest estate planning platform in the country but needed a New York presence for a stronger international practice, and I get to work with some of the best and brightest estate lawyers in the country."

A Day In The Life
When Private Wealth asked renowned international estate planning attorney Henry "Terry" Christensen III how he spends his time, he gave us this list of what he did on a recent day.
    Met with members of a wealthy East Coast family that's trying to solve a dispute within the family among the members of one generation
    Met with a South American client about a major restructuring of a closely held business
    Negotiated a contract with an auction house to sell a major art collection (Christensen is executor)
    Held a quarterly meeting with investment advisors for a wealthy client
    Worked on a tax-dispute case where the IRS has asserted a proposed deficiency of over $100 million
Christensen can't reveal whom he represents, but one of his colleagues at McDermott, Chicago partner-in-charge George Heisler, says, "It is breathtaking."

Did Someone Say, "Lawsuit"?
When beneficiaries of two charitable trusts created by pharmaceutical heiress Ruth Lilly sued the trustee for breach of fiduciary duty, David A. Baker, a partner in McDermott Will & Emery's Private Client department in Chicago, helped defeat the $100 million demand. Baker runs the Estate, Trust and Guardianship Controversy Practice Group, six full-time and 12 part-time attorneys drawn from both the Private Client and Trial departments. Private Wealth caught with up with Baker somewhere between the courtroom and the negotiating table to learn more about his unique practice.
PW:  Besides fiduciary defense work such as the Ruth Lilly case, what does your group do?
Baker:  We provide controversy management services.  Controversy in the private-client area is increasing and people who are faced with those issues want specialized attention. For example, family financial separation.  As wealth goes down the generations and ends up cut into many shares, it is unusual for everybody to have the same financial interests.  But they may be yoked together, and one or more of them may really need out. At any given time, we have dozens of those going on.
We also do controversy planning, where someone is very concerned about the potential, if not the likelihood, that there will be a contest down the road.  They're looking to take steps so that their wishes don't get diverted by a trial or litigated outcome.
PW:  Can you share an example of such a step?
Baker:  One thing that plaintiffs will use to attack estate plans and documents is the notion that the family office was the go-between, the attorney wasn't really in communication with the person who signed the will or trust, and that person didn't really understand it.  So we insist-with some degree of frustration to family office managers-on having much more face-to-face communication with the client herself than is customary.  As the attorney who drafted the documents, if you are called on to testify and all you can say is, "I never did actually talk to Ms. Client," it sounds bad.
PW:  Your group lives in two worlds, being a hybrid of two practice areas.  Your attorneys must possess an unusual combination of skills.
Baker:  Our lawyers can step into a court-they know how discovery works and other things that are common in any controversy-and also thoroughly understand all the estate and trust aspects.
PW:  Other large law firms don't have groups like yours.  How do they handle this work?
Baker: They take a civil litigator who was arguing an antitrust case yesterday and throw him a complaint about fiduciary conduct. But this area is so ingrained with tax and other technical aspects that I think it's very difficult to just dabble in it.  We come up with what I tell clients are the three S's-strategies, solutions and settlements-that other lawyers can't even really conceptualize without this body of cross-disciplinary knowledge and experience.