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.