Halleland departs old firm to build a new national one 

Posted: 1:00 am Mon, March 8, 2010
By Barbara L. Jones

In an increasingly mobile economy, it’s not uncommon to have a shareholder split off a law firm to start a spinoff firm. But when that shareholder’s name is the first name on the old firm’s letterhead —and that firm has aggressively marketed itself as a “new breed of law firm” — the departure raises eyebrows.

So many in the legal community were taken off guard when the news came a couple of weeks ago that Keith Halleland was leaving the Minneapolis firm of Halleland Lewis Nilan & Johnson to launch a new firm. Many people refer to Halleland Lewis as “the Halleland firm.” Indeed, the firm’s main Web site has been www.halleland.com.

Since its founding in 1996, Halleland Lewis has billed itself as a firm with a common vision and shared values that set it apart from other law firms. The firm, geared toward serving the needs of business, quickly broke with the subdued advertising model followed by big- and mid-sized Twin Cities law firms by marketing itself on airport billboards. The firm also began using as a secondary Web address www.newbreedlaw.com to drive home the point that Halleland Lewis wasn’t just one of the pack and would take a collaborative approach in working with its business clients.

But apparently even new breeds of law firms face the old problem of shareholder dissatisfaction and attrition.

Karl Speak of Brand Tool Box, a brand consulting and training firm that worked with Halleland Lewis, said even firms built on common values experience shareholder split offs when the partner’s values and those of the firm are no longer in complete alignment.

“Halleland Lewis placed a lot of stock in authenticity, common values and vision. This was true. This ‘new breed of law firm’ was true,” Speak said. “When they noticed there were some differences, they broke up.”

Keith Halleland has a different vision from the rest of the lawyers remaining at his old firm, and wants to take his career in a new direction. Halleland Lewis has grown to about 50 attorneys, but has remained a local firm with a One Financial Plaza address. Halleland wants to build a firm with a national presence.

“Growing is fundamental to Keith’s personal brand,” Speak said.

Meanwhile, Halleland Lewis has reconstituted itself as Nilan Johnson Lewis and is proceeding on its mission without Halleland and the other attorneys from the firm joining him in his new venture.

Go national or go home

The law firm known until earlier this month as Halleland Lewis was born out of the breaking apart of the Minneapolis law firm of Popham Haik, which bled lawyers for years until it was ultimately absorbed by Hinshaw & Culbertson.

In its 14-year history, Halleland Lewis has become well-known in the local legal community for its marketing, and for its concentration on working with companies on both their business and legal needs. The firm has developed expertise in six distinct practice areas: labor and employment, business law, intellectual property litigation, product liability and mass tort litigation, commercial litigation and health care.

Halleland and at least three other lawyers from the firm plan to form a new firm that will concentrate on business and consulting. The new firm will be composed of about 25 lawyers and consultants, including attorneys from at least three firms other than Halleland Lewis. The new firm will be named after Halleland and another as of yet undisclosed lawyer.

“We just have different views of the world in terms of what we think law firms should be and where we want to go,” said Halleland.

A historical perspective

The split from Popham Haik in 1996 informed the current split, Halleland told Minnesota Lawyer.

A group of strong lawyers, including Michael Nilan, Brian Johnson, Donald Lewis and Thomas Sipkins — some of the last lawyers to leave Popham Haik — came together and decided that they could build an economically viable firm, Halleland recalled.

“It was all done kind of overnight and quickly. It wasn’t necessarily long-term or thought-out. It was a firm born out of crisis at that point in time,” he said.

Because of the speed with which the split was carried out, there was no long-term vision for what the lawyers wanted, Halleland said.

“When I look at it in hindsight, the lack of a long-term vision really led to the current split,” he said. “We just have different views of the world in terms of what we think law firms should be and where we want to go.”

Halleland acknowledged the irony in his statement that his old firm lacks long-term vision when it bills itself as a visionary firm.

“But you have to keep reinventing that,” Halleland said. “If you can’t keep that vision going and you don’t have that shared view, then what do you have?”

Halleland said that there are a number of ways in which his vision departs from his former law firm. Perhaps the biggest one is that he wants to build a national practice.

“I have a go national or go home philosophy” he said. “I want to build a team that is second to none nationally in health care.” He is looking at opening offices in Madison, Wis., and San Francisco.

Secondly, there is a difference in philosophy at Halleland Lewis between business lawyers, who want to focus on an industry, and litigators, who want to focus on cases, Halleland said.

Alternative fee arrangements

And then there is money. Litigation is driven by the billable hours, but Halleland wants to follow a new model. It’s a difficult time economically to start a new law firm but there are opportunities as well, Halleland told Minnesota Lawyer. “We think that more and more clients want something other than the billable hour. We want to do more flat fees and more alternative arrangements. That’s the opportunity in this economy,” he said.

In fact, Halleland said his new firm’s enthusiastic embrace of alternative fee arrangements will tell clients much about who the lawyers are.

“This is a new economy and law firms have to be different. We have to get away from charging them something [like an hourly rate] that drives them nuts,” Halleland said.

A stroke of luck

Halleland also has a personal reason for making the split now. At a dinner in Seattle late last year he suffered a minor stroke.

“I call it the stroke of clarity and good luck,” he said.

The stroke caused Halleland to think about aligning his personal values with his law practice and making sure he was practicing law the way he wanted to. The stroke solidified his previously held view that he needed to make a change.

In fact, Halleland is convinced that his physical health will improve if his career is the
way he wants it.

“The disconnect I was feeling about where I was, was definitely impacting my health negatively,” he said.

Nilan firm says it wishes Halleland all the best with new venture

The departure of Keith Halleland from the Minneapolis law firm of Halleland Lewis has been in the works for at least a few months and didn’t take the nondeparting members of the firm by surprise. There has been no drama, no packing of files in the middle of the night.

Matthew Damon, the president of the newly reconstituted firm — Nilan Johnson Lewis — said the firm wishes Halleland well. Nilan Johnson shareholders met in February and the morale was high, Damon said. “We don’t see a way to be hurt by this sort of development.”

“We started as a group of entrepreneurs and the fact that someone wants to do it again is not a big surprise,” Brian Johnson told Minnesota Lawyer.

Damon said that the premise of their law firm is that people leave when they want to, and that with the departure of Halleland that message has again been communicated in meetings with attorneys and staff.

“We would be untrue to ourselves if we took a different attitude toward these gentlemen who want to leave now,” he said.

Damon said that the firm has learned from the demise of Popham Haik and other law firms that it isn’t good for the firm to take a hostile attitude toward departing lawyers.

“It’s not positive on a law firm to be locking people out, terminating them, when it’s possible to work things out. We’re confident about our ability to hold on to the client work that we want to hold on to, we’re absolutely confident about the direction of the law firm, so let’s just wish these guys well,” he said.

Damon said the firm’s business is deep — not reliant on one client or lawyer. (The firm had $25 million in revenue in 2009.)

Damon said the firm’s decision not to branch out nationally has been a strategic one. “We’ve resisted growth for growth’s sake.”

This cautiousness may reflect an event that spawned the birth of Halleland Lewis in 1996, the implosion of Popham Haik. Popham Haik’s woes were widely attributed to too much growth, too fast.

Damon attributes the decision of Halleland, and of at least three other attorneys at the firm, to leave to a difference of philosophies.

“One of the ways we’ve tried to deal with the maturation of our firm is to reaffirm the notion that we’re working attorneys, the people who are most highly valued are the people who are actually doing productive work for clients. We think that helps people to retain and sharpen their expertise, and that’s fundamentally what we are marketing. … Keith and others decided that they would like to build a place that takes a different approach,” Damon said.

For a firm to be healthy, everyone has to be on board with its approach, the lawyers said.

“If somebody doesn’t see that then it’s entirely appropriate and probably better [that they leave],” shareholder Michael Nilan said.