Jennifer Grady, managing partner of Richards Kibbe & Orbe, spoke to the New York Law Journal about the advantages and challenges of being a midsize law firm in New York. She said that big law firms are now competing for business that was traditionally the purview of midsize law firms.

The conversation was part of a series on midsize law firms.

Firm Name: Richards Kibbe & Orbe LLP

Firm Leader: Jennifer K. Grady, managing partner

Head Count: 60 lawyers

Locations: New York City, Washington, D.C., and London

Practice Areas: White collar/compliance/regulatory litigation, civil litigation, distressed debt trading, credit derivatives, investment in private capital and other illiquid investment products, bankruptcy and restructuring, marketplace lending and litigation finance

Governance structure and compensation model: Executive committee with managing partner and compensation committee

Do you offer alternative fee arrangements?: Yes

Q: What do you view as the two biggest opportunities for your firm, and what are the two biggest threats?

A: Two big opportunities for Richards Kibbe & Orbe are the emergence of alternative investment vehicles and the increase in cross-border enforcement. We've excelled historically at creating legal frameworks around nontraditional investments. Those are proliferating today, whether it's blockchain or marketplace lending (formerly known as peer-to-peer lending). They all present opportunity for us, and if any one does not become a successful area of business, we are nimble enough to turn our attention elsewhere. Meanwhile, clients come to us for our ability to navigate cross-border litigation and regulatory issues, which are only becoming more prevalent.

As for threats, all law firms must wrestle with the trend of clients pulling more work back in-house. And on the flip side of the cross-border opportunity, a global isolationist movement taken to extremes could create a challenge for us.

Q: The legal market is so competitive now—what trends do you see, and has anything, including alternative service providers, altered your approach? Is your chief competition other mid-market firms, or is your firm competing against big firms for the same work?

A: We view our competition broadly to include other firms, large or small, that think as deeply about our practice areas as we do. We have observed a move in recent years by big firms to expand their practices into areas that have historically been covered mainly by small or midsize firms, which has resulted in increased competition in many of our practice areas.

That said, focusing on solving our clients' problems has always been the key to our growth. We're always looking toward the next issues that need attention—from our firm's early attention to creating a secondary market for distressed bank loans to our more recent focus on marketplace lending, litigation funding or financial benchmark manipulation—we've become a leader in various areas of the market over the years.

Q: There is much debate around how law firms can foster the next generation of legal talent. What advantages and disadvantages do midsize firms have in attracting and retaining young lawyers, particularly millennials?

A: This isn't common to all midsize firms, but RK&O has a recruiting advantage in that we're very distinct from the larger firms from which we draw most of our talent. They are excellent firms, but lawyers get a different experience here, particularly in building legal skills and training. We maintain a one-to-one partner-to-associate ratio. Our associates are going out on pitch meetings, getting exposure to clients, and being handed significant responsibility from the start.

We also have a recruiting advantage in that we do not try to attract or retain lawyers at the very start of their careers. We generally don't hire any attorney more junior than a third-year associate in order to ensure quality at all levels. For our litigation practice, we often hire associates directly out of clerkship positions.

One challenging fact of life for midsize firms is that we can only retain lawyers who over time make a business case for themselves. Being a good lawyer is necessary but not sufficient for partnership—lawyers also need to show a talent and a desire for developing their own book of business.

Q: Does your firm employ any nonlawyer professionals in high-level positions (e.g. COO, business development officer, chief strategy officer, etc.)? If so, why is it advantageous to have a nonlawyer in that role? If not, have you considered hiring any?

A: Yes, RK&O has multiple nonlawyers in director-level positions—an executive director, a director of marketing and business development, a director of finance, a director of human resources and a director of information technology. These individuals bring significant experience in their respective areas and are instrumental in helping us to think more strategically as a firm. For example, our marketing director conducts one-on-one coaching with attorneys, ensuring that their business development efforts are effective and consistent with our larger goals. Our executive director brings with him significant accounting and law firm management experience and is focused on helping us achieve many of our business goals—including, for instance, ensuring that our alternative fee arrangements reflect the value that RK&O brings to our engagements while addressing our clients' need for predictability in their legal spend.

Q: What would you say is the most innovative thing your firm has done recently, whether it be technology advancements, internal operations, how you work with clients, etc.?

A: We are always innovating our legal practice, from designing new transaction structures in developing areas like marketplace lending and litigation finance to exploring flexible staffing models that enable us to scale up or down quickly to meet the demands of large cases typically handled by firms many times our size. We have also identified new ways to emphasize the importance of our associates and counsel to the firm, including by establishing an associate business development committee that hosts networking events focused exclusively on client contacts at our younger lawyers' seniority level and by implementing an upward review program to enable associates to provide feedback on the performance and working style of partners.

Q: Does your firm have a succession plan in place?  If so, what challenges do you face in trying to execute that plan? If you don't currently have a plan, is it an issue your firm is thinking about?

A: We are constantly thinking about succession planning by focusing on supporting and promoting partners as leaders at the firm. I was under 40 years old when I was asked to lead the firm as its managing partner almost five years ago—a choice that speaks to our firm's forward-thinking nature on a number of levels. The executive committee, which drives the strategy of the firm, is comprised entirely of non-founding partners whom we view as our next generation of firm leaders.

Handing down leadership positions the way we've done is necessary to a firm's longevity, but another form of succession planning is even more important: handing down client relationships. There are many reasons we encourage extensive contacts between our associates and their in-house counterparts. Not only does it help our associates' development as lawyers, but it also regenerates the client relationships that are our most important resource.