Editor: Please tell our readers about your professional experience. What drew you to Atlanta?
Stephenson: In the early '70s, Atlanta, San Francisco and Phoenix were cities that were popular with law students seeking opportunities outside New York, Washington and Chicago. Atlanta was a good choice because it was a fast-growing city and my interest, real estate, was a big industry there.
My practice area then and now is real estate. Over the past 40 years it has experienced typical periods of boom and bust. The down cycle that we have been going through recently is really nothing new to me; I've practiced during at least four down cycles in my career.
Editor: Tell us about your role as office managing partner.
Stephenson: I joined King & Spalding in 1985 after having practiced with two other firms. I've not only continued to be active in my practice, but have also been involved in various administrative and management areas, including as practice group leader, a member of the firm's policy committee and its ethics committee. For the last 10 years, I have been the office managing partner for the Atlanta office.
My role as managing partner of this office is one of coach, cheerleader and manager of some of the personnel issues. My real estate background gives me a leg up on managing our lease and space needs here at the Atlanta office. I also serve as the nominal figurehead for the firm here in Atlanta, which keeps me involved with the local community.
Editor: In our interview with you last year, you updated us on economic conditions in Atlanta and the Southeast. What is the current state of the economy? Are there signs of recovery? Has employment grown?
Stephenson: As reported in March, the unemployment rate for Georgia as a whole fell to 10.2 percent, but we are still well above the national average of about 8.9 percent. Atlanta is very much a real estate and construction town, and much of our employment is construction related.
The virtual shutdown of new development and new construction in Atlanta and the metro area has been a factor in keeping unemployment at a higher level than the national average. We are seeing some signs of recovery. As I said, unemployment has ticked down slightly and state revenue collections are up over last year, all of which is positive. We have also seen activity in the high-end real estate market.
Editor: What role has the firm played in attracting companies to Atlanta and Georgia? Stephenson: We have been involved in a couple of significant investments by foreign companies in Georgia and the Atlanta area. I might add it's not only foreign companies, but it's other U.S.-based companies looking to expand or relocate their facilities. We represented a Portuguese company in the construction of a significant facility in Effingham County, which is near Savannah, for the manufacture of power systems. We also represented a Malaysian company that was forming a domestic subsidiary to finance a plant acquisition and renovation in Burke County, near Augusta.
Many companies come in with specific requirements regarding proximity to transportation, airports, harbors, rail, water, workforce needs, quality of life, etc. A lot depends on the industry and its particular needs. For example, a company that depends greatly on import or export of goods by ship might be attracted to Savannah given its proximity to the excellent port facilities there. A business that is more dependent on air freight would presumably prefer to locate in the Atlanta metro area.
We advise companies looking at Georgia as to the best area. Many of them, of course, do their own homework and come in with a great deal of knowledge, but we can provide a bit of local color and knowledge that adds another dimension to the typical analytical data that most companies gather.
A lot of this work is done by our public finance lawyers who work closely with both state and county business development officials as well as local chambers of commerce. Georgia, like many states, attempts to attract investment by a variety of means. There are tax incentives and that sort of thing. Attracting business to a city or state in a tough competitive market presents challenges. So, we work hand in glove with both state and local development authorities and chambers of commerce in attracting businesses to the area.
Editor: You just held your Annual King & Spalding Health Law and Policy Forum. Please tell our readers about it.
Stephenson: This was the 20th Annual King & Spalding Health Law and Policy Forum, which is a one-day conference usually focusing on the latest legal and regulatory developments in the health care industry. In this anniversary year, we had the largest attendance ever for this event (325 attendees). It started out initially being just a King & Spalding-sponsored event, but now a number of companies and firms involved in the health care industry joined us in the sponsorship of this event and provided speakers on various topics. This year the keynote speaker was U.S. Congressman Tom Price (R-GA), who offered his views on where health care reform is headed.
Editor: Legal costs have continued to increase. What steps has the firm taken to meet ACC's value challenge?
Stephenson: Of course a lot of people in law firms have started to call improving efficiency the "new normal." We've always viewed efficiency as a driving factor. We are focused on what our clients are focused on - reducing overall legal costs. But, at the same time, clients expect that we will provide the highest quality legal work.
We bring to the table lawyers who understand our clients' businesses and the industries in which they operate. So, the client is not burdened with the cost of educating the lawyers about the client, its business and its industry. We staff our matters with the right level of lawyer for the task at hand. And as appropriate, we can leverage the cost advantages of lower-cost markets. We also employ lean staffing. This has enabled us to reduce the number of hours and yet get work out quickly.
We offer the King & Spalding Discovery Center in Atlanta that brings a lot of efficiency and lower cost to e-discovery and generally managing information. It allows us to deliver a wide range of e-discovery and information management services to our clients at a much-reduced cost than our competitors that compares very favorably with offshore providers. As a result of providing these services for 25 years, we are a leader in this area, and it continues to be a growing part of what we do.
We offer alternative-fee and blended-rate structures. All of these things together allow us to deliver the highest-quality legal services on the most cost-effective basis possible.
Editor: Great strides have been taken in Georgia in improving the business climate. Tell us about them.
Stephenson: The Georgia Chamber of Commerce has a very significant legislative agenda. It has been successful this year in passing several additional initiatives which it has supported, and there are still several more under consideration by the legislature, which is still in session.
Tax reform is something that the legislature continues to work on with the very active involvement of the Georgia Chamber. There is a commission and a joint committee of the Georgia House and Senate working on a tax reform package that members are optimistic will be introduced in next year's legislative session. The election of Governor Deal, a Republican and former congressman, will continue the trend toward improving the business climate.
Editor: Do you see the same pattern in other states in the Southeast?
Stephenson: Yes, generally speaking, our sister states, Alabama, Florida, North Carolina and South Carolina, are all improving their states' business climates with business-friendly legislatures and governors. Proof of the attractiveness of the business climate in the Southeast is evidenced by number of relocations of businesses and new plant development over the past five years.
Editor: In our interview last year, you reported on King & Spalding's educational program for new lawyers and continuing legal education for members of its firm and its clients. Is this program continuing to expand?
Stephenson: In 2010, we offered a third more client CLE programs (81 versus 61 in 2009). Our clients appreciate them, and oftentimes it actually brings them into the firm to sit with our lawyers. It's great for us and it's great for our clients. We have placed even greater emphasis on training our younger lawyers on how to practice law more efficiently, how to give the clients what they expect, and about understanding a client's business as a way of reducing cost. We are also teaching our lawyers to use plain English rather than a lot of legalese when they're just talking with clients as well refocusing on the whole concept of project management so that they can get from point A to point B in an efficient and timely manner.
Editor: Turning to your personal specialty, real estate, do you see business improving and more capital investment in the Southeast?
Stephenson: Right now, we're seeing a lot of available money, but a lot of it is targeted at trophy properties in the top markets, and those top markets really are New York and Washington, with Chicago participating to some extent. So, you have a lot of money chasing opportunities in those markets.
A similar phenomenon seems to be developing in Atlanta. We had a recent transaction in Atlanta where a prime building in the Buckhead area went at a top-dollar price. Valuations on these very high-end properties take us back to 2007 before the collapse of the real estate industry. This is a very positive development.
A problem still exists at the other end in what I'll call the distress market, where properties obviously have lost significant value. What I see over the next year is the possibility of interest rates rising, which may add further activity at the distressed level forcing banks and current owners to dispose of properties.