Editor: Mr. Stephenson, in the year since we last spoke, you have completed a move to a new headquarters building in Midtown Atlanta. How did this transition go?
Stephenson: It went amazingly well. The move from Downtown to Midtown took us over a month, but the disruption was minimal. Overall, everyone is pleased with the new office space and its design and layout, and we have received numerous compliments from our visitors, with particular reference to our new conference center.
Editor: What is the size of the Atlanta office today?
Stephenson: We are approximately 400 full-time lawyers and 50 temporary lawyers. As part of our relocation we also moved our litigation support group to a facility in Midtown about a quarter of a mile from our main office.
One of our largest practice groups in the Atlanta office is the tort litigation and environmental group, which has about 100 lawyers. Most of our litigation support group services this practice. In addition, business litigation, which also has about 100 lawyers, is a major component of the Atlanta office. Intellectual property has been a growth practice for us during the past year, and both the corporate group and real estate practice continue to be major forces for the Atlanta operation.
Editor: Please tell us how the Atlanta office connects to the rest of the firm. I gather you are able to call upon the expertise and experience of the other offices in putting your projects together, and that you are likewise on call to support them in their efforts.
Stephenson: With only a couple of exceptions, our practice groups are cross-office groups. The real estate group, for example, has lawyers in Atlanta, Houston and New York, and they work together seamlessly. The same is true of our financial transactions group, tax group, financial restructuring group, and special matters group. The Caremark/ CVS merger, for example, was a joint undertaking by people from the Atlanta office and our New York corporate attorneys. In a variety of litigation and transactional areas, cross-office team-based work is the general rule. We are fortunate to have a very collegial and mutually supportive culture. Depending on the project, lawyers from a variety of different disciplines and practice groups, and from a number of different offices, will be working together effectively. Technology certainly helps in any such endeavor, but a firm culture based on collaboration is, definitely, the single most important ingredient.
Editor: The firm had a record year in 2006, with revenues worldwide of $582.4 million. Can you tell us about this success?
Stephenson: The principal drivers were in litigation and transactional work. I hasten to add, it was a strong year across all of the firm's practice groups and offices, something that is essential for any law firm to have a record year. The Atlanta office made a substantial contribution to the firm's success, with about half of the firm's revenue for the year.
Editor: Please tell us about some of the major transactions in which the firm was involved over the past year.
Stephenson: One major transaction during the past year was for Sprint Nextel. Nextel has been a firm client for some 15 years, and we handled the Sprint-Nextel merger. The most recent transaction concerned the $7.5 billion spin-off of Embarq, their local and long-distance telephone service, into a publicly-held company. This was a tax-free transaction for the Sprint Nextel shareholders, and it resulted in the creation of a major independent communications provider. Needless to say, it involved large numbers of lawyers from a variety of practice groups and just about all of the firm's offices.
Another major transaction concerned GE Real Estate's acquisition of Arden Realty. This was a $3.1 billion deal involving a public-to-private transition, including a spin-off of a number of properties to Trizec. It involved lawyers from, principally, our Atlanta and Houston offices, and the practice groups involved included real estate, corporate, tax, employee benefits and environmental.
The Mirant Corp. disposition of some six power generation facilities in a $1.6 billion transaction was another very significant effort for us and entailed participation from all across the firm.
We also represented Novelis in its $6 billion sale to Hindalco Industries. That was another example of cross-team and cross-office work. Among those involved were lawyers from the corporate, antitrust, finance, employee benefits, intellectual property, tax and environmental areas.
Editor: While I realize that these are far from typical deals, I think our readers would be interested in hearing about how you coordinate an effort of such magnitude.
Stephenson: Normally, one partner will be charged with overall responsibility for the transaction. She must assemble the team. Senior practice group partners will be responsible for various aspects of the matter, and they will coordinate with the partner in charge of the project. Some of these deals will entail deploying more than 40 lawyers.
In almost all transactions, the tax lawyers are involved. Depending on how the transaction is financed, corporate finance and securities lawyers have a role to play, and the environmental lawyers are usually a critical component. Communication and coordination among all of these participants is crucial to the success of the deal, and the role played by the partner-in-charge is of supreme importance.
Editor: Please tell us about some of the major litigation matters that the firm has addressed over the past year.
Stephenson: The Tradecard v. S1 Corp. case involved our representation of S1 in connection with Tradecard's allegation of patent infringement. The case was tried in New York, but S1 is an Atlanta-based company, and one of our IP partners, Holmes Hawkins from our Atlanta office, acted as lead counsel. We were successful in our defense - the infringement claim was for $12 million - and the jury declared Tradecard's patent invalid.
The Colaccio v. Apotex matter was one of a number of cases where we represented GlaxoSmithKline. This one concerned an allegation that the anti-depressant Paxil leads to violence and suicide. Chilton Varner, one of our senior Atlanta tort lawyers, led the defense, which secured dismissal on the grounds of the FDA's approval of the product's packaging.
Buynie v. Airco was a case in which we defeated a class certification of the employees of a New Jersey chemical plant who claimed health problems. One of our Atlanta litigation partners, Ray Persons, was lead attorney, and through discovery was able to demonstrate that the circumstances of the plaintiffs were too different to support class certification. In these cases, of course, the defeat of class status is virtually a victory.
Editor: I understand that the firm's IP practice continues to grow, primarily through lateral hires. Would you bring us up to date on what has transpired during the past year?
Stephenson: In the Atlanta office we have added at least four IP partners. We also added strength in New York and Houston. Much of the focus of these additions has been on our patent prosecution and litigation capabilities. Three partners came to us from the Kilpatrick firm in Atlanta, including Tony Askew, who for years has been viewed as the dean of the Atlanta IP bar. His addition, together with that of his partners Steve Schaetzel and Jim Johnson, represents a very significant enhancement of our strength in this area. At the same time, we were fortunate to bring John Harbin, a strong IP litigator, into the fold from the Powell Goldstein firm in Atlanta. We believe that IP is a growth area. With these additions, we believe that we are in the process of assembling a world-class team in Atlanta.
Editor: Please tell us about the firm's new Diversity Fellowship program.
Stephenson: This was a product of our diversity and recruiting efforts. We wanted to support minority law students in their studies and, at the same time, to increase our minority hiring. In January of this year we announced the three inaugural recipients of this fellowship, who are in law school at Harvard, Vanderbilt and the University of Chicago. Each received a $10,000 stipend, in addition to a job at the firm during the summer. Each of our Atlanta, Washington and New York offices will host a fellow for the summer. Our hope is to encourage an increasing number of minority students to attend law school and to join the profession.
Editor: Speaking of diversity, how is King & Spalding faring in its diversity recruiting?
Stephenson: We are doing well, although we continue to be attentive to the pipeline challenge. About eight percent of the firm's lawyers are African American, and two percent of its partners. This demonstrates the difficulty of converting a successful hiring program into success in long-term retention. When young people leave the firm, we see many of them move into corporate counsel positions. Others take government jobs or join smaller firms. We are trying to address this, but I do see a need for the law schools to increase their enrollments if we are going to meet this challenge successfully over the long term. American law schools have not increased in size during the past 20 years, a time during which the demand for law graduates has only been increasing. This is putting pressure on all law firms, both with respect to minority hiring and hiring generally.
With respect to our minority hiring and retention efforts, we recently named Lovita Tandy, of our Atlanta office, chair of the firm's diversity committee. She will spend more than half of her time continuing to improve and implement the firm's diversity strategies and training, and working with minority and female attorneys on specific development and advancement plans. We believe we are making progress, but it is an undertaking that requires both constant and ongoing effort.
Editor: How do you see the Atlanta office evolving over the next five years?
Stephenson: King & Spalding will continue to be a dominant presence in the Southeast, despite the increasing challenge from the number of national firms that continue to open offices in Atlanta. Local competition is also very strong. Four key areas for us with respect to this dominance are our tort and business litigation practices, our growing IP practice, our corporate practice and our real estate practice. I expect these will continue to be the principal drivers of the office's success going forward.
Editor: And the firm as a whole?
Stephenson: The firm will continue to grow. We have a new openness to establishing a presence in cities where our clients need us to be. Most recently, we opened an office in Dubai in response to our Middle East clients' needs, and we were able to hit the ground running. I think this is a very exciting time to be part of King & Spalding.