New law firm makes it through tough times

Partners at Berger Harris L.L.C., the Wilmington law firm started in 2009, are (from left) Jack Harris, Buddy Berger, and Michelle Quinn.
Partners at Berger Harris L.L.C., the Wilmington law firm started in 2009, are (from left) Jack Harris, Buddy Berger, and Michelle Quinn. (CLEM MURRAY / Staff Photographer)
Posted: January 14, 2013

Jack Harris and Buddy Berger freely admit that the timing wasn't the best.

It was the fall of 2009 and Harris and Berger, colleagues in the Wilmington office of Chester County-based Riley Riper Hollin & Colagreco, decided to strike out on their own. Both had worked for big firms, Harris at Reed Smith and Berger at Blank Rome, among others. They liked their situation at Riley Riper.

But they had the entrepreneurial itch, and thought they might be able to do better on their own.

The problem was that the legal marketplace in the fall of 2009 was in a tailspin. Clients were pulling back, cutting their legal budgets. Some even were going out of business.

"People said, 'You guys are nuts; the timing is bad, everyone is cutting back,' " Berger said. "Other clients said you are in a tough time but if you make it through a couple of years you will be in a good situation."

Just over three years later the little Wilmington firm appears to be developing a comfortable cruising speed. Transactional work skyrocketed in the fourth quarter of 2012, in part because of concern over the tax and budget uncertainties hanging over Washington. But other pieces of the practice are coming together, as well.

When deal-making fell off as a result of the financial market collapse, increased litigation helped offset some of the lost work. The firm also has hired a new partner, Michelle Quinn, who specializes in legal work involving loan securitizations. The legal structure for many of these deals typically is fashioned in Delaware, whose incorporation laws and courts are deemed advantageous by many deal-makers. Quinn's role is to offer an opinion as to whether an entity holding real-estate ownership meets legal muster in Delaware.

Quinn came to Berger Harris L.L.C. from the old-line Wilmington firm of Richards, Layton & Finger, where she had spent several years doing similar transactions after graduating from the University of Virginia law school.

The problem that Quinn described at Richards Layton is a common one for young lawyers: They are under pressure to develop new business, but often the rates insisted on by firm management are too high.

Quinn said her old firm's rates were too much for many of the young start-ups that she wanted to represent, with the hope that they would grow, and along with it her legal work for them.

"I was reaching the point where a lot of our clients were getting frustrated about our flexibility in providing services," Quinn said.

At Berger Harris, she has that rate flexibility. Costs are further lowered because Quinn staffs most matters herself without associate help.

Quinn is the latest hire at Berger Harris, which now has seven lawyers. Harris said the first two or three years were stressful, not only because of the down economy but also because the firm did not yet have market recognition. It helped that litigation remained strong throughout the recession, Harris said. He added that another advantage was the new firm's ability to transition from real estate deal-making to workouts for real-estate developers who had gotten sideways with their banks.

"It used to be that when a client approached Buddy it was with loan documents to review," Harris said. "All of a sudden Buddy was being asked to review a forbearance agreement [the terms of a restructured loan agreement]."

While business sometimes emerged in unpredictable ways, there were also the predictable problems of a legal start-up.

The young firm had to contend initially with lagging collection of receivables, a common problem with new law firms because it can often take months to get bills out to clients. The firm set up a credit line with a local bank, though didn't use it much.

"We used it, but it became clear to us maybe 18 months in that it was more of a security blanket; we rarely tapped it," Harris said.

The firm inherited its 5,000-square-foot office space in Wilmington from Riley Riper, taking over the lease at what Harris said were favorable terms. But in a few months, the firm will move to new space in the high-end I.M. Pei Building in Wilmington, which was of course designed by the celebrated architect. It will be at a much higher cost.

A statement, it would seem, about the firm's confidence about the future.


Contact Chris Mondics at 215-854-5957 or cmondics@phillynews.com.

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