‘There is a lot of money waiting on the sidelines’

Sunday, April 26, 2009 at 2:08pm
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Mary Neil Price says law firms are wrestling with the downturn just like many of their clients.  Jude Ferrara/The City Paper

Mary Neil Price is a member of the Nashville office of Miller & Martin and the former general counsel of First American Corp., which was acquired by AmSouth in 1999. At her firm, the Tulane University Law School graduate has handled work on private equity and debt financing deals, licensing transactions and trademark matters.

Recently, City Paper correspondent William Williams discussed with Price various developments in the legal and financial sectors.

What is your take on the overall U.S. financial climate and how it could impact law firms?

There is no question that the U.S. financial climate is in a precarious position. It’s certainly the most volatile economic climate I’ve ever seen. People are genuinely scared, and that has impacted their behavior — whether it’s buying a new car or contributing to their 401(k) plan.

My sense is that many households are examining their spending habits and cutting back where they can. I know I have, and so has Miller & Martin. We have not cut any staff or attorney positions. Cutbacks affect our clients in a myriad of ways, and that affects our business.

For example, the lawyers both at Miller & Martin, and nationally, who do bankruptcy and workouts are extremely busy right now; lawyers who do real estate transactions and mergers and acquisitions, not so much. Another way the financial climate affects law firms has to do with hourly rates and alternative billing methods. The market for legal work is much more competitive and in some areas is practically a commodity.

I don’t think law firms should expect to be able to raise their billing rates for attorneys across the board on an annual basis or assume that long-standing clients will be satisfied with the typical hourly rate arrangement. We’re seeing more RFPs and competitive bidding as well as requests for alternative arrangements such as flat fees or blended-rate billing.

If you had been representing AIG’s top executives as they were discussing the recently issued controversial bonus payments, how would you have advised them?

That’s a complicated question and I’m certainly not privy to the details of AIG’s compensation plans. Clearly, they underestimated the public-relations impact of their decision. Even though what they did may have been entirely legal, the public relations piece of it failed miserably. That happens sometimes when the lawyers don’t take the “public perception is reality factor” into account.

Your legal work has included issues involving private equity and debt financing. What is your take on these given the nation’s current economic state?

My take is that there is a lot of money waiting on the sidelines trying to determine whether or not the economy has bottomed out. With respect to banks raising additional capital, the trust-preferred and asset-backed securities markets have both dried up. The Treasury Department’s TALF (Term Asset-Backed Securities Loan Facility) program aims to jump-start the ABS market, but whether those efforts will be successful remains to be seen.

Our advice to bank clients contemplating whether to participate in the TARP capital purchase program has been, “If you think you’re going to need additional capital in the next six to 18 months for sustained growth either through ongoing operations or expansion, and you aren’t confident that you can raise additional capital from existing investors, then you should seriously consider participating in the program.”

In February, Miller & Martin PLLC announced it had formalized its Sustainability Practice Group, which comprises 30 attorneys from the firm’s three offices. What can you say about its prospects?

Miller & Martin has been involved with what are now called “sustainability” issues for a while now, and I think it was a smart move to organize this particular practice into a more formalized group. I am actually involved with this group and I am excited about its prospects. A big part of our responsibility as lawyers is to anticipate our clients’ needs and to make sure we are prepared to respond. Sustainability and “green” energy sources are key concepts in the Obama recovery plan. I expect to see increased government and private investor support, and we want to be involved in the forefront of that effort.

Nashville’s legal community has undergone some mergers the past two years, including the recent merger of Birmingham-based Bradley Arant Rose & White and Nashville’s Boult Cummings Conners & Berry. Your thoughts?

Nashville firms becoming parts of larger regional firms is not an unexpected development. Many firms see synergies and cross-selling opportunities having multiple offices over an expanded territory. We have offices in Chattanooga and Atlanta. Bass, Berry & Sims has offices in Memphis in Knoxville. There are a host of Kentucky-based firms that have offices in Nashville.

It works well for some firms, and not for others. A lot of that depends on whether the firm’s client base is more local or more national or regional in scope. Our perspective is that we can service our clients more efficiently and economically with multiple offices. For example, we are able to service a number of clients on a national basis with lawyers based in Nashville who are qualified to practice in other states at less cost than the clients would incur using local attorneys.

Where would you rank — or where would others nationwide rank — Nashville’s legal community in terms of notoriety, influence and success compared to the legal communities in Southeastern peer cities?

To the extent that expertise and quality of services determines influence and national recognition, my sense is that Nashville firms would compare very favorably. Miller & Martin has established a national reputation in a number of areas — employment and labor relations comes immediately to mind.

Our work with the World Law Group, an international association of law firms, has resulted in a lot of business with foreign companies contemplating establishing operations in Georgia or Tennessee. Being located in the state capital has certainly enhanced the success and reputation of our government relations and financial institutions practices.

On the other hand, I would say that generally speaking Nashville firms have less national visibility than their counterparts in other cities. My personal viewpoint is that Nashville firms tend to be somewhat “old school” when it comes to their own self-promotion. For many years, any sort of advertising or marketing efforts in the legal profession were viewed as unseemly, if not downright tacky. And the fact that the vestiges of that mindset are still very much evident in the Nashville legal community is not a bad thing.