AN UPSTART LAW FIRM COMES OF AGE Traditionalists deplore Finley Kumble's nontraditional ways: It raids the competition, rewards on merit rather than seniority, and operates like a big business. But now that it has taken a place among the venerable giants, it is forcing them to change.
By John Nielsen REPORTER ASSOCIATE Patricia A. Langan

(FORTUNE Magazine) – IN THE TRADITION-STEEPED law profession, the gulf between establishment firms and ambulance chasers is vast. A law firm rises from untouchable to Brahmin only by accumulating decades of respectable practice. What then to make of Finley Kumble Wagner Heine Underberg Manley Myerson & Casey? Too young to be part of the establishment, it is too big to be an upstart. Seemingly overnight it has become one of the giants of the profession. It is among the most reviled, most envied -- and most emulated -- law firms in America. Finley Kumble's detractors see it as a factory in which the time-honored virtues of brotherhood and shared professional standards are sacrificed in a quest for growth. But to other lawyers the firm's heterodox nature is appealing. New York trial lawyer Harvey Myerson, 47, a onetime managing partner of blue-chip Webster & Sheffield, joined Finley Kumble two years ago to head its litigation department. Says he: ''The firm didn't want to be an also-ran. It showed guts in bucking the establishment. I think Finley Kumble is the wave of the future.'' If so, future law firms will be aggressive, be run with modern management techniques, and have offices all over the U.S. and perhaps the world. Classic partnerships based on loyalty and seniority will give way to far looser agglomerations whose members are rewarded according to performance, not seniority. By any statistical measure Finley Kumble is big-time. Size? With 618 lawyers, it is third after Chicago-based Baker & McKenzie, which has 833, and New York's Skadden Arps Slate Meagher & Flom, which has 650. Wealth? Its revenues will top $150 million this year, a vast sum in the law business. Political connections? Among its partners are Joseph Tydings, former Senator from Maryland; Hugh Carey, Mario Cuomo's predecessor as governor of New York; Robert Wagner, a longtime mayor of New York City; and a sprinkling of other former government figures, including Congressmen, judges, and bureaucrats. Legal talent? It boasts such stars as Myerson, who represented the United States Football League in its recent antitrust suit against the NFL; Alan Schwartz, a top entertainment lawyer who counts comedian Mel Brooks and actor Roger Moore among his clients; Paul Perito, a specialist in white-collar crime; and Carroll Dubuc, an expert in aviation law. Sprawl? Finley Kumble has offices in New York, California, Florida, Washington, London, and as of September, Dallas. It is, its top people insist in chorus, a truly national law firm, not a New York outfit with branches. THE ARCHITECT of this imposing edifice is co-managing partner Steven J. Kumble, 53. A dapper, soft-spoken graduate of Yale and Harvard Law, Kumble insists he would rather be a practicing real estate attorney. Instead he has spent most of the past 18 years managing the enterprise. His efforts have made him wealthy. He owns an art-filled Fifth Avenue co-op and a 200-acre Vermont farm. His second wife, Peggy Vandervoort, is a leading broker, breeder, and syndicator of thoroughbred racehorses. The firm began life as Finley Kumble Underberg Persky & Roth in 1968 with eight lawyers. In the early days Leon Finley, now 78 and an active senior partner, was the group's most experienced hand and chief rainmaker, jargon for a lawyer or other professional who brings in new clients. Kumble, however, quickly put the firm on a collision course with the New York legal establishment. ''We were always very entrepreneurial,'' says partner Neil Underberg, 58, who was present at the creation. ''We wanted to bring in business and become an important part of the legal community. There are a lot of ways to do that, most of which take generations.'' Rather than wait for generations of associates to come of age, Kumble chose to grow a newfangled way. He raided other firms, offering star performers top dollar. Such a thing was unheard-of at the time. Gentlemanly firms did not take experienced attorneys -- and their clients -- away from other members of the club. A partner in a law firm was a partner for life. Recruiting constantly, Kumble added to the firm's core businesses of banking and real estate, moving into such areas as labor, bankruptcy, and tax law. His first big catch was corporate lawyer Andrew Heine, 57. Now part of the firm's inner management circle, Heine recalls that Kumble could be persuasive: ''He told me my name could go anywhere on the shingle that I wanted, even before his. Very few lawyers would say that. I told him I'd settle for a lower billing so the firm could still be known as Finley Kumble.'' The hustling of the early years caused a few missteps. A founding partner was proved guilty of providing false information to the Securities and Exchange Commission in 1973. That together with some legal skirmishes with disgruntled clients -- the firm denies any wrongdoing -- created an unsavory reputation. In New York legal circles, Finley Kumble became known as a pressure cooker where principles were flouted and money was king. ''They were unpleasant, nasty people, screamers,'' says a former associate. ''I hated working there, but I came away with enormous respect for Steve Kumble. He is not a screamer. He's smooth, tough, and cold as ice. And he's probably a managerial genius.'' Kumble demurs. ''We just took advantage of opportunities,'' he says. In fact the firm's first foray outside New York, in 1974, was prompted solely by fears of losing an important corporation. The client had business in Miami; Finley Kumble opened a small office there to handle it. That first attempt failed. So did a second, perhaps because the office was disorganized. ''One day I had to call the Miami office from a pay phone, only to have the operator tell me the number was unlisted,'' Kumble recalls. ''It's funny now, but it wasn't at the time.'' The eventual success of the Miami office shows that Kumble did not just take advantage of opportunities but made them. In 1982 he found C. Thomas Tew, 46, a securities lawyer who headed a small Miami partnership that was looking to merge with a national firm. Tew had no intention of heading a branch office. Branches of national law firms are often little more than remote outposts tightly controlled by the home office. And Kumble's New York style fueled the Miami lawyer's skepticism. Says Tew: ''Oh, was he smooth. He came in with his red suspenders and Gucci loafers, and I thought, 'This is going to be a trip.' '' But Kumble had an irresistible proposal. ''We started talking about concepts, and I quickly realized that this guy had thrown away the branching mentality,'' says Tew. ''He wanted to recruit the best managers he could find and turn them loose to build a firm.'' Kumble recruited Tew and litigator John Schulte, 48. They started the new Miami office with 17 lawyers and now have 75. Last year Tew gained national prominence as bankruptcy trustee for ESM Government Securities Inc., a Fort Lauderdale firm charged with fraud by the SEC. Finley Kumble had perfected its expansion techniques on a larger scale in Los Angeles and Washington. In 1978 the firm cut a deal with Marshall Manley, 46, a legendary insurance specialist and rainmaker. Manley had broken with his old firm, Manatt Phelps Rothenberg Manley & Tunney, but quickly found a home at Finley Kumble. From scratch he built an operation that now has nearly 200 ^ lawyers in Southern California. Two years after signing Manley, Finley Kumble merged with the Washington firm of Danzansky Dickey Tydings Quint & Gordon. ''We had good people, but we needed to broaden our base,'' says Tydings. ''All the big firms had built up Washington offices, which meant we weren't getting the referrals we used to get.'' Forty Danzansky Dickey lawyers joined Finley Kumble in the merger; today the Washington office has a staff of 140. THE EXPANSION philosophy, partners insist, has made the firm greater than the sum of its parts. In the Finley Kumble canon, each office is an autonomous, full-service law firm, but each reinforces the others' strengths -- and when necessary, shores up their weaknesses. For example, when Miami needed insolvency lawyers a few years ago, it got them from New York. Harvey Myerson chose Finley Kumble largely because he liked the national concept. ''If one of my clients has a litigation matter in, say, Los Angeles, I have to find local counsel,'' he says. ''Normally that means hiring an outside firm. I can't control the quality, and the client pays twice. With Finley Kumble, I can pick and choose among my own partners.'' Governing the beast is another matter. Law firms are partnerships and untidily democratic at best. Finley Kumble's phenomenal growth -- it has added more than 100 lawyers in each of the past three years -- might have meant chaos. As the new offices expanded, they inevitably challenged New York's dominance. The biggest crisis so far came three years ago, when Manley threatened to accept an offer from New York's Shea & Gould unless he had a larger say in running the firm. The senior New York partners hastily patched things up, and Manley emerged as co-managing partner with Kumble. Manley has since pulled back, because he is spending much of his time holding down a job as president of the Home Group Inc., an insurance and financial services company spun off from now-liquidated City Investing Co. In August he relinquished his title at Finley Kumble for a largely advisory role as chairman of the firm's 25-member national management committee, which acts rather like a corporate board in setting policy. In his place the firm named two relative newcomers co-managing partners along with Kumble -- Myerson and Robert Washington Jr., 43, head of the Washington office.

As Myerson and Washington shoulder some of the managerial burdens, Kumble says he will spend more time planning, recruiting, and visiting the firm's / offices -- in spite of the fact that he hates to fly. (Thirty years ago an Army observation plane he was riding in ran out of fuel and ended up in a tree.) ''We're pretty good at fielding teams of lawyers from different offices when we have to,'' he says, ''but I think we can do it better.'' He will also be planning for the future by, among other things, investing in equipment for telecommunications, teleconferencing, and instantaneous transmission of documents. Says he, ''The firms that can't or won't make these capital expenditures won't be around in the 21st century.'' UNLIKE MANY OTHER big law firms, Finley Kumble is actually run like a multimillion-dollar enterprise. Its chief number cruncher is executive managing director William Lang, 42, a CPA by training who heads the firm's administrative, finance, personnel, and data-processing functions. Each office keeps close tabs on its lawyers and is linked to Lang's New York computers, which spew out budgets, income projections, and billing reports. In a profession notorious for a cavalier attitude toward cash flow, Finley Kumble is a taut financial ship. ''Partners have to make out their bills weekly,'' says Washington. ''No bills, no draw against profits.'' The most sensitive job is apportioning the profits among 200-plus partners. While establishment law firms typically base partners' compensation on years of service, Finley Kumble has set itself up as a meritocracy, where longevity means nothing. Splitting the pot falls to Kumble and other top managers. It is a tortuous three-month process made doubly difficult because the firm has no compensation formula to fall back on. The key criteria are rainmaking, client responsibilities, management responsibilities, and public service. Partners at the top make nearly $1 million a year, those at the bottom perhaps $200,000. To some traditionalists in the law business, the rise of megafirms like Finley Kumble is a sad development. Such behemoths, the critics argue, are not partnerships in the best sense, with a common culture, personal bonds, and shared professional standards. Rather they are mere groups of strangers held together by greed. Says Norman Roy Grutman, a New York trial lawyer who once had his name on Finley Kumble's shingle but broke acrimoniously with the firm a decade ago: ''Bigness is not excellence or goodness. How can you have a brotherhood with 500 lawyers? It's a McDonald's franchise operation that treats people as summaries on three-by-five cards.'' But if the old virtues are being lost, it is because clients prefer the new ones. Mega-firms are here to stay. Finley Kumble's client base includes American Express, Prudential-Bache, Air France, Lockheed, several major banks, federal agencies, states, cities, and foreign governments. The largest of them accounts for less than 2% of revenues. Indeed, the legal profession itself seems to be abandoning the ways of the brotherhood extolled by Grutman. Raids among law firms are already commonplace, and attorneys jump ship for various reasons: money, prestige, and policy disagreements. In late August in New York antitrust specialist Gordon Spivack, 57, moved his entire department -- some 30 people from partners to secretaries -- from Lord Day & Lord uptown to Coudert Brothers because his old firm was not promoting his associates fast enough. FINLEY KUMBLE'S days of hyperexpansion are probably over. Kumble finds it increasingly difficult to drum up new business or recruit well-known lawyers without creating a conflict with existing clients. ''You meet yourself coming and going,'' he says. ''It's the biggest obstacle to growth.'' But some senior partners welcome a period of consolidation. Says Tydings: ''When you bring a senior person from another firm you have to support him for 120 days before he begins generating revenue. At the rate we've been growing, that takes a lot of capital.'' The firm remains outside the exclusive fraternity of so-called white-shoe establishments like Cravath Swaine & Moore. ''Cravath has had 150 years to develop a culture,'' says Kumble. ''We've had 18.'' But the enfant terrible is showing definite signs of maturity: slowing growth, consolidation, and a broadening of top management. Finley Kumble has no more skeletons in its closet, insists Myerson, than any other major firm. Is white-shoe status just around the corner? ''I will never be part of the establishment, but our younger people will be,'' says Kumble. He pauses. ''Some of them think we already are.''