Charlotte Four Years After the Bank Crisis

In Ken Otterbourg’s May 15 article for CNN Money, Otterbourg considers how Charlotte has fared some 4 years after the financial meltdown. In many ways, the nation’s second largest banking hub is quite different. Perspectives and even physical appearances have changed, particularly for the city’s 2 largest banks. The wavy greens and blues of Wachovia, the regional powerhouse so long a staple in the city, were traded for the red and gold of Wells Fargo in their 2009 acquisition. Bank of America, on the other hand, still remains but has had its own struggles. As Otterbourg notes, though it may be too big to fail, BofA now faces a dramatically different landscape with heightened scrutiny and pressure.

This changing financial landscape, Otterbourg says, has forced the city to consider what was once an unthinkable reality—Charlotte outside of banks. “It’s a concept that was once unimaginable here. Like Detroit outside of cars. Or Vegas outside of gambling.” Bank of America and Wachovia put Charlotte on the map. And while Charlotte does have an international airport and small market NFL and NBA franchises, it is hard to overstate the banks’ importance in a place without a major river, harbor, or research university. No one can argue Charlotte would be the same without its ties to banking. Thus in 2008, the financial crisis shook Charlotteans to the core. Which begs the question—how has the city responded?

“From the city’s financial heart, the pain and uncertainty spread like a stain across the region,” says Otterbourg. “Unemployment soared. So did foreclosures. It was as if the whole land—the concrete and steel, the red dirt and the endless brick—was holding its breath, just waiting for the other shoe to drop.” And then, Otterbourg says, it didn’t. Construction, migration, and economic vitality slowly made its way back into the region. The financial sector started to show signs of life. The mass layoffs once feared at Bank of America and Wells Fargo never came to full fruition, and other banks such as Fifth Third, PNC, and Ally Financial stepped up to bridge the gap. Finance employment is back up to 50,000 and wages are on the rise. While these are still below the 2007 averages of 54,000 employed and $104,000 in wages, the outlook is getting brighter.

Perhaps more importantly, other signs of recovery are surfacing in non-financial sectors. Chiquita relocated its headquarters from Cincinnati and promised 400 jobs. NASCAR opened its $200 million Hall of Fame downtown in 2010. Manufacturers like Siemens, Westinghouse, and ABB all now have large Charlotte facilities. Yet manufacturing as a whole is still suffering, says Otterbourg, “accounting for two-thirds of the 60,000 jobs lost in the region during the recession.” So there is still work to be done.

2Overall though, the business community seems to have rallied. New mayor Anthony Foxx and other city officials have committed to top priorities of: (1) attracting top businesses, and (2) keeping those already there within the city limits. Foxx and others make no secret that Charlotte is an importer of talent, and will pay to get it. In fact, Chiquita received $22 million in incentives and ABB will receive $2.5 million if they meet hiring goals. Says Foxx: “That’s Charlotte’s culture. It’s one of inviting businesses in.” And it is a mindset like this that is helping the city back on its feet while also establishing new roots.

The resilience of the city has not gone unnoticed. Its choice as host city for the 2012 Democratic National Convention is a step forward economically regardless of one’s political affiliation or backing. It has great potential to showcase the city on the national stage as a model for recovery and growth. This by extension could attract additional business and bring significantly more jobs to the region. No matter what—banking is and will always be at Charlotte’s heart.

But continued diversification in other sectors will be a key to continued growth and stability. In the words of Hugh McColl, perhaps Charlotte’s most influential financial leader: “We are not looking back on the banks. We can’t keep wringing our hands over that. The bank’s still very strong, and it will come through all of this, but I don’t think ever again will the city be dependent on the two rich uncles it used to have.”

3,900 Jobs Added in April as Legal Employment Rebounds

After losing 1,700 jobs in March, 400 more than originally anticipated, the legal sector posted a strong rebound in April, adding 3,900 jobs overall. This continues an overall upward trend in legal employment as 6,900 jobs have been added since this time last year (and 6,000 since July – see chart). The total number of legal jobs has now reached 1,120,900, the highest total in almost 3 years, dating back to June of 2009.

This is certainly encouraging news. Yet it remains an uphill battle when viewed in light of employment levels before the recession. Says Tom Huddleston Jr. in a May 4 article for The Am Law Daily: “While such figures may inspire optimism within the legal industry, they remain below the industry’s prerecession employment highs. In April 2008 the sector employed an estimated 1,166,000—roughly 45,000 more than it does now.”

Huddleston Jr. goes on to note that the U.S. economy as a whole added 115,000 positions for the month, dropping the employment rate from 8.2% to 8.1%, which remains the lowest figure in over three years. However, economists have indicated that these projections fell short of the increases they expected for the month. Moreover, they believe in spite of job gains in both March and April, the increases have been relatively small and representative of “large numbers of workers abandoning the labor force.”

This is just further proof we find ourselves in a time where even good news must be taken with a grain or two of salt.

AmLaw Rankings Show DC-Based Firms, Others Increased Revenues in 2011

In a recent comment in an article for The BLT (Blog of Legal Times), Crowell & Moring chairman Kent Gardiner mentioned that “maintaining your position is the new up” for today’s law firms. In some ways, this rings very true given the difficulties of the last few years. The industry has changed dynamically since the recession of 2008, and recent trends like fluctuating employment and staggering losses of partners and profit at firms like Dewey & LeBoeuf appear to confirm Gardiner’s thinking. However, closer analysis of AmLaw’s most recent rankings for 2011 reveals growth is still very possible.

In fact, 83 of the country’s top 100 firms reported gains in revenue in 2011, 25% more than last year. Quinn Emmanuel Urqhart & Sullivan led the way with 31.4% growth, and 13 of the top 100 brought in more than $1 billion in revenues. On the other side, 2011 was a hard year for firms like Rosen & Katz and Fulbright & Jaworski, which experienced the largest decreases in revenues, of 4.8% and 4.5% respectively. But across the board, the numbers show that many firms are finding ways to adapt and grow even in the face of adversity.

This is certainly true in DC. With a growing demand for regulatory work ranging anywhere from financial services, to food/drug and agriculture, health and life sciences, and energy, the nation’s capital is now one of the industry’s hottest and most timely markets along with Silicon Valley.

According to the aforementioned BLT article, “Top DC Firms Show Revenue Gains in 2011”, 8 of the 9 DC-based firms that made the AmLaw 100 for 2011 posted increases in revenues, except for Hogan Lovells. Of the 8 that posted increases, 6 of those were greater than 5%, including:

  • Arnold & Porter, up 15.2% to $639.5 million
  • Steptoe & Johnson, up 9.1% to $376.5 million
  • Finnegan Henderson Farabow Garrett & Dunner, up 7.4% to $342 million
  • Venable, up 5.3% to $355.5 million
  • Covington & Burling, up 5.1% to $611 million
  • Williams & Connolly, up 5% to $317.5 million

The other 2 DC-based firms that experienced increased revenues were Crowell & Moring and Patton Boggs, both of which increased slightly by 0.6% to $329.5 million and $339.5 million, respectively.

Additionally, firms like Atlanta-based Alston & Bird have showed that significant success is also achievable outside of hot markets. Their 24% increase in profits per partner was second highest among firms in the AmLaw 100, second only to Arnold & Porter’s 25% increase in PPP.

While many firms grew through expansion (like Alston & Bird, who added 12 lawyers in California and Brussels, and Arnold & Porter, who added 26), others experienced growth with fewer lawyers. According to an April 26 AmLaw article by Robin Sparkman, Hunton & Williams and Mayer Brown both posted double digit gains in revenue per lawyer, while shedding more than 100 lawyers (12% fewer at Hunton and 7.4% at Mayer Brown).

Clearly the model for firm success has changed and will continue to in the wake of the recession. But as many of the nation’s top firms have shown, growth is still an achievable and necessary expectation for those that seek to improve their standing.