MARITIME LAW FIRMS ADRIFT ON ROUGH SEAS

MARITIME LAW FIRMS ADRIFT ON ROUGH SEAS

"There's nothing like a good collision," said Henry F. White Jr. "When the collision happens, off you go," added the veteran maritime lawyer.

Many maritime lawyers agree that ship collisions are the most exciting part of their practice. But as ships get safer there just aren't as many accidents as there used to be.That means less work for lawyers and heightened competition in a field where lawyers have traditionally enjoyed an unusually friendly relationship with their colleagues at other firms.

The recent defection of six out of 18 partners from one major maritime firm and the highly charged lawsuit filings that followed are just one sign of pressures from heightened competition and the recession-plagued economy, lawyers said.

As economic pressures on firms continue to increase, more breakups are likely, they added.

The defections from New York-based Hill, Betts & Nash are "just part and parcel of what's happening in general," said Michael Chalos, who broke away

from a large firm himself 14 years ago to help form Chalos, English and Brown.

"In the 1970s and (early) 1980s you hardly ever saw that," he continued.

The Hill, Betts divorce is the second in the last two years where a ship finance department jumped ship from a major firm to join another. Early in 1990, seven partners from Burlingham, Underwood & Lord joined the New York office of Watson, Farley & Williams.

Lawyers at other firms said as cargo disputes have declined in number and become a less profitable area to do business, partners in the more profitable areas like finance have begun to feel like they weren't getting a big enough piece of the pie.

Most lawyers said they expect more breakups in the future, particularly at some of the larger firms.

"If the economy keeps going the way its going and New York keeps declining as a maritime center, it's inevitable," Mr. Chalos said.

Many factors have led to the decline in business for maritime law firms, including containerization, the falloff in the number of U.S.-based shipowners and the disenchantment of U.S. banks and institutional investors with investing in shipping.

Maritime cargo disputes are down significantly because with containerization most goods are no longer handled by hand at the waterfront, one lawyer said.

"Damage claims don't surface at the wharf anymore," the lawyer said.

Robert G. Shaw, a partner at the medium-sized Healy & Baillie firm lamented the departure of a lot of ship finance work to London and other overseas locations.

"Classic term loan financing goes on in London now more than it ever did," he said.

Marine Midland Bank informed its clients in December that it was closing down its ship financing operations, leaving only two New York banks - Manufacturers Hanover and Chase Manhattan - active in ship finance work, Mr. Shaw said.

More than the decline in the number of banks, the decline in the number of U.S.-based shipping companies has hurt the maritime law firms.

"You can trace the decimation of the bar to the decimation of the (U.S.) lines," said Tom Mills, a partner at Dyer, Ellis, Joseph & Mills in Washington.

In Washington, the decline has been heightened by the drop in government maritime aid programs.

Mr. Mills estimates that there were four or five times as many maritime lawyers in Washington in 1980 when Ronald Reagan took office with an anti- subsidy agenda. Most of those remaining lawyers are involved with lobbying Congress rather than working with federal agencies, Mr. Mills said.

The decimation of the Washington maritime bar has meant the death of a comfortable kind of club. "In the old days, you ran into each other all the time," Mr. Mills said.

In New York, while it has taken some hard hits, the collegial, clubby atmosphere remains.

"Like in any small community, you get to be friends," Healy & Baillie's Mr. Shaw said. "There is a pretty strong sense of knowing the people you deal with."

"Each firm had its own character," before the competition increased in the last 10 years, said one lawyer. "It was like a college campus," the lawyer continued.

The collegial atmosphere, along with the romance of the sea, the international nature of the business and the excitement of ship collision cases are what attracts many lawyers to this field where hourly rates are significantly lower than in corporate law.

"The maritime work is more fun," said John D. Kimball, a partner at Healy & Baillie.

"I have friends all over the world," said one lawyer. "I could not want a more interesting and exciting practice," the lawyer added.

But most see the fun and collegial nature of maritime law as being on the decline, making it more difficult to make deals.

"It makes it harder to do things," Mr. Kimball said. If you don't know the other lawyer, "you can't trust them," he added.

Nobody, however, sees the practice disappearing because of hard times. And, at least one area is growing because of the recession.

"We've done an awful lot of bankruptcy work," Mr. Kimball said.