Paine, Hamblen, Coffin, Brooke & Miller LLP, Spokanes largest law firm, has launched an aggressive growth strategy that includes a merger last week with Spokanes fifth largest firm and the expectation of having as many as 100 attorneys within the next two years.


On Feb. 1, the practice of Chase, Hayes & Kalamon PS, with its 14 attorneys and 20 support staff, was merged into Paine Hamblen, giving the bigger, 105-year-old firm a total of 63 attorneys and 170 employees overall.


More important than the merger itself, says Paine Hamblens managing partner, Shaun Cross, are the market changes that are fueling it. Quite simply, Cross says, Paine Hamblen must expand or lose its usefulness to some of its biggest clients, including Avista Corp. and Providence Services, whose legal needs are becoming greater and more sophisticated.


As their transactions start to increase, we have to have the people here to serve them, says Cross. We need to grow, and we need to grow as quickly as we can.


Ranked in 1998 as the 22nd largest law firm in the state by the Washington Journal, a trade publication for lawyers, Paine Hamblen moves to about 12th place with the merger, and expects to be within the top seven firms if it reaches its goal of having 80 to 100 attorneys on staff within two years, says Cross.


Im very excited on behalf of Paine Hamblen. This will provide the critical mass it needs. Its a wonderful growth platform, says David Meyer, senior vice president and general counsel of Avista Corp. We benefit by having strong local counsel with broad-base practice specialties. And its not only Avista, but the entire community that benefits.


Says client Wayne Williams, CEO of Spokane-based Telect Inc., Their ability to look forward, be visionaries, and keep up with our growth demands has eliminated the need for us to think that a Seattle-based law firm could offer more.


Cross predicts that Spokanes legal community will evolve similarly to how the health-care sector here began to evolve 10 to 15 years ago. You can get a heart transplant here, he says. In fact there arent very many procedures you have to go outside of Spokane for. In the legal community, we havent yet brought together in Spokane all the capabilities out there. The heart-transplant type of functions (in a legal metaphor) still have to be done outside of Spokane. Were going to try to change that.


The firm currently is looking for additional attorneys with special skills in tax law, corporate law, securities law, and environmental law, though it already has legal teams in each of those areas.


Recruiting talent shouldnt be a big problem, says Cross, who adds that Paine Hamblen already has been able to attract attorneys from big-city markets because of the lifestyle Spokane has to offer, and because of the reputation and client list the firm has been able to amass.


Cross declines to name the firms major clients, aside from Avista, Providence, and Telect. However, the 1998 Martindale-Hubbell Law Directory lists among Paine Hamblens clients: Tidymans Warehouse Foods, Output Technology Corp., Key Tronic Corp., Johnson Matthey Electronics Inc., Albertsons Inc., Boise Cascade Corp., and both the city and county of Spokane.


Merging firms


Chase, Hayes & Kalamon was founded 10 years ago and emphasized insurance litigation, health-care law, employment law, corporate law, and estate planning. Four of its 14 attorneysJames Kalamon, Roger Chase, Gregory Arpin, and Andrew Smythehave become partners in Paine Hamblen as a result of the merger. Also, Richard Hayes, a former principal in Chase Hayes, now serves of counsel to Paine Hamblen, which has retained its name.


Cross says Chase Hayes expertise in employment and health-care law will be important additions to Paine Hamblen, as will the former firms biggest client, Providence Services, the umbrella organization that operates hospitals throughout the Inland Northwest, including Sacred Heart Medical Center and Holy Family Hospital.


Cross says Paine Hamblen and Chase Hayes had very similar cultures, and he describes the marriage as a great match. He says Kalamon had practiced law for 12 years at Paine Hamblen before leaving to help launch Chase Hayes, and Chase had earlier worked for a firm whose practice was similar to Paine Hamblens.


Still, the merger presents a logistics challenge for Paine Hamblen. Chase Hayes occupied about 11,700 square feet of floor space in the Seafirst Financial Center, which Paine Hamblen plans to give up. Paine Hamblen leases 30,600 square feet of space, in the Washington Trust Financial Center, and between now and early April will squeeze Chase Hayes 34 staffers into that space.


Its going to be very tight, says Cross.


Paine Hamblen carved out some room by not renewing the leases for about 7,000 square feet of space it had subleased to other tenants on one of the floors it controls in the Washington Trust tower, but that still really isnt enough, he says.


What we really need is 40,000 square feet right now, says Cross, who says the firm eventually will want as much as 60,000 square feet of floor space to accommodate its expected growth.


Dealing with space needs will be a big task for us in the coming year. Cross says the firm is looking at all its options for securing additional space, but declines for now to be more specific.


Paine Hamblen also maintains an office in Coeur dAlene, where 23 employees, including eight attorneys, are based. And it leases office space in Kennewick, Wash., that is used by Spokane-based attorneys while theyre visiting clients in the Tri-Cities area, but currently has no staff assigned to it. Cross says the firm eventually might locate some attorneys and support staff there.


Next, the firm likely will look elsewhere in North Idaho, as well as in Montana, for locations for additional branches, he says. It will concentrate on inland markets. We want to be the predominant law firm in the northern tier, east of the Cascades to the Dakotas, Cross says. Thats going to be a challenge for us, but we feel like were uniquely positioned to do it.


Strategic planning


Paine Hamblens aggressive growth push is the result of an exhaustive strategic-planning effort the firm embarked on last year, in which it hired a national law-firm consulting firm and consulted extensively with the managing partner of a fast-growing law firm in Richmond, Va.


That firm, which had been smaller than Paine Hamblen and does business in a community Cross says is much like Spokane in terms of business demographics, had also made a decision to grow and, following the acquisition of a small law firm there, exploded in size to 120 attorneys and now has offices in Washington, D.C., London, and Saudi Arabia.


Throughout most of the 90s, Cross says, Paine Hamblen had been stuck at around 45 attorneys and 120 total employees.


Fifty attorneys has been the sound barrier in Spokane, he says.


The firm had always believed that it should remain relatively small to serve its clients best, Cross says. It also was believed widely in the firm that if the firm grew too large in a community Spokanes size, it would confront conflicts of interest due to representing companies that end up on opposite sides of a legal issue. He now contends that that belief was just an excuse for not growing.


We got beyond the decade-long tastes great, less filling debate on growth, Cross says. We decided were going to grow.


The firm has been making organizational changes that have helped prepare it to grow, including the addition of a principal administrator who runs the day-to-day business end of the company, and a human resources manager. It also changed its governance policies to give more decision-making power to Cross, as managing partner, and to an executive committee. Previously, Cross says, the firms 30-some partners had to reach unanimous consensus to make any critical moves, which was difficult because lawyers arent typically quick to change.


The firm had started to see demographic shifts within its staff that told the partners that they hadnt been doing enough to prepare the firm for the future, including having more of a corporate governance structure and in ensuring that younger attorneys were being groomed to take over eventually as the older partners retire.


Those are the kinds of steps Paine Hamblens attorneys, as general counsel to many companies, had advised their clients to take. Were in a lot of boardrooms, says Cross. We were telling the people what to do, but we werent doing it ourselves.


The firm has been growing. Though Cross declines to disclose revenue figures, he says the firms projected gross revenues for 1999 are about 60 percent higher than the revenues posted just two years ago, and if the firm meets its growth expectations, revenues will jump another about 40 percent in the following two years.


Paine Hamblen, founded in 1893, is Spokanes second oldest law firm, just 11 years younger than Witherspoon, Kelley, Davenport & Toole PS, Spokanes third-largest firm. Paine Hamblens partners have included Frank Post, one of the early presidents of Washington Water Power Co. (now Avista) and for whom Post Street is named; Laurence Hamblen, for whom Hamblen Park and Hamblen Elementary School were named; his son, Herb Hamblen, a former Speaker of the House in the state Legislature; and numerous state bar presidents and judges.


The Paine Hamblen of today was formed primarily by a 1980 merger between Paine, Lowe, Coffin, Herman & OKelly (launched as Blake & Post in 1893), and Hamblen, Gilbert & Brooke (started as Hamblen & Lund in 1899). It operated as Paine, Hamblen, Coffin & Brooke until 1986, when it merged with the Coeur dAlene firm Miller & Miller and the Miller name was added.