duncan.adams@roanoke.com 981-3324

One of the region's largest law firms is cutting employees, including seven lawyers and about 14 other staff members - a move the Roanoke-based firm attributes to "challenges and constraints" defending insurance cases.

"We've decided we are going to reduce the amount of insurance work we're doing and, as a result of that, some people have been asked to leave," said Mike Pace, managing partner for Gentry Locke Rakes & Moore.

The decision followed months of "strategic assessment" at the firm, Pace said, a process he said involved both internal review and input from clients and consultants. He said the assessment was completed to help plan the firm's future and that Gentry Locke Rakes & Moore will now focus more on commercial law and litigation.

"There's no systemic crisis. There's nothing bad going on. It's normal business," he said.

Pace said five of the seven lawyers who are leaving will form a new firm, Frankl Miller & Webb, and will take on some of the insurance defense and workers' compensation work now handled by Gentry Locke Rakes & Moore. Those lawyers are Dan Frankl, Mary Beth Nash, Tom Miller, Dale Webb and Jason Moyers, he said.

"It's all very amicable," Pace said.

Pace said Gentry Locke Rakes & Moore will remain one of the state's largest law firms - with a staff of about 102 employees, including 43 lawyers - after the staff reduction.

Nash declined to comment Monday and Frankl did not return a phone call. Pace said these lawyers will remain at Gentry Locke Rakes & Moore until early November to allow a smooth transfer of insurance-related work to the new firm.

Pace would not identify the other two lawyers who were asked to leave but confirmed that their last day is Sept. 30.

"It didn't have anything to do with performance," he said. "They're good lawyers. It's not about that."

Instead, said Pace, "it's reflective of the challenges and constraints" involved in insurance defense and "it's about making sure we have a proper mix of people and resources for our practice areas going forward."

He emphasized that Gentry Locke Rakes & Moore will continue insurance defense and workers' compensation work "for a number of clients with whom we have long-standing relationships."

Kenneth Abraham, a law professor at the University of Virginia, said insurance companies trying to keep premium prices low have pressured outside law firms defending their policyholders to reduce legal fees. That pressure sometimes can affect larger firms more than smaller firms because of higher overhead costs and hourly fees at the former, he said.

"Insurance companies pay hourly rates below what that firm and many firms need to be able to economically represent the policyholder for the insurance companies," Abraham said.

An article last year in the Chicago Daily Law Bulletin described tensions between insurance carriers and insurance defense lawyers. It reported that conflicts peaked a few years ago, fueled in part by insurance companies' arranging for third-party audits of legal bills submitted by outside law firms they've hired and by insurers turning more to in-house counsel to represent policyholders. The article described efforts by the Chicago-based Defense Research Institute to bring insurers and lawyers together to talk about their differences.

And larger law firms have spun off smaller firms whose focus has then become insurance defense, according to the article.

Meanwhile, Pace said, "I'm very excited about our prospects for the future and the prospects of success for the new firm," Pace said.

He added, "Gentry Locke has a reputation of being actively involved in the community and that will certainly continue."

Researcher Belinda Harris

contributed to this report.