By ALLISSA KLINE
Business First

The effects of the nation's economic woes are trickling down to some Western New York law firms.

Phillips Lytle LLP is doing less banking and financial-services work. Hodgson Russ LLP expects a downturn in corporate transactional work. Kenney Shelton Liptak Nowak LLP could eventually be forced to lower rates for struggling clients.

All three firms have multiple offices, including sites in New York City, where the local economy ebbs and flows with Wall Street.

"We've often believed in Western New York that our business was by and large insulated from what happened on Wall Street," Hodgson Russ president and CEO Gary Schober said. "But I think now to a greater extent ... our practice is affected by what's going on on Wall Street."

While some firms reported doing less work in specific practice areas, none of the firms contacted for this story said they expected to lay off attorneys or staff, a move undertaken this year by firms in New York and Washington, D.C. None planned to cut current operating budgets or implement travel restrictions between offices or to client locations.

Instead, most firms said they expect hiring to remain consistent and expenses to be monitored.

"We're certainly taking a closer look at our direct marketing expenses, things like travel, entertainment and meals," said Tom Liptak, a partner at Kenney Shelton Liptak Nowak. "But we've always looked at that very keenly. We aren't doing anything different now than we were doing in February or March in terms of the scrutiny placed on nonrevenue items."

A law firm's prosperity is linked to the financial health of its clients, local firm leaders agreed. When clients suffer, so too will the lawyers who represent them. Subsequently, some of those law firms could face merger or acquisition situations.

But the effects of a slowing economy aren't necessarily bad for the legal industry, firm leaders said.

At Phillips Lytle, practice areas such as creditors' rights have picked up as other areas have declined, according to David McNamara, the firm's managing parter. That means the firm is representing more lenders who've provided loans to companies now experiencing financial trouble.

"We can see an uptick in business," McNamara said. "That is translating into a greater volume of work and we have allocated staff accordingly."

For now, the firm is sticking to its hiring plan. It'll add six new attorneys to the roster next fall, about the same number it has hired for the past five or six years, McNamara said.

Liptak and his staff, a group that focuses primarily on insurance-defense litigation and insurance coverage, could see a rise in personal-injury litigation cases, Liptak said. The firm's collections department recently got a bump in collection cases, but Liptak could not determine whether the increase was a result of a slowing economy.

Having a general practice also reduces the chances of hitting a lull, said Diane Tiverson, managing attorney at HoganWillig LLC. The Amherst-based firm does work in several areas, including personal injury, malpractice, real-property law and family law.

"If you've got a nice general practice, then some areas are going to grow while others may not grow so quickly," Tiveron said. "We've always dealt with this. Real estate is hot and heavy in the summer months, and then in the winter months it recedes. We've always dealt with that on a smaller scale."

Instead of shrinking, Tiveron's firm is growing. She said it plans to move next year across the street to a larger office.

Spreading out to various practice areas is one reason Goldberg Segalla LLP hasn't been impacted by the economy, managing partner Rick Cohen said. The other reason: 10 offices in four states, he said.

"We're very, very diverse from a client perspective as well," Cohen said. "We don't have and never have had a single client that represents more than 5 percent in gross revenues in any year."

So what about the firms who might not make it through this most recent financial downturn? There's a good chance the Western New York legal industry could see smaller firms being folded up into larger firms, firm leaders said.

"I think some other firms are going to see some pressures, especially those firms right on the fringe of being economically viable," Liptak said. "If a two-person law firm is not going to make it as a two-person law firm, they're going to have to go somewhere."

Liptak said his firm is not seeking to merge with a larger firm or acquire a smaller firm.

At Hodgson Russ, however, the current economic crisis could deliver opportunities for the 230-attorney firm to acquire smaller firms, Schober said. But any acquisition would have to fall in line with the firm's strategic plan, he said.

"I don't want to be like a kid in a candy store who goes in to buy a chocolate bar and gets so overwhelmed that he gets jawbreakers and everything else," he said. "At the same time, our strategic plan does have provisions for being opportunistic, so if all of the sudden a terrific situation drops from the sky for us to consider, I would be willing to look at it."