The Dewy Orifice: A Post-Mortem
After the much ballyhooed merger between Dewey Ballantine and Orrick Herrington & Sutcliffe fell apart, many theories were bandied about as to why the deal disintegrated. See, e.g., here.
Now, from a British legal publication, The Lawyer, we get this fascinating report:
Orrick Herrington & Sutcliffe chairman Ralph Baxter demanded a guaranteed $25m (£12.92m) payout over five years, had the proposed merger with Dewey Ballantine gone through, The Lawyer can reveal.Orrick’s management drafted an employment agreement for Baxter and Dewey chairman Mort Pierce to sign, which would have committed both partners to the newly merged firm for five years.
Pierce is understood to have refused to sign, prompted by the dissatisfaction of a number of Dewey partners with the terms of the agreement.
The significant remuneration for a non-fee-earning chairman is thought to have contributed to Dewey’s decision to walk away from the merger with Orrick.
Pierce is known to be the highest earner at Dewey, earning an extra $3m (£1.54m) in one year in bonuses alone. But he is also the highest biller, averaging more than 3,000 chargeable hours a year.
Balking at Ralph Baxter’s rich demand is understandable. But in hindsight, one can’t help wonder whether Dewey shouldn’t have just bent over and grabbed its proverbial socks. The DB partners who have walked out the door in the past few weeks probably took with them books of business totalling well over Baxter’s concededly greedy demand.
But the $25 million wasn’t the end of it. Check this out:
For Dewey, the combination of Baxter’s personal demands, which also included unlimited first-class air travel for himself and at least one family member, and the perceived imbalance in terms of post-merger management were the final straw in scuppering a deal that could have produced a $1bn (£514.5m)-turnover firm, which could have been in the global top 10.
Quips an amused tipster: “I laughed when I saw Baxter’s personal demand of unlimited first class travel for him + 1.
Seriously, does he think he’s Gnarls Barkley or what?”
Revealed: Baxter killed Dewey-Orrick merger [TheLawyer.com]
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Mort personally bills 3000 hours a year?
Hey, if he bills 3,000 hours a year, when is he going to see his family if he can't bring them on plane flights?
It's Mort Pierce of Dewey who supposedly bills 3000 hours a year. It was his Orrick counterpart, Ralph Baxter, who wanted the $25 million. But Baxter doesn't bill such impressive hours (as far as I know).
Note: The Orifice chairman is a non-fee earner who wants $5M/year and unlimited first class +1; the Dewey Chairman bills 3K hours and makes a $3M bonus. "Orrick" is the sound that happens when your potential merger partner takes the suggestion to stuff the merger agreement up his orifice.
Baxter wanted 5 mil just to be an administrator? What a joke. (I certainly think he'd deserve 5 mil if he billed 3000 hours, because that would mean his group must be super-busy.)
It sounds like both chairmen burned no one but their own partners and firms over their piggish demands, but I suppose that like real democracies law firms get the leadership they deserve.
By the way, everyone knows that three thousand hours by almost anyone, but certainly someone running a major law firm, is an out-and-out fraud, of course - simple felony, aided and abetted up and down the line.
considering that the firm would have been 1600 lawyers, raking in over a $1Billion, it is not unreasonable for an effective CEO be paid such a fee. Hell, I like the idea of someone running the firm like a business and not like a lawyer.