Law Firm Mergers

Some former partners of the dearly departed Dewey & LeBoeuf claim that the firm could have survived if not so many partners had defected in the final months. The wishful thinking theory of these Dewey defenders is that if the firm could have held on to more of its top rainmakers, the plan of paying everyone back (slowly) and waiting for work to pick up might have succeeded.

Perhaps learning from Dewey, the leaders of embattled Patton Boggs have been trying to get partners to commit to staying as the firm restructures. Not long ago, managing partner Edward Newberry declared that about 90 percent of the firm’s partners agreed to stick around.

But 90 percent is not 100 percent. Today brings word of more Patton partners headed for the exits. How many? Who are they? And where are they going?

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Who is the white knight of Patton Boggs?

When we last checked in with the beleaguered law firm of Patton Boggs, things were looking… dicey. The firm was losing more partners — some due to layoffs, some due to defections — and firm leaders were suspending their partnership draws (and asking their fellow partners to do the same; yikes).

But today we actually have some positive news to share about Patton Boggs. Here comes the cavalry!

Which major law firm just signed a letter of intent with Patton Boggs regarding a possible merger?

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* Valerie Ford Jacob, leader of Fried Frank since 2003, is stepping down from her post prior to her official 2015 departure date. At least she’s leaving on a high note, with the firm’s highest profits per partner ever. Yay. [WSJ Law Blog (sub. req.)]

* Ralph Lerner, the ex-Sidley Austin partner who billed extra car charges to his clients, claims he went into work on weekends to do work for free to make up for it. Aww, how nice of him. [Am Law Daily]

* When we first covered this in January, it was just a rumor, but now it’s officially set in stone. The deed is done: Buchanan Ingersoll is picking up Tampa firm Fowler White Boggs. [Pittsburgh Business Times]

* Many New York law schools moved in the recent U.S. News rankings, but not necessarily in the right direction. Four out of 15 schools moved up; the rest stayed the same or slipped. [New York Law Journal]

* Would you like damages with that? McDonald’s corporate and its franchisees are facing lawsuits filed by employees over their allegedly “stolen wages.” Class actions have been filed in three states. [Bloomberg]

* Want to know what’s happening at Attorney@Blog today? Check out our Twitter feed! [Attorney@Blog]

Albert Togut: man with a plan (of reorganization).

Maybe the floundering firm of Patton Boggs can actually right itself. It doesn’t have the Biglaw mark of Cain, namely, a name that lends itself to bad puns — e.g., Dewey and “do we,” Howrey and “how are we,” and Thelen (rhymes with “feelin’”). In hindsight, Patton Boggs did the right thing when it dropped George Blow’s name from the marquee and went from “Patton Boggs & Blow” — a name we would have had a field day with — to simply “Patton Boggs.”

(Yes, Patton Boggs has some pun potential. But there are only so many “bogs down” and swamp-related plays on words to be had. Yes, even for us.)

Luckily, for the time being we can use some “Dewey” puns. Because Patton Boggs, for whatever reason, is using all of Dewey & LeBoeuf’s old advisers….

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For those of you who haven’t tuned out Jarndyce v. Jarndyce Chevron Corp. v. Donziger, the never-ending litigation between oil giant Chevron and plaintiffs’ lawyer Steven Donziger, today brings some news. It shouldn’t come as any surprise to those who have been following the case, but Judge Lewis Kaplan (S.D.N.Y.) just ruled in favor of Chevron, enjoining Donziger and his Ecuadorean-villager clients from trying to enforce here in the United States the multi-billion-dollar pollution judgment they secured against Chevron in Ecuador — a judgment that was the result of fraud, according to Judge Kaplan. (Links to coverage and to the parties’ reactions to the ruling appear at the end of this post.)

The Chevron/Ecuador case is one of those matters that’s most interesting to those who are actually involved in it; to the rest of us, it’s a lot of noise. Speaking for myself, I’m interested in only two aspects of it: (1) its impact on the revenue and profit of Gibson Dunn, which has been litigating the case aggressively on behalf of Chevron, and (2) its meaning for the deeply troubled law firm of Patton Boggs, which made the ill-advised decision to align itself with the Ecuadorean village people.

In a media call this afternoon that I joined, Chevron’s general counsel, R. Hewitt Pate, declined to discuss the size of the company’s legal fees in the litigation. So we’ll have to focus on that second item: the bog that is Patton Boggs. Which right now looks like the Lago Agrio oil field, prior to remediation….

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We’ve seen this story before. A firm experiences a dip in profitability, then starts losing key partners (or reverse the order if you like; falling profits and defecting partners go hand in hand). Worried about its survival, the firm starts seeking out a white knight, in the form of a merger partner. And then….

Well, that depends. Sometimes a merger partner is found and the combined firms live happily ever after. Sometimes a merger partner is found and the combined firms suffer together, with the weaker firm effectively giving the stronger firm the “cooties.” And sometimes no merger partner is found at all; the troubled firm goes down, and rival firms swoop in like vultures to pick off the top practices and rainmakers. We can all think of examples of each scenario.

What will happen to Patton Boggs, the troubled law firm plagued by plummeting profits, fleeing partners, and layoffs galore? It’s too early to tell. Right now we’re at the stage of the firm casting about for someone to merge with. Who is the firm’s latest love interest?

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* Hot on the heels of the SCOTUS stay, Utah has ordered its state agencies not to recognize any of the same-sex marriages that took place. Eww, Utah, you are being disgusting right now. [NBC News]

* The eminently quotable Chancellor Leo Strine of the Delaware Court of Chancery has been nominated to serve as chief justice of the state’s highest court. Best of luck with your confirmation! [Chicago Tribune]

* Law firm mergers rose by almost 50 percent after 88 firms joined forces throughout 2013 (a new record, according to Altman Weil). Let’s see if this year’s pace is as frenzied as last year’s. [Am Law Daily]

* The legal profession isn’t very good at diversity, especially in Texas. Here’s a not-so fun fact: just six percent of all equity partners at the largest law firms in Dallas are minorities. [Dallas Business Journal]

* “[I]t was the first time he had ever heard of someone being killed by a pair of underwear.” A man in Oklahoma was tragically killed after becoming the first-ever recipient of a fatal atomic wedgie. [News OK]

* A Supreme Court whose members are still afraid of using email will most likely have the final say on the NSA case, one of the biggest technology and privacy rulings in ages. Well, that’s comforting. [Talking Points Memo]

* Pittsburgh firm Buchanan Ingersoll & Rooney is reportedly in merger talks with Tampa firm Fowler White Boggs. Boy, a merger between two firms from lackluster cities sure sounds promising. [Daily Business Review]

* Law professors are completely outraged by the ABA’s proposal to cut tenure from its law school accreditation requirements. Quick, somebody write a law review article no one will read about it! [National Law Journal]

* Struggling to find a topic for your law school personal statement? You should ask someone who knows next to nothing about you and your life for advice. [Law Admissions Lowdown / U.S. News & World Report]

* Michael E. Schmidt, the lawyer killed in a police firefight, had some interesting things in his apartment, including a “green leafy substance,” a “white powdery substance,” and lots of pills. [Dallas Morning News]

This is my first column of 2014, so I’m due to join the ranks of those who make predictions for the coming year.

But my predictions will be slightly different from others, because mine will be based on fact.

In the last months of 2013, I heard that two different law firms had reduced partners’ draws to offset the firms’ poor financial performance. At least one of the firms reduced draws retroactively — announcing near the end of the year that partners’ salaries would be reduced as of January 1, 2013 (which slices partners’ incomes dramatically in the last few months of the year). Both firms shared the pain among all partners — folks suffered in the equity and non-equity ranks alike. (This is a particularly nasty trick to play on income partners: “Here’s your partnership deal: If the firm does better than expected, you’re a mere income partner; of course you will not share the wealth. On the other hand, if the firm performs worse than expected, we’ll permit you to share the pain, and we’ll cut your pay. Here’s the partnership agreement! Sign right here on the dotted line!”)

I’ve now been in-house for four years, and my ear has lifted pretty far from the law-firm ground: If I heard about two law firms suffering from such terribly bad years that they were forced to reduce their budgets as year-end approached, then I’m guessing that many more than two firms suffered this fate. This means that, for many firms, 2013 was not a good year, which leads me to my predictions for 2014 . . . .

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As reported in Morning Docket, the year is quickly drawing to a close, and two large law firms may be getting ready to celebrate their future together in 2014. Sources say that Blank Rome and Nixon Peabody have the urge to merge, and they’ve supposedly been in talks for two months or more.

The last three proposed Biglaw mergers we reported on — McKenna/Dentons, Pillsbury/Orrick, Patton Boggs/Locke Lord — fell apart, but if the Blank Rome/Nixon Peabody combination comes to fruition, their union would create one of the top 50 largest firms in the U.S. (number 33, to be exact).

Will they or won’t they? Let’s discus the details…

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