Biglaw, Law Firm Mergers

Anatomy Of A Rumor: The Quinn Emanuel / Williams & Connolly 'Merger' Talks

What was the genesis of this eyebrow-raising report?

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NOT! (Click to enlarge.)

Last Tuesday, Biglaw was rocked by reports of supposed merger talks between Quinn Emanuel and Williams & Connolly. The news spread rapidly, perhaps because it was so surprising.

Other than being two of the nation’s finest litigation firms with a shared reputation for zealous representation of their clients, QE and W&C share little in common. Quinn Emanuel is obscenely profitable ($5 million in 2016 profits per partner), rather large (700+ lawyers), and rapidly expanding, with offices in eight U.S. cities and more than a dozen cities overseas.

In cultural terms, Quinn reflects its founder, legendary litigator John Quinn. The firm is entrepreneurial and risk-taking, doing a fair amount of contingency work, and it’s brash and publicity-seeking. How many Am Law 100 firms have ever advertised in airports?

(Not surprisingly for the staid precincts of Biglaw, the Quinn approach has its detractors. QE’s critics — or player haters — question the accuracy of its profitability, the sustainability of its expansion, and the tastefulness of its self-promotion.)

Compared to Quinn Emanuel, Williams & Connolly is less profitable ($1.6 million in PPP) and smaller (under 300 lawyers). And this is intentional. Given the tremendous talent under its roof and its worldwide reputation, W&C could be much larger and more lucrative than it currently is. But the firm has made a deliberate decision to focus on quality and collegiality, refusing to expand beyond its one D.C. office or even hire many laterals. As Jenna Greene noted in an interesting post-mortem, Why It’s a Good Thing That Williams & Connolly Isn’t Merging With Quinn Emanuel:

As big law firms fell over themselves to jack up their PPPs and lure top laterals, Williams & Connolly has been like the last samurai, refusing to go with the flow. In the firm’s 50-year history, the partnership has only hired two laterals — U.S. Supreme Court advocate Kannon Shanmugam in 2008 and tax expert Gerald Feffer in 1986. The rest are homegrown.

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This approach instills lawyers with the Williams & Connolly culture, which is in many ways the opposite of Quinn’s. Despite its overall political liberalism — it’s zealously pro-criminal-defendant, for example, and it’s more likely to hire a former criminal defendant than a former federal prosecutor — W&C is culturally (and fiscally) conservative. It does most of its work based on hourly rates, eschewing exotic alternative-fee arrangements, and it pays above-market base salaries but no bonuses to its associates (who have been wondering, ever since last summer’s Cravath pay hike, about when they’ll get a raise). And you definitely won’t see W&C advertisements in airports — heck, it took years for the firm to even put up a website.

Given the big differences between the two firms, I reacted with surprise — and skepticism — to last week’s rumored merger talks. After Williams & Connolly issued its unequivocal denial, I tweeted:

So I decided to do a little digging. I reached out to both firms; both declined to comment. But I also spoke to individual lawyers at both places, and here is what I managed to piece together.

The meeting that gave rise to the rumors took place not last week, but a while ago — several weeks or even a month ago. It took place over breakfast, at a Marriott in downtown D.C.

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Okay, hold on right there — a power breakfast to discuss the merger of two leading law firms… at a Marriott? I have great respect for Marriott as a business and stay often at its hotels (Gold Elite, baby), but Marriott is a solid rather than glamorous brand. If the firms wanted to support Marriott International — maybe it’s a client? — they could at least have met at the D.C. Ritz-Carlton, Marriott’s top-of-the-line property in the nation’s capital.

UPDATE (6:51 p.m.): In defense of the Marriott pick, a source points out that it was probably the Washington Marriott at Metro Center (775 12th Street NW), conveniently located down the block from Williams & Connolly (725 12th Street NW).

The breakfast involved a small number of Quinn Emanuel and Williams & Connolly lawyers. The W&C representatives were people that John Quinn knows personally at the firm, through personal friendship or prior work together as co-counsel. Some folks you might have expected at a merger-related meeting were not present; for example, W&C chairman Dane Butswinkas did not attend, nor did all members of the Executive Committee.

What was discussed at the breakfast? The two sides disagree. The QE sources say that business matters were discussed, including referrals of work between the two firms. The W&C sources say that most of the discussion centered on families and summer plans — and that to characterize it as an official business meeting would be quite erroneous.

Near the end of the breakfast, John Quinn tossed out — somewhat spontaneously, and in very general terms — the idea of stronger ties, such as a strategic partnership or maybe even a merger. The W&C lawyers were taken by surprise, since nobody went to the breakfast anticipating such a discussion.

How did the Williams & Connolly lawyers respond? Again, there’s some divergence.

The QE sources say that the Williams & Connolly folks did not say no, at least not in a way that would satisfy a “clear statement rule.” And they claim that John Quinn followed up with W&C lawyers after the breakfast as well, which led to talk of a follow-up meeting sometime in September for further discussion.

The W&C sources disagree. Although the Williams & Connolly lawyers at the breakfast might not have been as blunt as they could have been — they were taken by surprise, and didn’t want to be rude — they made quite clear that the firm was not interested.

According to the W&C camp, when John Quinn raised the subject of a merger, he prefaced it by saying something like, “Here’s a crazy idea.” The W&C lawyers responded along these lines: “Haha, that sure IS a crazy idea! Merging with a giant international law firm more than twice our size? We haven’t opened a second office in our half-century of existence! Heck, we don’t even hire laterals!”

And that’s where things were left — until Legal Business, a U.K.-based publication, reported on the supposed merger talks last Tuesday. Their article included comment from John Quinn: “It is true that we had a meeting on this subject but it was very preliminary and we don’t know what, if anything, will come of this.”

This news quickly jumped the pond — given credibility by Quinn’s confirmation, and picked up promptly by the American Lawyer, Law360, and Above the Law — and it caused a lot of tsuris over at Williams & Connolly. Senior partners and Executive Committee members were besieged by calls and emails from anxious clients, colleagues, and recruits, expressing concern that the firm they know and love was about to get transformed through absorption into the Quinn Emanuel borg. (As a litigation partner at another Biglaw firm told me, the merger rumors “created some serious consternation among W&C clients, associates, etc.  — and gave me an endless source of amusement.”)

As noted earlier, Williams & Connolly can be somewhat press-shy, even secretive. This makes sense; in many of their cases, the best result involves their client never being in the newspaper. But given all the drama, here W&C had no choice but to speak. Firm chairman Dane Butswinkas issued a statement: “While Quinn Emanuel is an excellent law firm, we are happy just the way we are. We have no plans to merge with them or any other law firm.”

What went down here, from the point of view of each firm?

From the perspective of Quinn Emanuel, there was enough there to justify John Quinn’s confirmation of something when contacted by Legal Business. Remember that Legal Business contacted John Quinn — i.e., Quinn Emanuel didn’t make an announcement of its own — and remember his caveat that the talks were “very preliminary.” (Side note: the U.K. legal-media outlets tend to be more aggressive in their coverage of the industry than we are in the States, and they will often report out stories that we might hold pending further confirmation.)

From the perspective of Williams & Connolly, this was something spun out of nothing, and there was no way anyone could have thought that even “preliminary” discussions were underway. This was an informal breakfast meeting, not attended by W&C top brass, focused on personal rather than business matters. Yes, John Quinn randomly tossed out his “crazy idea” at the end — but that idea was not discussed further back at W&C, and certainly not discussed in the Executive Committee that runs the firm. To the contrary, many Executive Committee members and other firm leaders learned of the supposed “merger talks” the way everyone else did — from news reports.

Whose version of events am I inclined to credit? Speaking for myself, I view the W&C account as more credible. Here’s why (in addition to the fact that the talks took place over breakfast — not dinner, breakfast — at a Marriott.)

John Quinn’s incredible success, as both a lawyer and businessman, rests upon his energy, enthusiasm, and view that almost nothing is truly impossible. When he gets an idea in his head, he runs with it — over mountains, through walls, and past any obstacle standing in his way.

In many cases over his long and distinguished career, many of Quinn’s ideas — including the idea for Quinn Emanuel itself, which he launched after leaving Cravath — have turned into huge wins. But sometimes Quinn’s vision can get ahead of reality, which I suspect is what happened in this case. When he raised the idea of a “merger” with a few Williams & Connolly partners over breakfast, the fact that they didn’t explicitly say “hell to the N-O” — even if they gave many other strong indications that anyone else might have viewed as dispositive — gave him just enough of an opening to think that “preliminary discussions” were underway.

(An alternative hypothesis: John Quinn knew full well that this breakfast chat didn’t amount to “merger discussions,” but decided to confirm to Legal Business anyway. I’m not sure, however, what his motivation would be for such a move. Did he want to burnish QE’s brand by touting talks with another top firm? Did he want to make mischief for W&C? It’s all too speculative.)

If law firm consultants were to use this episode as a case study for how to conduct merger talks, what lessons would they draw from it? Here are three that come to my mind:

1. Communicate clearly. This sounds obvious, but it’s easier said than done. Despite its reputation for ruthlessness, Biglaw can actually be quite genteel — and passive-aggressive. Many lawyers like to think of themselves as learned professionals who are above money-grubbing pursuits, so they can turn skittish when talk turns to dollars and cents.

But a merger is a business deal in which money matters, so don’t be afraid to be blunt — polite, certainly, but honest. And don’t defer difficult issues to the post-merger integration, especially issues surrounding compensation and internal leadership, just because it’s too awkward to talk about them in advance.

2. Get leadership involved early. This is usually not a problem in most law firm mergers, where the deals originate at the top and then get sold to — or foisted upon — rank-and-file partners later. But in the rare situation where this is not the case, bring the people with actual decision-making authority into the loop as soon as possible. Otherwise you’re just wasting everyone’s time.

3. Prevent leaks. This apparent misunderstanding would never have seen the light of day if someone hadn’t leaked the news to Legal Business. Again, plugging leaks is easier than said than done — just ask Jeff Sessions — but it can be done, especially if the talks take place between firm leaders and are kept inside a small group.

So that’s the skinny of how the supposed QE/W&C “merger talks” came into existence, along with lessons learned. Best of luck to Quinn Emanuel and Williams & Connolly in their — very independent — respective futures.

Why It’s a Good Thing That Williams & Connolly Isn’t Merging With Quinn Emanuel [Litigation Daily]

Earlier:

DBL square headshotDavid Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.

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