In all, it took just seven days for partners at Akin Gump Strauss Hauer & Feld and Orrick, Herrington & Sutcliffe to pressure their respective firm leaders to call off merger talks. Those seven days included a strange fake news story and frustration for partners on both sides of the discussion.
Partners at Akin and Orrick said that there was not one single issue that killed the talks; it was more a feeling among partners that an Akin-Orrick combination wouldn’t be worth the headache of trying to bring the two firms together. (The National Law Journal examined what the combined firm would look like here.)
One Akin partner, who said that the firm had instructed its partners not to comment publicly about the talks, said, “I just don’t see the need to try and cram two firms with around a thousand lawyers together. It made no sense.” An Orrick partner, who cited similar instructions from his firm, said, “Neither firm was willing to jettison chunks of their practice to make a merger happen. Neither one wanted to screw some of their partners just to get a deal done.”
Granted the Akin-Orrick talks were still in the very early stages. Current and former partners at Akin and Orrick said that R. Bruce McLean, chairman of Akin, and Ralph Baxter, who chairs Orrick have been friends for years and have occasionally, and informally, discussed joining forces. But they only really began to seriously discuss a possible merger a few months ago, the partners said. McLean and Baxter declined to comment for this article.
Following a report on The American Lawyer’s Web site on Sept. 28, the two firms confirmed that they were talking merger. In a statement, Akin described the talks as “exploratory.” Orrick’s statement described them as “preliminary.”
Adding to the drama was a fake news story. On Sept. 27, one day before most partners found out about the talks, a story began circulating via email through Akin that was purported to have appeared in “Law Firm Merger News,” a publication the Library of Congress said doesn’t exist. The story cited “well-placed sources” as confirming that the two firms were in talks and offering a quick analysis of what the deal would look like. One “industry source” was quoted as saying, “Orrick's collegial, progressive, and team-based culture is at odds with Akin's profitable, but highly polarized, eat-what-you kill culture.”
It’s unclear where the story came from or who wrote it, but it began to feed the rumor mill. Two Akin partners said they had either seen the story or had heard other partners talking about it.
The fake news story wasn’t enough to prompt McLean or Baxter to confirm the discussions to their partners. In fact, partners at both firms said they weren’t told about the discussions until just hours, and in some cases minutes, before the news appeared on The Am Law Daily on Sept. 28. Big producers received a phone call from firm management giving a heads up about the talks and that the news was about to hit the Web. Others found out en masse.
At Akin, partners were sent an e-mail at 1:47 p.m. on Sept. 28 from McLean that said that the two firms were talking and that it was “too early to speculate” on what the outcome would be. Another Akin partner said, “I literally heard about it on Law.com.”
On the Orrick side, the firm scrambled to alert its partners before the news hit the Web. Despite a similar partnership-wide e-mail from Baxter, an Orrick partner said that some lawyers at the firm “read about it online with everyone else.”
Partners at Akin, a firm not used to the spotlight of merger discussions, said that being “left out of the loop” caused a great deal of frustration at the firm, particularly in New York, which has become a power center at the firm after a 2008 management restructuring. “It’s not that we didn’t like Orrick. We have a great deal of respect for them. But it was frustrating to some of the partners who are doing the day-to-day work to not be in the loop,” said a partner in Akin’s New York office.
That said, another New York-based Akin partner, who was not in favor of an Akin-Orrick merger, said, “I don’t mind if Bruce is out there talking to people. It just seems like a waste of time to go after a whole firm, when you only need a few dozen laterals in some practices. It’s like picking up a whole baseball team just to get a shortstop.”
Once McLean and Baxter began to receive complaints about the prospect of a combination and about how the talks were handled, the deal quickly unraveled. By Oct. 4, it was dead.
Akin spokeswoman, Kathryn Holmes-Johnson addressed the partnership’s reaction to the talks in a statement, saying, “As with most firms, any major firm initiative or endeavor requires consensus among the partnership. In this particular instance, the partnership made the decision not to move forward with the merger discussions with Orrick.”
For Orrick’s Baxter, who has overseen at least seven failed merger attempts, it’s back to the drawing board. But according to a partner at the firm, “I haven’t detected any ill will within the partnership because we haven’t been able to complete a deal. We’re perfectly willing to have Ralph out there talking to people because we know he’s not going to do a dumb deal.”