The BLT: The Blog of Legal Times

The Morning Wrap

Killed: President Barack Obama, in an address to the nation late Sunday from the White House, said U.S. forces in Pakistan killed Sept. 11 mastermind Osama bin Laden. Thousands of people gathered outside the White House, Times Square and at ground zero in lower Manhattan. Investigative work on a courier led the authorities to the $1 million compound that harbored bin Laden, who was killed in firefight.

Stop!: Missouri state officials have asked the U.S. Supreme Court to stop a U.S. Army Corps of Engineers plan to blow up a levee that would flood 130,000 acres of farmland to ease flooding at the confluence of the Ohio and Mississippi Rivers, The Wall Street Journal reports. Missouri officials argue the plan violates the state's clean-water laws.

Slashed Support: Faced with substantial budget cuts, the New York state courts system has eliminated funding for a program that supports lawyers who are coping with drug and alcohol abuse, The New York Law Journal reports. The program, established in 2001, brought statewide resources to the prevention and treatment of alcohol and substance abuse among lawyers, judges and law students.

Associates in Demand: The recent rebound of M&A and IPO activity in Silicon Valley has contributed to new demand for midlevel associates, particularly in corporate departments, The Recorder reports. Cooley and Wilson Sonsini Goodrich & Rosati are bumping associate salaries up. Litigation, licensing and patent prosecution attorneys are also in high demand.

Striking Out: A judge has thrown out a Mets fan's suit over a broken bat that flew into his face. The suit said the Mets and Major League Baseball should have done more to protect fans against shatter-prone maple bats.

Apologies: Sony executives are apologizing for a security breach in the company's PlayStation Network that exposed personal data of 77 million accounts. Sony is vowing to increase security measures. The FBI is investigating what Sony officials described as a "criminal cyber attack" on the company's data center in San Diego.

Managing Partners Survey The Marketplace, Forecast the Future

During a breakfast discussion this morning, the managing partners of some of Washington’s top law firms said that they believe the Big Law business model has fundamentally changed and that the industry is just now starting to figure out what the new environment is going to look like.

The discussion, which was hosted by The National Law Journal, brought together T. Mark Flanagan Jr., managing partner of McKenna Long & Aldridge; Karl Racine, managing partner of Venable; and Roger Warin, chairman of Steptoe & Johnson LLP—all of whom spoke about what their respective firms were doing and about what the future might hold for some of the District’s largest law firms.

Overall, the consensus was that 2009 was an unprecedentedly bad year, both in terms of drops in revenue and in the reduced headcounts many firms saw as a result of layoffs and associate deferrals. While there were some slight improvements in 2010, this year failed to mark a return to the boom-time days in the years leading up to the recession.

Wilmer Announces Succession Plan

After six years at the helm of Wilmer Cutler Pickering Hale and Dorr, co-managing partners William Perlstein and William Lee have announced who will succeed them. As of Jan. 1, 2012, the firm will be led by partners Susan Murley and Robert Novick.

The Am Law Daily reports that Murley chairs the firm's transactional practice; Novick chairs the firm's regulatory and government affairs practice.

As with Perlstein and Lee, the next leaders come from different sides of the firm, which was formed by the 2004 merger of Washington, D.C.-based Wilmer Cutler and Boston-based Hale and Dorr. Boston-based Murley was a partner with predecessor firm Hale and Dorr; Washington, D.C.-based Novick had joined Wilmer Cutler in 2001. But, Lee told The Am Law Daily, there is no rule that Wilmer's co-managing partners must represent each of the predecessor firms. And the firm wasn't set on the exact same management structure. The nominating committee considered other structures, Lee says, including one with a chairman and a managing partner. Ultimately, the committee decided to stick with the current co-managing partners setup.

"At the time of the merger, having co-managing partners was necessary to make the merger work," Lee says. "But we have learned if you have co-leaders working together effectively there are many benefits to the decision making process."

Read The Am Law Daily’s full report here.

Cassidy & Associates, The Rhoads Group to Merge on Jan. 1

Updated 4:05 p.m.

As of Jan. 1, 2011, lobbying firms Cassidy & Associates and The Rhoads Group will combine their operations. The merged firm will continue to operate under the Cassidy & Associates banner.

Gerald Cassidy will remain the firm’s executive chairman. Barry Rhoads, who had been chief executive officer of The Rhoads Group, will step into the newly created role of president once the two firms consummate the merger. Former Rep. Marty Russo (D-Ill.) will continue to serve as the firm’s senior vice chairman and CEO. Gregg Hartley will also remain the firm’s vice chairman and chief operating officer.

The combined firm will have 53 lobbyists and other government relations professionals.

The Rhoads Group was founded in the wake of the 2001 break up of Boland & Madigan, a subsidiary of Cassidy & Associates. The Rhoads Group, which maintained a relationship with Cassidy & Associates but operated entirely independent of it, was set up as a government relations firm with an initial focus on helping states and communities on defense-related economic development issues and Base Realignment and Closure Commission counseling.

Cassidy & Associates was founded in 1975 and advises clients on lobbying, polling, public relations and crisis management.

Cassidy’s clients include BP Wind Energy North America Inc., Estee Lauder Companies Inc., Briggs & Stratton Corp., MGM Mirage and Intel Corp. The Rhoads Group represents NRG Energy Inc., Sonardyne International, the state of New Jersey, the commonwealth of Kentucky, Deloitte, Seimens One and Dynamic Animation Systems Inc.

The combination will also presumably increase Cassidy & Associate’s gross revenue at a time when lobbying firms are expecting increased business as a result of the widespread Republican victories in the midterm elections. As Cassidy told The National Law Journal earlier this month, “A divided government makes the process more complex and gets more parties involved. That lends itself to the need for expert advice and counsel. It's been good for business in the past, and that's going to be true this time around."

According to the Influence 50, our annual ranking of the most profitable lobbying firms in Washington, Cassidy & Associates brought in $23.3 million in 2009. The Rhoads Group did not make the list last year, but Rhoads said his firm brings in "$5 million plus" in revenue."

Cassidy and Rhoads said that the two firms have been discussing a merger for the past several months because it would offer a way to better serve each firm's clients.

Cassidy said the union made particular sense for the two firms' defense industry clients. "There is going to be a great deal of work in the defense sector as more and more pressure is put on Congress to cut defense spending. Barry is an expert on working with the military to turn base closures into opportunities for economic development."

Rhoads, a former Army officer and federal prosecutor, said he has been tasked with expanding Cassidy & Associates' marketing strategies and for helping to grow the firm. "By joining a much larger platform, there is a great deal of opportunity for us and for our clients," Rhoads said.

Proskauer, U.K.-based SJ Berwin Drop Merger Discussions

After nine months of discussions, Proskauer Rose and the U.K.’s SJ Berwin have decided not to move forward with merger talks, Legal Week reports.

In a joint statement, the firms said: "Our discussions end with the same profound respect, and with the greatest admiration for all the partners we have met during the course of this process. At this stage in our discussions we recognized that the timetable necessary to reach the agreements that would ensure the successful integration of our firms is not workable at this time. Accordingly, and with considerable regret, we have mutually determined to halt our talks. We look forward to continued cooperation between our firms for the benefit of our clients."

In a separate report, Legal Week wrote that that the partners at SJ Berwin had been growing increasingly frustrated with the uncertainty surrounding the talks and had pressured firm managers to draw them to a close.

In 2009, SJ Berwin also entertained talks with the ever-courting Orrick, Herrington & Sutcliffe. Those talks, like the recent talks between Orrick and Akin Gump Strauss Hauer & Feld, did not result in a consummation.

As previously reported by The National Law Journal, the Akin-Orrick merger discussions were derailed by a lack of interest by the partnerships of both firms, particularly in the New York office of Akin Gump.

Squire Sanders, U.K.-based Hammonds Partners Approve Merger

Marking what will be the latest transatlantic merger in recent months, the partners at Squire, Sanders & Dempsey and U.K.-based Hammonds have voted to approve a combination of the two firms, The Am Law Daily reports. The union will take effect on Jan. 1, 2011.

The combined firm will have roughly 1,275 lawyers across 37 offices in 17 countries. It would have a combined gross revenue of $625 million, based on the financial data from both firms for 2009.

Squire Sanders chairman James Maiwurm will become global chair and CEO of the combined firm. Hammonds managing partner Peter Crossley will become the firm's managing partner for Europe. There will be two additional managing partners for the Americas and Asia-Pacific regions. A 13-member global board comprising partners from both firms and elected by the general partnership will govern the new firm.

Read the full Am Law Daily story here.

SNR Denton Goes Live

After just four months of planning and work, Sonnenschein Nath & Rosenthal and U.K.-based Denton Wilde Sapte have merged to officially become SNR Denton. The new firm, which went live today, has roughly 1,250 lawyers in 48 offices worldwide and estimated annual revenues of $750 million.

Based on figures from the The National Law Journal’s sibling publication The American Lawyer, SNR Denton is now the 25th largest firm in the world when measuring by headcount.

Elliott Portnoy, who previously chaired Sonnenschein and is now co-CEO of SNR Denton, said the union was made easier because the two legacy firms did not have offices in overlapping cities. He said that meant that the firm didn’t have to address questions of how to address multiple leases or how to decide who would move in with whom. “We didn’t have to go through many of the tussles that other large combinations have seen when trying to bring two firms together,” Portnoy said.

Joining Portnoy as co-CEO is Howard Morris, who previously served as CEO of Denton. Joseph Andrew, who comes from the Sonnenschein side of the merger, and Martin Kitchen, who comes from the Denton side, now serve as chairmen of the new firm.

Portnoy said the combination was also eased by the fact that both firms had shifted their practices to align with industry sectors as opposed to more traditional law firm practices. Those sectors are energy, transport and infrastructure; financial institutions and funds; government, health and life sciences; insurance; manufacturing; real estate, retail and hotels; and technology, media and telecommunications. “We found that our sector alignment was virtually identical to theirs,” Portnoy said.

To bring the two firms together, Portnoy said sector group leaders from both sides of the deal implemented 100-day plans designed to address a number of issues, including compensation and branding.

For compensation, which is often a key factor in determining whether a large-scale merger will work, especially when bringing together firms from either side of the Atlantic, Portnoy said that SNR Denton opted for a more U.S.-style merit-based model as opposed to the lockstep model that is common among U.K.-based firms. But Portnoy stressed that changes were made to both firms’ compensation models to “create a new, unified model.”

The SNR Denton brand and marketing materials was created entirely anew, Portnoy said, and outside professionals were brought in to develop a brand that was unique to the new firm. “It looks like neither of the old identities,” he said.

Portnoy said that lawyers from both sides of the merger are already working together on “dozens” of client matters. While he wouldn’t name specific clients that both firms counted in their books of business, Portnoy said there were a number of clients in the financial and investment banking sectors that overlapped.

As for whats next for the new firm, Portnoy said SNR Denton will continue to focus on growth. Just last week, Sonnenschein added six new partners to its offices in Dallas, New York, Los Angeles, St. Louis, and Washington.

“We want to continue expanding our footprint into markets where we didn’t previously have a presence and to continue adding depth to the markets where we do have offices,” Portnoy said.

What an Akin-Orrick Merger Would Look Like

Akin Gump Strauss Hauer & Feld and Orrick, Herrington & Sutcliffe have confirmed that the two firms are in the early stages of merger talks. While that certainly doesn’t mean a combination is a sure thing, it does raise the question of what a union of the two firms would look like. The talks were first reported by The National Law Journal’s sibling publication The American Lawyer.

For starters, a combination would create a firm with gross revenues of $1.57 billion and about 1,800 lawyers in 29 offices worldwide, according to the most recent Am Law 100 numbers. That would immediately catapult the combined firm into the top 10 highest grossing firms on the Am Law Global 100, putting it neck-and-neck with Jones Day at No. 8. As The Am Law Daily reported, at $1.46 million, Akin had slightly higher profits per equity partner in 2009 compared to a PPP figure of $1.36 million for Orrick.

For Akin, which was founded in Dallas, wedding San Francisco-born Orrick would immediately give it a major West Coast presence. Orrick has more than 450 lawyers spread among its offices in Seattle and Portland in the state of Washington; and San Francisco, Silicon Valley, Los Angeles and Orange County in California. Akin currently has 86 lawyers in Los Angeles and 14 in San Francisco.

For Orrick, the deal would mean an office in Philadelphia and a huge entrée into Texas.

With its strong ties to the energy sector, Texas has become a target of such recent interlopers as Latham & Watkins, which opened a Houston office in January. Akin has 213 lawyers in the Lone Star State, spread among its offices in Austin, Dallas, Fort Worth, Houston, and San Antonio.

Orrick would also pick up one of the largest, and most profitable, offices in Washington, something the firm hasn’t been able to build on its own. Akin has 282 lawyers in Washington and ranked No. 13 on The NLJ's D.C. 25, our annual ranking of the top money-makers among Washington firms. Akin’s Washington office brought in $227.9 million in 2009. By itself, Orrick has about 90 lawyers in Washington and didn’t rank on the survey.

Additionally, the deal would give Orrick access to Akin's lobbying practice, which regularly places No. 1 on The NLJ's Influence 50 ranking of top grossing lobbying practices. In 2009, Akin's lobbying practice grossed $96.7 million.

But in the U.S., the real question would be New York, a city where both firms each have roughly 200 lawyers.

According to one former Akin lawyer, New York has been a sticking point in previous merger discussions involving Akin because lawyers in the Big Apple enjoy their place in the firm’s hierarchy. “They haven’t wanted to see their relative position in the firm change in the past,” the lawyer said.

Internationally, the two firms complement each other relatively well, overlapping in just Beijing, London, and Moscow. From the Akin side, the combined firm would add offices in Abu Dhabi and Geneva. (Akin acquired its Geneva office from Hogan & Hartson, which spun the office off ahead of its own merger with U.K-based Lovells earlier this year.)

From Orrick, which has a much larger international presence, the combined firm would also have offices in Berlin; Dusseldorf, Germany; Frankfurt, Germany; Hong Kong; Milan, Italy; Rome; Shanghai; Taipei, Taiwan; and Tokyo.

The combined firm would also have two dynamic leaders who have made no secret of their desire to expand their respective firms.

R. Bruce McLean, who chairs Akin, has acknowledged his goal of turning his firm into a top global player, even if it means merging with another firm. At a panel discussion hosted by The NLJ in December, McLean said he would “absolutely” entertain the idea of a merger, if it meant the firm could become a major international contender.

“If we found a merger partner that allowed us to take a big step in the direction of the implementation of the strategy, we would definitely enthusiastically explore that. While we haven’t come to the conclusion we have to find a merger partner, do we look at that? Absolutely, we do look at it,” McLean said. McLean did not return calls for additional comment.

And Ralph Baxter, Orrick’s chairman, has overseen several merger attempts during his tenure. Most recently, Orrick made a highly publicized and ultimately ill-fated attempt to merge with Dewey Ballantine in 2006. Though the executive committees at both firms approved the tie-up and recommended it to their partnerships for a vote, the deal fell apart when several Dewey rainmakers jumped to Covington & Burling and Weil, Gotshal & Manges, according to The Am Law Daily.

Regardless of Orrick’s botched union with Dewey, consultants say that on paper it matches fairly well with Akin. Tom Clay, a consultant at Altman Weil, which is not involved in the Akin-Orrick discussions, said, “I don’t see any real reason to take them out of the game.”

But given that the demand for legal services hasn’t returned to pre-recession levels, Clay said both firms would likely take a “more rigorous” approach to due diligence than in the past.

So is an Akin-Orrick combination in the cards? We’ll just have to wait and see.

This Week in The National Law Journal

D.C. Top 25: "The Beltway is no longer a barrier against the pitfalls of a down economy," reporter Jeff Jeffrey writes in The National Law Journal's annual survey of the top money-makers among Washington law offices. For the first time in 11 years, the combined gross revenue for Washington's largest firms declined, falling 2.7% to $5.9 billion. Managing partners said intellectual property, litigation and white-collar defense practices remained steady in 2009. Firm leaders said it may be another year or two before the demand for legal services comes back fully.

Losing End: The Federal Trade Commission's suit against Ovation Pharma­ceuticals, now Lundbeck Inc., ended in a loss for the agency despite what appeared a slam-dunk case for the government, Jenna Greene reports. Antitrust lawyers are examining the FTC's loss in the U.S. District Court for the District of Minnesota to determine the ramifications for drug companies thinking about mergers or acquisitions.

Kicked Off: The law firm Winston & Strawn is disqualified from representing Pfizer Inc. in a $1 billion lawsuit brought by Brigham Young University. Leigh Jones reports a magistrate judge granted BYU's motion to disqualify the firm from the case in Utah federal district court. Conflict of interest is at the heart of the dispute. Winston & Strawn partner Gene Schaerr represented BYU in other matters at the same time the firm was representing Pfizer.

Attorney Hiring Spree: For-profit higher education companies are turning to lawyers with experience in congressional investigations as the education providers gear up for an inquiry of their operations, David Ingram reports. Critics question whether the companies, which grew during the recession, have exaggerated job prospects. Letters went out last month to 30 for-profit companies asking for information about job placement rates, program costs and student debt.

Secret Dockets: Three advocacy groups, including the American Civil Liberties Union, are trying to shed light on qui tam litigation, challenging the mandatory sealing provision that keeps complaints confidential for months, even years. The groups are fighting in the U.S. Court of Appeals for the 4th Circuit to revive a suit that seeks to declare the sealing provision as unconstitutional.

Fed Lawyers Defend Actions During Crisis

Two top lawyers for the Federal Reserve system are headed to Capitol Hill today to defend its handling of the financial crisis, including the 2008 failures of Lehman Brothers and Wachovia.

Scott Alvarez, general counsel of the Federal Reserve’s Board of Governors, and Thomas Baxter Jr., general counsel of the Federal Reserve Bank of New York, are scheduled to testify before the Financial Crisis Inquiry Commission. The commission has been charged by Congress with investigating the causes of the havoc on Wall Street.

Both lawyers had prominent roles during the crisis — Alvarez as an adviser to Fed Chairman Ben Bernanke and Baxter as an adviser to Timothy Geithner, who was president of the New York Fed before becoming U.S. treasury secretary.

In testimony as written for delivery, Alvarez describes how the Federal Reserve refereed a dispute between Citigroup Inc. and Wells Fargo & Co.

Both institutions considered merging with Wachovia Corp. after it faced a loss of investor confidence in September 2008. At one point, Citigroup and Wachovia entered into an agreement to deal with each other exclusively, but Wells Fargo then proposed a late bid that Wachovia’s board of directors accepted. Citigroup, in turn, protested and threatened litigation.

Alvarez says there was concern that the competing claims “could themselves become a destabilizing influence” on the banking system. “To allow these discussions time to proceed, Federal Reserve officials became involved in facilitating negotiations for a cease-fire or standstill to the litigation among the three firms,” he says in the prepared testimony (PDF).

Citigroup eventually agreed not to block the Wells Fargo bid, and Alvarez adds that the Federal Reserve “did not provide any emergency financial assistance” for the deal “nor was any financial assistance sought” for either bid.

Baxter, in his prepared testimony (PDF), pushes back against the idea that the Federal Reserve allowed Lehman Brothers to fail. The bank and federal agencies “tried hard to save it…. We did not succeed, but the effort made was serious and determined. We came very close.” The biggest obstacle, he says, was the lack of a serious merger partner for Lehman Brothers after British banking rules complicated a proposed merger with Barclays PLC.

Click here for a recent profile of Baxter in Corporate Counsel, a National Law Journal affiliate. Click here for a National Law Journal story on the Financial Crisis Inquiry Commission.