Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae have agreed to merge, creating a firm of more than 1,300 lawyers.
Expected to become effective by October, subject to partner approval, the planned combination is the largest ever between New York-based firms. The combined firm, which will be known as Dewey & LeBoeuf, will have 550 lawyers in New York, making it the fifth-largest in the city.
LeBoeuf Chairman Steven H. Davis will become chairman of the merged firm, with Dewey and LeBoeuf partners having equal representation on the executive committee.
The merger unites two firms that have both taken active measures in recent years to bolster their competitive position in a crowded marketplace. At LeBoeuf, Davis has overseen a years-long restructuring that led to partner departures and office closings but also increased profitability substantially. Meanwhile, Dewey recently went far along the path to another big merger.
Indeed, the announcement of the deal between Dewey and LeBoeuf comes only eight months after a highly anticipated merger between Dewey and San Francisco's Orrick, Herrington & Sutcliffe messily collapsed amid partner departures and disagreements over the management structure of a combination.
Dewey had been fully committed to going it alone after that, firm Chairman Morton Pierce said Monday, but the failure of the Orrick deal predictably brought many new suitors calling.
One of those was Davis. Over a series of breakfasts, Davis said Monday, the two firm leaders came to see that their interests and aspirations were aligned.
Though well-known names in the New York market, both Dewey and LeBoeuf rank a notch below top Manhattan shops like Cravath, Swaine & Moore or Simpson Thacher & Bartlett in terms of profitability and reputation. Previously, many such firms have seen either combinations with non-New York firms or massive international expansion as their best avenues for growth.
Indeed, a major attraction for Dewey of the deal with Orrick had been the California firm's substantial overseas presence, especially in Asia. But Pierce said Monday that talks with LeBoeuf led to some rethinking of the issue.
"In discussions, it became clear that outside New York wasn't the most important, it was inside New York," said Pierce, pointing out the New York market generally produces the highest-value legal work.
Davis agreed, noting that LeBoeuf had generally ruled out mergers in the past. The prospect of a combination that boosted the firm's critical mass in the New York market, however, was too good to pass up, he said.
"We'll have a larger revenue pool and a larger income pool," he said. "To the extent you need resources to attract top people, it'll be easier." Davis said he was not concerned about overlap between the two firms' practices. He said there was not a single partner at Dewey that he would not have been happy to have as a partner at LeBoeuf.
Dewey is best known in New York for the mergers and acquisitions practice led by Pierce, and a number of partner departures from the practice contributed to the failure of the Orrick deal. Historically an insurance regulatory firm, LeBoeuf remains particularly strong in the insurance and energy sectors.For Davis, the merger caps a restructuring process launched in 1999.
Since that time, the firm has followed a strategic plan aimed at moving out of less profitable practices and locations and focusing on higher-value areas. In the years immediately after the adoption of the plan, scores of partners either left or were asked to leave and a number of offices were closed.
SIMILAR FINANCES
In more recent years, though, the firm has expanded considerably with high-profile lateral hiring in New York, London, Chicago and Washington, D.C. Since 2001, LeBoeuf's profits per partner have doubled from $705,000 to $1.43 million last year, according to the most recent Am Law 100 survey by The American Lawyer, a Law Journal affiliate. Dewey's profits per partner in 2006 were $1.45 million.
Davis said the similar finances would allow the merged firm to avoid some of the clashes that have plagued other large mergers in New York. He noted that most of those involved large firms with headquarters outside of New York, in cities where lawyer compensation can be extremely different.
Indeed, large mergers in the New York legal market have not had a strong record of success. London's Clifford Chance, San Francisco's Pillsbury Winthrop Shaw Pittman and Chicago's Winston & Strawn all sought New York expansion via large-scale mergers, but the resulting combinations have been plagued by partner departures and other woes. However, out-of-town firms eager to expand in the New York market have continued to seek mergers.
Though the New York market drove the deal, Dewey & LeBoeuf will have a significant presence overseas. The firm will have 170 lawyers in London as well as offices throughout continental Europe. LeBoeuf's energy practice has also led it to establish offices in Russia, South Africa, Saudi Arabia and Kazakhstan. The combined firm will also have offices in Beijing and Hong Kong, which Davis said will be priorities for expansion.
