With a full-firm merger increasingly unlikely, Thelen has begun looking to other firms to pick up practices or offices, a current partner confirmed this week.
Merger talks with Nixon Peabody ended several weeks ago, the partner and two other sources said. Nixon remains interested in taking on parts of Thelen, two sources familiar with the talks said. Other suitors for pieces include Pillsbury Winthrop Shaw Pittman and Alston & Bird, several sources said. Alston is talking to groups at Thelen and hopes to expand its IP, energy, commercial litigation and other practices in Northern California, an Alston lawyer confirmed.
While Thelen is looking for firms willing to pick up various pieces, a core group may choose to stick together, and Thelen partners are meeting on a weekly basis to discuss their options, said the partner, who spoke on condition of anonymity.
Although Thelen is not in late-stage discussions with any firms, things could change quickly, a source familiar with the situation said. Dissolution has not been formally discussed, that source added.
At least some associates have been assured they could move with partners, a lawyer close to the firm and a legal consultant said.
A firm spokesman said Thelen Chairman Stephen O'Neal was traveling this week and couldn't be reached for comment. Other Thelen partners declined to comment on the firm's plans.
Thelen Reid & Priest's 2006 merger and the overall economy were among the reasons the firm has found itself in its situation, the partner said.
"This is the by-product of a merger relationship that did not develop the way that we had hoped," said the partner, referring to the December 2006 merger with Brown Raysman Millstein Felder & Steiner. Name partners Peter Brown, Richard Raysman and Jeffrey Steiner have all left the firm this year.
While the Brown merger didn't turn out as hoped, it was unforeseeable, the partner said: "Sometimes even reasonable decisions turn out to have bad results."
When the Brown merger took place, Thelen announced that the combined firm would be home to 630 lawyers. The firm now has 417, according to its Web site. Thelen has lost more than 100 lawyers since March, not including the 26 associates who were laid off that month. About 50 partners have left the firm this year. Most recently, Pillsbury has picked up Thelen's China practice, and four energy regulatory attorneys and two construction litigators in Washington, D.C.
The majority of the departures have come from the firm's New York office, which was largely populated by attorneys from the Brown firm. But former partners and industry observers have said that the firm's Los Angeles office also has seen a number of departures in recent years. In 2006, the then-two-floor Los Angeles office hit a peak of about 60 lawyers, and the firm decided to add a third floor around that time, former partners said. Now the office is down to 35 attorneys.
But there are still some key rainmakers who have remained, recruiters and partners at other firms have said.
Thelen would not be the first San Francisco law firm to suffer this year. The partnership at Heller Ehrman voted to dissolve that firm on Sept. 26 after a string of departures in recent years led to the firm's banks -- Bank of America and Citibank -- forcing the firm to shut down.
More generally, recruiters, consultants and firms are not optimistic about how 2008 will end for law firms, with most saying that the best a firm could hope for is flat revenues.