Roughly 23 lawyers and 27 staff are expected to join the now 280-lawyer Adams and Reese effective Jan. 1, both firms announced Wednesday.
The surprising news comes as Ruden McClosky celebrates its 50th anniversary and caps a difficult financial year. Hit hard by the collapse of Florida's real estate market, Ruden's gross revenue dropped by 9 percent to $85.3 million in fiscal year 2008 after a record year in 2007.
Managing partner Carl Schuster said he learned of the defections from offices on Florida's West Coast two weeks ago.
"Frankly, it was not unexpected," Schuster said. "It's not something we relish."
In June, the firm laid off eight associates and hit survivors with an 18 percent pay cut. The firm told equity partners they were unlikely to receive repayment of holdbacks of 18 percent of their compensation. Earlier in the year the firm laid off 20 employees, including two lawyers.
The pay slash caused many Ruden McClosky attorneys to look for new homes. It was not clear if issues related to compensation and firm financials drove the two West Coast offices to start talks with Adams and Reese.
Schuster said losing the two offices would likely be a financial wash with reduced overhead expenses canceling out any dip in revenue. Ruden's 25-lawyer Tampa office will continue serving clients in the region, Schuster said.
"We've done the numbers and we don't see a negative financial impact from this," Schuster said. "We assumed that the fees those offices generated in the past year would go with them."
For Adams and Reese, absorbing the Ruden groups brings the firm's attorney headcount to more than 280 lawyers in 12 cities, including New Orleans and Baton Rouge, La.; Memphis and Nashville, Tenn.; Birmingham and Mobile, Ala.; and Houston.
The firm, founded in 1951, has grown aggressively along the Gulf Coast through a series of small mergers and ranked 197 on the Am Law 200 list of top grossing law firms in 2009.
The firm, which represents many manufacturing, shipping, energy and banking clients with business operations in port cities along the coast, is less dependent on real estate transactional work than Ruden.
Managing partner Charles Adams said the firm began exploring expansion in Florida around 2007, but backed off after the recession hit. In August, an intermediary for the Ruden lawyers approached his firm and talks took off, Adams said.
"This opportunity presented itself, and we were very excited about the lawyers," he said. "We hope this is just the beginning of growth in that area of Florida."
Adams said seven partners in each office would be joining the firm and offers have been extended to every associate. As part of the move, Adams and Reese will pick up the leases for roughly 30,000 square feet of office space in the two cities.
V. James Dickson, who specializes in construction, environmental law and litigation, will head the St. Petersburg office. Dickson called Adam and Reese "a perfect fit," in a statement released by Adams and Reese.
Partner John Dart, who will head the Sarasota office, stated the lawyers wanted to join a firm with "a well-defined vision and a long-term strategic plan."
"It will further enable us to add value to the services we provide our clients, with expanded areas of practice and experience in a broader geographic region," Dart said in the firm's statement.
Reached by phone Wednesday, Dickson and Dart each declined to comment on the circumstances surrounding the move.
Also among the lawyers joining Adams and Reese is David Bernstein, who represented developers, lenders and management companies as chair of Ruden's manufactured housing practice.
While the home-building sector has been hard hit, Adams said he sees "tremendous opportunity" on Florida's West Coast.
"For the last 18 months, we've been waiting to see how things settled in the overall legal environment. We would only be interested in talking to people coming out on the right side of that," Adams said. "These lawyers will have a better opportunity to represent clients if they have a larger firm's resources behind them."
Meanwhile, both firms said they would work together to manage the transition process.
"We don't want this to impact clients regardless of which way clients elect to go," Adams said. "We're communicating with clients so they have that choice and their services are not interrupted."
Looking to the future, Schuster said Ruden would focus on expanding the Tampa office through lateral hiring and be more conservative about opening new outposts. After the departures, the firm will have about 130 lawyers working in nine offices throughout Florida, down from a peak of roughly 180 lawyers.
"Over the years, we opened offices in a way that wasn't necessarily the most strategic. Where there were groups of lawyers interested in joining us, we decided to open offices," Schuster said. "Now, we've realized we have to consolidate. The business is in the bigger cities."
