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Kelley Drye to Acquire Collier Shannon

New York's Kelley Drye & Warren voted Tuesday evening to acquire Washington-based Collier Shannon Scott, a combination that will create a 350-lawyer firm with expected gross revenues of more than $220 million.

The move will more than double Kelley Drye's Washington presence to about 125 lawyers and bring the mainly corporate and litigation firm a mix of regulatory practices, including Collier Shannon's well-regarded advertising, international trade, and antitrust groups.

"We're very positive about the merger," says John Callagy, the New York-based chair of Kelley Drye. "We have people who respect our firm's culture, and we're very pleased with that."

The two firms expect the deal to be completed in the coming weeks, although work remains to be done regarding client conflicts and other administrative issues, says Paul Rosenthal, chair of Collier Shannon. No partners will be let go as a result of the merger, nor will either firm be forced to drop any major clients, the firms say. The new firm will be called Kelley Drye & Warren nationally and Kelley Drye Collier Shannon in Washington.

Tuesday's vote was the last major hurdle in the merger discussions, which began in November over a casual lunch between the firms' top Washington partners. The firms finalized a memorandum of understanding late Thursday evening, and Collier Shannon partners unanimously approved the deal Friday morning, Rosenthal says.

"Everyone was happy to go forward," Rosenthal says.

The merger is the latest in a string of acquisitions in the D.C. legal market, which has seen many midsize firms swallowed up by out-of-town players looking to enhance their presence inside the Beltway. Firms including Shea & Gardner, Shaw Pittman, and Swidler Berlin have all merged with out-of-town firms in recent years.

Collier Shannon is one of Washington's last midsize regulatory shops. The firm, which prides itself on its collegial culture, has long guarded its independence. But in recent years, Collier Shannon's competitors have been growing rapidly, making it more difficult for the firm to compete for top-end litigation work. In 2000, Collier Shannon lost half of its antitrust practice when former partner James Rill left to join Howrey, taking about 30 lawyers with him. Although the firm's marquee practices still produce strong revenues, Collier Shannon's head count never again approached its 1999 peak of 106 lawyers.

For Kelley Drye, the merger is a way to shore up an eroding Washington base. The 271-attorney firm made its initial foray inside the Beltway in the 1980s, but the firm's D.C. operation has suffered in recent years. Kelley Drye has never been able to build a significant regulatory practice, and its largest D.C. practice group, telecommunications, hit hard times in 2002 after the dot-com bust. Despite a few recent high-profile hires, including former Virginia Gov. James Gilmore, Kelley Drye's Washington head count slipped to a low of 29 last year.

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