Patton Boggs, Washington, D.C. (Photo: Diego M. Radzinschi/ NLJ)
The end of March brought another flurry of change at Patton Boggs, as several partners in Dallas decamped to McGuireWoods and a New York judge ruled that Chevron Corp. can sue the firm for alleged misconduct.
Days later, global firm Dentons injected itself into the talk of a possible merger between Patton Boggs and Squire Sanders.
Together, the changes added a coda to the firm’s yearlong project to downsize by more than 100 lawyers, shed personnel deadweight and unnecessary overhead costs and find a merger partner.
Of the three recent developments, the partners’ departures happened first.
Private-equity attorneys Jon Finger, Akash Sethi, Kevin Boardman and David McLean and intellectual property lawyers Darren Collins and Robert Hilton joined McGuireWoods and will open its Dallas office, the firm said on March 31.
“Their departures do not affect our ongoing discussions with Squire Sanders, do not impact our strategic plan, and are not material to the firm,” Patton Boggs said in a written statement.
Benjamin Chew, who was Patton Boggs’ commercial litigation and antitrust group leader, also left recently to work at Pillsbury Winthrop Shaw Pittman in Washington.
Besides these lateral moves, names of three other partners have disappeared from Patton Boggs’ website in recent weeks.
The firm said in March it planned to shed more than a dozen partners as it continues to downsize. In late February, it asked partners to commit during the restructuring. Although 90 percent of the remaining partners said they would stay, a handful said they planned to leave.
“The partners who have ­recently resigned were among the few who declined to make that commitment,” the firm said. “As to those who have decided to pursue other opportunities, we wish them well.”
The Dallas office remains the firm’s second largest but headcount has declined from almost 90 lawyers one year ago to fewer than 50 today, according to its website. Two dozen lawyers, including 12 partners, left Patton Boggs in summer 2013 to open Holland & Knight’s Dallas office.
Meanwhile, Patton Boggs has hired few partners in recent weeks, bringing on tax lawyer Linda D’Onofrio as a partner in New York, and a number of former partners expressed concern about the firm’s cash flow.
POSSIBLE LIABILITY FOR EX-PARTNERS
The firm has warned the former members of the Dallas office who moved to Holland & Knight that, under their partnership agreements, the individuals may be responsible for overhead costs for the office space they vacated, according to several former partners. The firm has not asked for the payments yet, the former partners said.
A number of Patton Boggs partners who’ve left within the past year said the firm has delivered on payments it owed to them since their departures, and the firm has said it has no cash flow problems. But several former partners expressed concern about the side of the capital investments they would recover when they settle their accounts.
Also complicating the firm’s future was U.S. District Judge Lewis Kaplan’s two-page order on March 31 giving Chevron permission to bring claims against Patton Boggs for fraud, malicious prosecution and deceit. (Chevron made its allegations in the form of counterclaims in an abuse-of-process case brought by Patton Boggs, so it needed judicial approval to proceed. After receiving the order, the company filed its claim April 3.)
Kaplan rejected arguments by Patton Boggs that the judge lacks jurisdiction over the firm.
According to Chevron, a Patton Boggs team tried to enforce a judgment that they knew or should have known was tainted. Kaplan previously has ruled that plaintiffs lawyer Steven Donziger committed fraud by fabricating a report, among other acts, used by his Ecuadoran clients in a dispute with Chevron over pollution in the Amazon. Patton Boggs got involved when it agreed to help the Ecuadorans enforce their judgment.
Donziger’s plaintiffs won $9.5 billion in an Ecuadorian court in 2011, and Patton Boggs stands to collect a large fee if a court outside Ecuador orders Chevron to satisfy the judgment or the company settles. If the firm loses in Chevron’s suit, Patton Boggs could be held liable for damages.
“High-stakes litigation requires the ability to take a punch even when it is below the belt,” Patton Boggs general counsel Charles Talisman responded in a written statement. “We have no doubt that we acted ethically and properly.”
REMAINS A MERGER TARGET
Despite the legal risk, Patton Boggs apparently remains an attractive merger partner — witness the attention from Dentons, a Swiss verein with 2,600 lawyers worldwide that said it has made a “serious overture” to join forces.
In response to a request for clarification on the talks with Dentons and whether that discussion is still going on, a Patton Boggs spokesman said only that the talks with Squire Sanders continue.
The Dentons announcement may not be unusual in a year when law firm ­combinations keep a record-setting pace. Law firms regularly talk to one another, and those conversations can lead to business opportunity or help educate the firms about what’s happening in the ­marketplace.
“People are always thinking and talking about what could be possible and how you could improve your station in life. Just because you have a conversation doesn’t mean you’re going to do anything,” said Richard Burleson, co-founder and namesake of a midsized Houston-based law firm centered on the oil and gas industry.
Patton Boggs had, in fact, flown to Houston about two years ago to discuss a possible merger with Burleson over a cup of coffee, Burleson said. He said he didn’t see his firm and Patton Boggs as a good fit, and the talks went nowhere.
Contact Katelyn Polantz at email@example.com. Jan Wolfe contributed to this report.