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MERGER MATES: ARE GOOD ONES TAKEN? When it comes to law firm mergers, the frenzy is abating. Law firm combinations nationwide during the first three months of 2003 were down by half, compared with the same period two years ago, according to a new Hildebrandt International report. One of the remaining hot spots: D.C. Among firms of at least five lawyers, first-quarter mergers have decreased steadily across the country: 18 this year, 22 last year, and 41 in 2001. Overall, there were 54 mergers in 2002 and 82 in 2001. And because many mergers typically take effect in the first quarter, 2003 is on course for a decline. With rising caution about expansion and a shrinking pool of merger candidates, the number of law firm unions in 2003 will probably remain low, says Hildebrandt consultant Lisa Smith. “It’s not the same as it was a few years ago,” Smith says. “Many of the best targets have been taken.” The shortage of those targets — stable midsize firms — might mean that a greater number of more-complex marriages between 500-plus lawyer firms are on the horizon, Smith says. But in Washington, the story is playing out a little differently. Despite slimmer pickings among midsize firms, many national firms are still hungry for even a small foothold in the capital — particularly because of cooling possibilities in California and New York, Smith says. “Interest in D.C. has skyrocketed,” she notes. “It’s a stable, attractive market.” The proof? Nearly 200 national law firms have branch offices in D.C., compared with about 120 branch offices in New York, according to Hildebrandt. Even though Washington is one of the top three cities for merger activity, it has seen only two law firms join forces this year. Smith says attempts by large out-of-town firms to woo D.C.’s myriad boutiques abound. But many small firms aren’t swooning. Shea & Gardner has been courted repeatedly by larger firms trying to establish a presence in D.C., says chairman John Aldock. So far, no one has given the 70-lawyer litigation firm “a sufficient reason to give up its independence,” Aldock adds. “D.C. is a little unique in that it has a lot of strong boutiques,” Smith says. Regulatory, litigation, and intellectual property boutiques are the hottest commodities for firms seeking acquisitions in Washington, she adds. Hyman Phelps & McNamara administrative partner Robert Dormer says he’s continually deflecting offers, often by referring merger suitors to his competitors. “Sometimes, I’m a little surprised to get calls from 900-lawyer firms interested in our measly little 31-lawyer firm,” Dormer says of the D.C.-based food and drug regulation boutique. “We’re flattered, but basically people here are very happy being on their own.” — Lily Henning TOBACCO CASE HEATS UP Rep. Henry Waxman (D-Calif.), a leading anti-tobacco legislator, has called for a congressional investigation into allegations that officials of the Altria Group Inc. — formerly known as the Philip Morris Cos. — destroyed key documents in violation of a federal court order in the Justice Department’s lawsuit against the tobacco industry. “Philip Morris’s document destruction appears to have been caused by a ‘print and retain’ policy that recalls the infamous ‘document retention’ policy of Arthur Andersen,” Waxman wrote in an April 17 letter to House Energy and Commerce Committee leaders. William Ohlemeyer, associate general counsel for Altria, says its lawyer Thomas Frederick of Winston & Strawn notified U.S. District Judge Gladys Kessler of deleted e-mails last year and that the matter was “handled to the court’s satisfaction.” He says he was surprised to learn that Waxman wanted to investigate the issue “without any indication from the court that it is a problem.” The production of internal documents has been a continuing struggle in the DOJ tobacco suit scheduled to go to trial in September 2004. Thus far, the tobacco companies have turned over millions of documents, but DOJ lawyers complain that relevant materials are still being found more than a year after discovery closed in February 2002. At a January hearing, Kessler said, “It concerns me greatly” that e-mail had been destroyed and that other documents were still being located. Last week, Frederick told Kessler during a hearing that Philip Morris had found another 19,000 documents that needed to be produced. Also at that hearing, DOJ lawyer Renee Brooker said Philip Morris had removed more than 12 million files from a database that by court order the government was supposed to be able to review intact. Frederick denied the contention and claimed there was no violation of the court order. — Tom Schoenberg THE ARC OF A CAREER Longtime Dickstein Shapiro Morin & Oshinksy managing partner Angelo Arcadipane will be poring over office designs and lease agreements instead of profits per partner next year. The 62-year-old firm head is stepping down in December from his post of 12 years. He’ll take on special management projects, including oversight of the firm’s anticipated move or renovation. During his tenure, the firm has grown from 175 to 325 lawyers, expanded its New York office from a tiny outpost to a 55-lawyer presence, and in 1996 added name partner Jerold Oshinsky. Arcadipane also implemented a corporate-style organizational structure, adding five chief officers to handle the firm’s business matters. Michael Nannes, 50, who will take over as managing partner in 2004, calls his own transition to the helm a “non-event,” since he has worked with Arcadipane for nearly 25 years. Of Nannes, an energy practice attorney and former litigator who has been deputy managing partner for seven years, Arcadipane says, “We’re at the point where he finishes my sentences and vice versa.” Arcadipane will continue to handle a limited number of legal matters, serve on the board of Holy Cross Hospital, and work with the Duke Ellington School of the Arts, a D.C. public charter school. — Lily Henning LAW FIRMS SCRAMBLING FROM SARS As cases of severe acute respiratory syndrome continue to spread, law firms are taking precautions to guard employees against the mysterious flulike illness. At White & Case, one lawyer who recently returned from Asia has gone into quarantine before returning to work in the New York office, says managing partner Duane Wall, who has advised “extreme caution in authorizing any nonessential travel to Asia.” A similar policy is in place at Shearman & Sterling, which has also asked lawyers returning from areas where SARS is epidemic to “stay home for a few days until they’re clear,” says managing partner Robert Treuhold. A pair of Shearman & Sterling lawyers in Hong Kong had a scare last month when they learned they were on a flight from Beijing with a passenger who later came down with SARS. The firm shut down its Hong Kong office for several hours on March 31 for testing and disinfection, and the lawyers worked from home during the 10-day incubation period of the disease. Both are healthy and back at work. Skadden, Arps, Slate, Meagher & Flom is also limiting travel to Asia, says managing partner Robert Sheehan. Lawyers in the firm’s Hong Kong office have been issued masks, and the firm has “made sure the building is on a rigorous cleaning program,” Sheehan says. Hogan & Hartson has offices in Beijing and Tokyo. Firm chairman J. Warren Gorrell says both are “still open and fully staffed,” although clients are far more reluctant to travel to the region these days. “A lot more business is getting done electronically and by telephone,” Gorrell says. So far, 27 countries and Hong Kong have reported 3,389 cases. Worldwide, 165 people have died from the illness. — Jenna Greene LSC’S FULL HOUSE The Legal Services Corp. has been enjoying some surprising good favor from both the Bush administration and Congress this year, with a $9.5 million funding boost and addition of six new members to its board of directors. With a mid-1990s push by Congress to “put the corporation on a glide path to elimination,” as stated by current board member Hulett Askew, recent good will is a result of what LSC spokesman Eric Kleiman calls a “focus on the noncontroversial,” which gained the support of “compassionate conservatives.” President George W. Bush’s nomination of six Republicans and three Democrats marks the first time in a decade that a president has appointed such a large group to the bipartisan board. On April 11, the Senate confirmed University of Colorado law professor Robert Dieter; Maryland LSC Chairman Herbert Garten, name partner of Baltimore’s Fedder and Garten; partner Michael McKay of Seattle’s McKay & Chadwell; partner Thomas Meites of Chicago’s Meites, Mulder, Burger & Mollica; and partner Frank Strickland of Atlanta’s Strickland Brockington Lewis. Bush friend, motorcycle enthusiast, and nonlawyer Florentino Subia of Texas will be there as a voice for the LSC’s traditional clientele. The new members will be sworn in at the board’s quarterly meeting in Santa Fe, N.M., April 25 and will serve the remainder of the three-year term of the Clinton appointees they are replacing. There are three confirmations and two nominations pending until the board is packed with Bush nominees. “It is obviously helpful for the president to have his own appointees on the board,” Askew says, but he does not think that the new board will face the same hurdles and controversy generated over the LSC’s previous involvement in prisoner, abortion, and class action cases. — Alicia Upano I LEFT MY HEART . . . Six months after D.C.’s Howrey Simon Arnold & White set up shop in San Francisco, the firm has lured four partners over from Townsend and Townsend and Crew. Howrey announced April 11 that it has hired K.T. “Sunny” Cherian, Duane Mathiowetz, Brian Smith and Robert Scott Wales. The partners — all of whom are patent litigators — said they had unfinished business to wrap up at Townsend and were unsure when they would make the move. One-time Townsend partner Henry Bunsow recruited the group away from the firm. Bunsow himself was hired away from Keker & Van Nest in October to launch Howrey’s San Francisco office. “What I sold them on — it’s the same reason I came here — is that this is a unique opportunity that is not going to come around again,” Bunsow said. “This is a chance to be on the ground floor of a new effort — building the San Francisco office of the largest IP firm in the world.” Townsend Chairman James Gilliland Jr. said he was sorry to see the group go, but he did not think it would have a material impact on the firm. “We still have over 50 lawyers in our patent litigation group, so I believe it remains the strongest in Northern California,” Gilliland said. “I suspect the reason these guys moved to Howrey was less because of [the size of Howrey's practice] than the fact they like Henry Bunsow, who’s a terrific guy, and they have the opportunity to build an office from the ground floor.” Howrey now has 11 lawyers in San Francisco. — Brenda Sandburg, The Recorder

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