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If there was any doubt about the changes in store when Mary Cranston and Marina Park took the helm of what was then Pillsbury Madison & Sutro at the beginning of 1999, the firm’s attorneys didn’t have to look any further than their Web site. “We look forward to helping the firm shed its traditional stodgy image — which was never accurate — and establish a new image reflective of the true firm spirit,” Park said in a press release trumpeting the new management team. Cranston and Park, serving as firm chair and managing partner respectively, were the first women to lead the 125-year-old firm and are among a small cadre of women at the head of corporate law firms. Since taking charge, the pair have pumped up profits, restructured the firm’s internal organization, and pulled off a massive cross-country merger with New York’s Winthrop, Stimson, Putnam & Roberts to create the national, 750-lawyer Pillsbury Winthrop. But the journey has been bumpy, with controversy and high-level defections at times overshadowing Cranston’s and Park’s accomplishments. The hands-on, centralized management style that has been the hallmark of the regime has caused some backlash within the ranks. And the 2002 press release in which Cranston and Park denounced a departing partner exacerbated misgivings about the firm’s administration. Now, with a few months remaining in Cranston and Park’s current three-year term managing Pillsbury Winthrop, the firm is at a crossroads. As preparations get under way to elect the next management team, Pillsbury’s partnership must decide whether to stick with the leadership that has driven and defined the firm’s transformation. In the next couple of months, a 15-member nomination committee stacked with some of Pillsbury’s biggest rainmakers will designate the next chair and managing partner and the rest of the slate for an 11-member managing board. The firm’s partners will then vote up or down on the entire slate. While Cranston has indicated a desire to serve another term as firm chair, she says the ultimate decision rests with the partnership and its vision for the firm. Park is more circumspect, saying she’ll wait and see what the composition of the new board looks like and whether it’s a comfortable fit before committing. “I haven’t told them that I wouldn’t do it if they ask me. I also haven’t told them that it’s an automatic that I would,” says Park. Unlike the current management board, which had dedicated slots for legacy Winthrop and Pillsbury partners, the new board need not preserve such distinctions. And the vice-chair spot, which was filled by former Winthrop, Stimson Managing Partner John Pritchard, could also disappear. Pritchard, who has already transitioned back to active practice, says he’s not concerned that board changes will result in less representation for the firm’s East Coast offices. “I’m certain that there will be significant representation from the various geographic areas of the firm,” says Pritchard of the next managing board. “In any event, we’re one firm now,” he adds. “We have confidence in our partners wherever they may be.” No partner has publicly announced intentions to challenge Cranston or Park for either of the top jobs. And according to some Pillsbury insiders, the firm’s financial performance under the current administration might make a management shake-up unlikely. While Pillsbury’s average profits per partner are still well below similarly sized firms like Orrick, Herrington & Sutcliffe and Gibson, Dunn & Crutcher, attorneys at the firm credit Cranston and Park with steadily increasing the bottom line. “The results speak for themselves. Last year was the most profitable year in firm history,” says one partner. Pillsbury’s average profits per equity partner in 2002 came in at $710,000, up 7 percent from the previous year. Indeed, Cranston and Park have managed to continuously increase profits. Since Cranston and Park have been in the top management spots, profits per partner have more than doubled from the $350,000 the firm recorded in 1998. Revenues per lawyer have likewise jumped nearly 40 percent from $465,000 in 1998 to $650,000 in 2002. “It’s hard to argue with the numbers,” says another partner. “It’s one thing to talk about some lapses of judgment. They keep making money.” The focus on profitability has been one of the fundamental goals of Cranston and Park’s administration. The improved figures are partly attributable to the fact that Pillsbury altered its ratio of equity to non-equity partners in 1999, giving a hefty boost to its recorded profits per equity partner. But the rising income is also the result of Cranston and Park’s aggressive focus on the bottom line. To keep the black ink flowing, the pair has adopted a hands-on management style, paying close attention to the firm’s various operations. Park has completely stepped away from her Silicon Valley transactional practice to focus on the job. And Cranston, an American College of Trial Lawyers fellow whose online bio states that she’s litigated more than 300 class actions, says she now devotes only a maximum of 20 percent of her time to litigation. “As we’ve grown in size and complexity it became clear that you couldn’t have a CEO who was also trying to practice law full time,” says San Francisco partner Gregg Vignos. THE MERGER The need for a dedicated management team was reinforced after Pillsbury Madison & Sutro and Winthrop, Stimson, Putnam & Roberts joined forces in 2001. The combination, one of the biggest law firm mergers in history, was the crowning achievement of Cranston and Park’s first term, giving Pillsbury a long-sought capital markets practice in New York as well as a platform for an international expansion. While Winthrop may not have been among Wall Street’s elite players, its acquisition gave Pillsbury the critical mass that it needed in New York. And it provided crucial diversification after the crash of the Silicon Valley technology market, which had served as Pillsbury’s engine throughout the late 1990s. “I think it turns out with the benefit of hindsight to be a good move for Pillsbury,” says legal consultant Peter Zeughauser. As Cranston and Park began their term, spearheading a new board and a new firm, they faced the enormous task of integrating two organizations with distinct practices, financial systems and technology infrastructures. “We have looked at every aspect of our operations, asking the question, ‘If you were to wave a magic wand and create a perfect law firm today, what would it look like?’” says Cranston. “And we’ve attempted to revamp ourselves in that model.” Pillsbury’s management structure gives the board the authority to act on its own, though Cranston says the board secures broad partnership support for its actions. Under the streamlined system, Pillsbury’s management has enacted a variety of measures to bring the two firms together while bolstering profitability. The 2,500-hour requirement for partners, which was unveiled at Pillsbury Madison & Sutro shortly before the merger, was extended to all Winthrop partners. And firm management has not been shy about adjusting things like first-year associate start dates and staffing levels, including a few rounds of staff and attorney layoffs, in order to keep costs in line. The board has also taken a close look at the firm’s practice mix, and made changes to practices with billing rates that no longer fit Pillsbury’s cost structure. In 2002, for example, the firm cut loose its small Orange County real estate practice. At the same time, Pillsbury has pumped more resources into its higher-rate core practices, which include energy, capital markets and finance, technology, telecommunications and litigation. And a cross-practice, client-teams initiative has allowed the firm to bill more from its top clients, according to Cranston. The client teams program “puts a lot of focus on expanding relationships with the companies that we are best positioned to bring extra value to,” she says. “That has helped our revenues.” Another important benefit of the client-team structure is the protection it provides against defecting partners: Because the system effectively institutionalizes clients, it’s difficult for an individual partner to walk off with them. Thus, Pillsbury attorneys contend, the firm felt little adverse effect when San Francisco partner Robert Mittelstaedt — an important partner on the ChevronTexaco account — jumped to Jones Day in April. According to court records though, Mittelstaedt did not leave completely empty-handed, taking at least two major ChevronTexaco matters over to Jones Day, including Bowoto v. ChevronTexaco, 99-2506, a high-profile case involving alleged human rights violations in Nigeria. “There were some cases that Bob had been involved in that were in substantial stages and we wanted Bob to continue on them,” says Charles James, the general counsel of ChevronTexaco. James, who is himself a former Jones Day partner, disputes any notion that Mittelstaedt’s move represents an eroding of the longstanding relationship between Pillsbury and ChevronTexaco, a company which spent more than $100 million on outside counsel in 2002. Pillsbury is among the company’s “principal legal providers,” says James, and is “someone who we continue to use in basically the same capacity that they were used in prior to my arrival.” Meanwhile, telecommunications giant SBC — another marquee Pillsbury client — tapped Mittelstaedt to defend the company in a class action it was hit with after his move to Jones Day. The loss of Mittelstaedt, and the eight other attorneys who have since followed him to Jones Day, is one of several high-level partner departures during Cranston and Park’s administration. Other homegrown rainmakers that have checked out include Kenneth Chiate, who moved to Quinn Emanuel Urquhart Oliver & Hedges in 2002, and Stephen Stublarec, who joined Latham & Watkins earlier that year. Chiate says his move was not a reflection on Pillsbury, but simply the result of an opportunity he couldn’t pass up, while Mittelstaedt declined to comment for the story. Stublarec could not be reached for comment. MARY’S WAY But the regime that has transformed the firm has not proceeded free of dissent. The executive authority vested in the firm’s management, and the manner in which the board has wielded the power, has irritated some attorneys, who have resented their lack of input in the decision-making process. “It’s Mary’s way or the highway, plain and simple,” says one former partner, characterizing the current regime as autocratic. “Mary decides what consultants to hire, who to promote, what offices to open.” The East Coast intellectual property practice that Pillsbury picked up through its 1996 acquisition of Cushman Darby & Cushman has lost a steady stream of attorneys, including 18 partners. A number of those departures followed a contentious management decision to relocate the practice from Washington, D.C., to Northern Virginia. Another former Pillsbury partner ascribes his decision to leave Pillsbury to “a wide spectrum of dissatisfaction and general professional unhappiness with the management of the firm. You could sum that up as a deterioration of morale.” Cranston acknowledges that the numerous initiatives the firm has launched over the past few years haven’t always enjoyed complete unanimity. But she maintains that whenever the board has made a major decision, it has put out a policy statement or proposal for discussion among the partnership. “When you’re changing a law firm, you don’t get unanimity,” says Cranston. “What you do is try to get the leadership and the consensus of the majority of the partners behind it.” The now-infamous press release in which Cranston and Park denounced Frode Jensen, a Stamford, Conn., partner who had resigned to join Latham & Watkins, re-enforced some partners’ perceptions about the firm’s management style and provided fresh ammunition to critics. The unusual breach of etiquette regarding a lateral partner move sparked consternation inside and outside the firm and resulted in a $45 million defamation suit against Pillsbury. (The suit was settled in April for a confidential sum.) How the Jensen affair will factor into the nomination committee’s thinking as it selects the next managing board is uncertain. “Clearly that’s not something that would be a big star in [Cranston and Park's] column, but I think that people are rational enough to take a look at the overall picture,” says a Pillsbury partner, speaking on condition of anonymity. More important than the past is the vision for the future. After three years of aggressive change, the appetite for further expansion could be limited. The long-running plan to find a merger partner in London, for instance, seems to be in a holding pattern. The nomination committee is expected to be in place by the end of this month, at which point it will begin gauging the partnership’s feelings about the future direction of the firm and its next leaders. “I think everyone has for the most part liked the energy and liked the sense of direction, but they want to make sure that they’re comfortable that they’re headed in the right direction,” says Park. “You do have to slow down every once in a while just to sort of regroup.”

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