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If getting new clients is like seeking out new friends, then a law firm’s work for a private equity firm is like having a roommate who throws nonstop parties. For New York’s Debevoise & Plimpton, that roommate has been private equity firm Clayton, Dubilier & Rice, Inc. In 1996, when the founders of Kinko’s, Inc., brought in CD&R as an investor, they got the firm’s longtime law firm � Debevoise � as part of the bargain. Debevoise since then has developed a lasting relationship with the company, even though it has had to share some of the glory, and fees, lately with a Texas firm that pursued its own inside track with Kinko’s. Up to the time that CD&R entered the picture, the founders’ formula for growing Kinko’s had worked well. Over a 26-year span, a single Santa Barbara, California, copy shop opened by Paul Orfalea had grown to 850 stores worldwide. Kinko’s avoided the typical franchising strategy by using a constellation of partnerships with Orfalea at the center. But Orfalea and his partners knew that if Kinko’s was to grow further, it had to be organized more rationally. They wanted to bring in new capital � that was part of CD&R’s role � and eventually go public. First, though, came the task of disentangling 129 corporations and turning them into something coherent. John Allen, Jr., the Debevoise partner who devised the transaction, spent most of the fall of 1996 toiling on what proved to be one of the most challenging deals of his career. “To weave together 129 disparate companies to make this equity investment and have the whole thing gel � and to describe it in a manner that everybody was satisfied with � is tough,” he explains. After the roll-up and CD&R’s $214 million investment in Kinko’s were announced in January 1997, it made sense for the company to keep Debevoise & Plimpton as its outside counsel. After all, Allen had just negotiated the “horrifically complex” deal, as he puts it, and was already far up the learning curve. That’s the standard scenario, says Franci Blassberg, the cohead of Debevoise’s private equity group. “It’s only natural for the portfolio company that is doing a major transaction � a refinancing or an add-on acquisition � to turn to the counsel who did the initial transaction, because you know all about them, and, sometimes, the work that needs to be done relates quite intricately to the work that’s already been done,” she says. Thus, Allen supervised two major Kinko’s transactions, in 1999 and 2000, when J.P. Morgan Chase & Co. and AOL Time Warner Inc. became shareholders. Allen and Debevoise also helped bring a handful of independent Kinko’s operators into the fold and supervised the acquisition of Electronic Demand Publishing Inc. in 1997. When Stuart Blake was replaced as Kinko’s general counsel by Calvin Klein, Inc., senior vice president Jim Cornell in July 1999, Debevoise remained on board. The same was true when Kinko’s moved from Ventura, California, to Dallas in early 2002 and Cornell, who decided to stay in California, was replaced by Leslie Klaassen of Fujitsu Network Communications Inc. That’s not to say that Debevoise has Kinko’s to itself. Local counsel often proved convenient, and sometimes separate counsel was needed when Debevoise’s first loyalty was to CD&R. In California that backup role was filled by Gibson, Dunn & Crutcher. The move to Dallas provided a similar opportunity for Baker Botts, where Dallas partner Andrew Baker had an in with his friend Gary Kusin, Kinko’s new CEO. By the time Kusin was ready to direct some work Baker Botts’s way in August 2002, Andrew Baker was already swamped with work. Another Baker Botts partner, Don McDermett, Jr., took the Kinko’s account and proved the firm’s effectiveness on a routine due diligence assignment. The next transaction was anything but routine. With the equities markets in a slump, the planned IPO never went forward. Orfalea, who had stepped down as chief executive soon after CD&R’s investment and as chairman in March 2000, was eager to cash out. His and other founders’ relations with CD&R had degenerated into litigation. In the fall of 2002 CD&R and Kinko’s offered the restive founders an olive branch. Debevoise’s Allen was told to negotiate a stock acquisition for CD&R and let the founders cash out. He did just that. In December 2002 CD&R invested an additional $175 million in Kinko’s as part of a $460 million recapitalization plan. Orfalea received $116 million for his shares, and $260 million went to the other founders. Because of their potentially diverging interests, Allen could not represent both Kinko’s and CD&R in the transaction, so Baker Botts’s McDermett was counsel to Kinko’s in the deal. Robert Montgomery, the partner at Gibson, Dunn in Los Angeles who negotiated on Orfalea’s behalf and has been his lawyer on corporate matters for years, has nothing but good words for Allen. “Jack is the most honorable, honest, and decent lawyer I’ve ever dealt with at a New York firm,” he says. “He never tried to take advantage of anyone.” Frederic Liskow, who became Kinko’s GC in March, says, “Other firms knock on the door every hour,” but Debevoise’s and Baker Botts’s mastery of the company’s history makes them hard to replace. Post-Orfalea, life goes on at Kinko’s. In March the company acquired ImageX, Inc., a Kirkland, Washington-based business stationery provider, in a small $16.5 million transaction. Its lawyer? Baker Botts’s McDermett. Next up: Debevoise?

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