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Insurance brokerage giant Aon Corp. is boarding up its San Francisco-based litigation headquarters as the company centralizes legal operations at its Chicago base. The closure is one of the first major measures taken by former U.S. Deputy Secretary of Labor Cameron Findlay, who joined Aon as general counsel and executive vice president in August. “We’re a Chicago-based company with our legal department headquartered in Chicago, and it didn’t make sense to us that we would have our litigation headquarters in San Francisco,” Findlay said. Aon’s San Francisco office, established in 1993, consists of a half-dozen attorneys dedicated exclusively to litigation. The office handles about 100 cases a year, with more than half of the matters located in California. All of Aon’s San Francisco lawyers were offered jobs in Chicago, though none opted to relocate with the company. Findlay said the departing San Francisco attorneys will not be replaced with litigators in Chicago. “We’re moving toward a smaller in-house litigation group, and we have a fairly large group here in Chicago already with nine litigators,” Findlay said. Some of the office’s lawyers have already moved on. Shand Stephens, Aon’s national litigation counsel and head of the San Francisco group, joined Piper Rudnick’s San Francisco office as a partner on Monday, along with Margaret Lund Parker and Eliot Hudson, who joined as partner and of counsel respectively. Aon’s San Francisco exit ends a phase in which the company built up its own litigation force to handle much of its litigation in-house. “It’s very unusual to have an inside lawyer doing lead trial work in major cases,” Stephens said. “As with most arrangements, they fit for some time with some management, and then other management wants to do it in a different — not a better or worse way — but a different way that’s more comfortable for that moment in time.” While the San Francisco outpost was only a sliver of Aon’s 90-attorney legal department, it was the company’s largest group of U.S.-based attorneys outside Illinois. Aon also has lawyers stationed in New York, London and the Netherlands. The move out of San Francisco comes as some corporations grouse that California has become an expensive and hostile environment for businesses. A study released last week by consulting firm Bain & Company found that nearly 40 percent of companies polled in California plan to move jobs out of state, with many citing concerns about workers’ compensation and regulatory issues. But Findlay stressed that the move has absolutely nothing to do with business conditions in California. In fact, the company continues to maintain substantial non-legal operations in San Francisco and throughout the state. Aon grossed $9.8 billion in revenues in 2003, with $663 million in net income. While the move out of San Francisco will bring some cost savings in terms of rent and salaries, “some or all of that may be offset by outside counsel costs,” said Findlay. He said that Aon would rely more on outside law firms and continue to have a relationship with Stephens, who will now work for the company as outside counsel. Aon established its litigation headquarters in the Bay Area a decade ago in order to hire Stephens, then a partner at now defunct Bronson, Bronson & McKinnon, who would only take the job on condition of remaining in San Francisco. The company’s San Francisco legal group was responsible for a broad spectrum of litigation. In addition to defending the company’s insurance brokers in errors and omissions claims, the attorneys represented Aon and its subsidiaries in everything from employment matters to investor lawsuits. In November, Aon settled 10 shareholder lawsuits for $7.25 million. The company has also been hit with a class action alleging that it improperly denied overtime pay to hundreds of its account managers and account executives. Findlay joined Aon after a two-year stint as the No. 2 official at the U.S. Department of Labor. A former clerk for U.S. Supreme Court Justice Antonin Scalia, Findlay has had a long career in government posts, having held positions in the White House and the Department of Transportation in the administration of former President George H. W. Bush. Aon’s San Francisco legal division will officially cease operations at the beginning of April.

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