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Reed Smith Rainmaker Michael Sanders had his hands full. In July, Volcano Therapeutics Inc. needed a new round of venture capital financing. It also planned to acquire a U.S. subsidiary of a European company with cutting-edge cardiac monitoring technology. Nearly 80 attorneys in London; Pittsburgh; San Francisco; and Oakland, Calif., sprang into action, helping Sanders handle overseas assets, federal regulators and intellectual property. Volcano Therapeutics ended up with $50 million in financing and muscled past Fortune 500 competitors to acquire Jomed Inc., a 400-employee firm with several health-product lines. The deal also helped forge alliances between Volcano and other companies that bought related assets from Jomed. The deal also demonstrated the new capabilities of Reed Smith, the firm that acquired Crosby, Heafey, Roach & May in January 2003. The merger gave birth to a behemoth: The combined firm has nearly 1,000 attorneys and 18 offices on both coasts and in London. That extra manpower was instrumental to the success of the Volcano deal, Sanders said. “It was the type of transaction that, if we had just been . . . Crosby Heafey, we would have had to reach outside of the firm” to get it done, Sanders said. The firm is touting the rare, complex deal internally, making Sanders the “poster boy” for the merger, he added. One year after 215-attorney Crosby Heafey joined with 780-attorney Reed Smith, there are many signs of success. The merger allowed the firm to generate $17.4 million in additional work, including Sanders’ deal. With one exception, all of the Crosby lawyers who joined Reed Smith as equity partners have stayed and are making more money, Reed Smith’s officials say. 10 partners exit But the merger wasn’t for everyone. At least 10 Crosby partners have left for other firms or to do general counsel work. And while Reed Smith was busy cementing its California ties, there was unrest back east. Dissatisfaction spread among Reed Smith’s East Coast associates, who complained about the firm in a survey, and a few long-time partners left the firm. But overall, Reed Smith has plenty to celebrate, said Chairman Gregory Jordan. “It really couldn’t have gone better,” said Jordan, who was in Oakland earlier this month to meet with firm partners. Crosby Heafey attorneys who joined Reed Smith as equity partners took home more profits after the merger, Jordan pointed out. In 2002, the last year before the merger, Crosby’s profits per partner were $304,000. After the first year of the merger, Reed Smith attorneys raked in an average of $550,000 in profits. East Coast clients who used Reed Smith’s West Coast attorneys generated $11.7 million in new business. California clients who used Reed Smith’s West Coast attorneys generated $5.7 million, Jack Nelson, the head of Reed Smith’s West Coast operation, said. The firm plowed some of the $17.4 million in new business into a revenue-sharing program, which means that 140 associates firmwide will get a $7,500 bonus this year-a program that wasn’t available at Crosby. The firm is on track to do even more cross-selling this year. The firm took in $4.9 million worth of similar work in January and February, Nelson said. The success of the merger is due at least in part to Crosby shedding 30 equity partners-and thereby shoring up its profits-shortly before the deal was done. Jordan emphasized the careful planning that went into the merger. The firms integrated all internal functions, and Reed Smith continues to hold quarterly meetings to hash out merger issues, said Michael Pollack, director of planning and strategic growth. Reed Smith has adopted successful Crosby Heafey programs such as an associates committee and has put Crosby lawyers in firmwide leadership posts, Pollack said.

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