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WASHINGTON — Swidler Berlin Shereff Friedman is considering a pair of deals that could send the firm’s Washington, D.C., and New York lawyers to two separate firms, sources familiar with the discussions say. Under the plan, D.C.’s Dickstein Shapiro Morin & Oshinsky would pick up Swidler’s Washington lawyers. Swidler’s New York office would merge with San Francisco-based Orrick, Herrington & Sutcliffe. If successful, the addition of Swidler’s 159 D.C. attorneys would make Dickstein-Swidler Washington’s third-largest office, with more than 400 lawyers in D.C. In a survey this year of the largest 150 law offices in the D.C. region by Recorder affiliate Legal Times, Dickstein ranked ninth. Swidler was 24th. Orrick had attempted to merge with both offices of Swidler earlier this year, but senior officials from both firms called off talks in July after a significant client conflict was discovered during the due diligence process. Barry Direnfeld, Swidler’s D.C. managing partner; Michael Nannes, Dickstein’s managing partner; and Ralph Baxter Jr., Orrick’s chairman, did not return repeated phone messages seeking comment. And spokespeople for Swidler and Orrick declined to directly answer questions about reports of the talks, citing firm policies against public comment on merger discussions. When reached by telephone, Dickstein’s former managing partner, Angelo Arcadipane, termed a question about the reported talks “presumptuous,” and refused to comment further. But four independent sources with knowledge of the firms and the talks confirm that discussions between Dickstein and Swidler are serious. Two of the four confirm that Orrick is in talks to acquire Swidler’s 61 New York lawyers. Due to the sensitivity of the negotiations, none would agree to be named in print. For Dickstein, the addition of Swidler’s D.C. office could add strength in several practice areas, most notably insurance. “[Together] they’d be formidable in that area,” says one attorney with knowledge of both firms. And the two have at least one strong connection in that practice area. Rick Fields, a former director of Swidler and chair of that firm’s insurance group, now practices in Dickstein’s 70-lawyer New York office. The two firms also have significant energy practices, and Swidler’s government affairs group is among the strongest in D.C. “Dickstein could desperately use Swidler’s lobbying,” says the attorney with knowledge of both firms. “Swidler has a lobbying practice that most firms can’t touch.” Swidler, according to Legal Times‘ sister publication Influence, brought in $22.4 million in lobbying revenue in 2003, one of the 10 highest totals for a D.C. law firm lobbying practice. The total was nearly $10 million more than the previous year because of a huge boost from asbestos clients. One D.C.-area legal recruiter, however, is less impressed with the merits of the merger. The “insurance practice has flattened out,” he says. “But [the proposed merger] does put the combined firm on the level of Arnold & Porter and Covington and Wilmer” in terms of size in the District. He points out that along with a large D.C. presence and Dickstein’s existing New York branch, the combined firm might make a tempting merger target for a large suitor with national reach. For Swidler, industry observers say that melding its D.C. office with Dickstein would give it access to the capital necessary to expand its stronger practices. Dickstein had profits of nearly $2 million per partner last year, far and away the highest of any D.C. firm — though much of the profit derives from a mammoth payout from a 1999 contingent fee suit against two vitamin manufacturers. In 2001, before the payouts from the contingent fee case began, the firm’s per-partner profits were $650,000.” For its part, Swidler’s profits per partner hit $940,000 in 2003, and firmwide revenues were $158 million. The D.C. office accounted for roughly $110 million of that total. However, that figure hasn’t been enough for Swidler to keep up with its D.C. competitors. In 2002, the firm dropped from Legal Times‘ list of D.C.’s 20 highest-grossing offices. The merger with Dickstein would also give Swidler’s attorneys a much larger platform from which to lure clients. One legal recruiter says the firm doesn’t have the size and breadth to attract and fully service Fortune 500 companies. “They can’t get the clients they really want,” he says, adding that the firm has struggled as the market for its strong telecom practice has leveled off. Swidler has lost lawyers in Washington over the past few years. In April 2003, the firm reported 187 lawyers. Swidler’s Web site currently lists 159 lawyers in D.C. Despite this, Swidler spokeswoman Ellen Katkin says the firm is well positioned to stand on its own. “Right now, we’re in a position of tremendous strength,” she says. “Last year we had a record year in terms of profits and revenues. We expect another record year this year.” But for some industry observers, news of the talks confirms what many had already believed: that the 1998 merger between D.C.’s Swidler & Berlin and New York’s Shereff, Friedman, Hoffman & Goodman was not a ringing success. The two offices had distinct practice areas, and, according to one former Swidler partner, “didn’t communicate with each other because they didn’t need to.” Elizabeth Lampert, a legal business consultant who worked with the merged Swider Berlin Shereff Friedman, sees the same disconnect. “Their culture never meshed,” Lampert says. “[Even] years after the merger, they never integrated their stationery, their font or anything.” One source close to Swidler says the firm is likely talking to both Dickstein and Orrick because Swidler’s New York lawyers would prefer to join Orrick. “Dickstein would want to acquire the New York office,” he says. “But the New York office would say, ‘That doesn’t help us.’” Indeed, Orrick offers a bigger platform for the Swidler team, with some 700 lawyers firmwide. Profits per partner last year were nearly $1 million, the highest for a San Francisco-based firm. Orrick has 200 attorneys in New York — more than it has in its home office in San Francisco. And the firm has made no secret of its desire to grow in New York. A source with inside knowledge of the firm says adding Swidler’s 61 New York attorneys to its own group on Fifth Avenue has been Orrick’s game plan since merger discussions began last year. “They’re ambitious to become a real player, and you need 300 to 400 attorneys to be a player in New York,” he says. “They’re halfway there [now].” Says law firm consultant Peter Zeughauser, of Newport Beach’s the Zeughauser Group: “Trying to find 65 lawyers of that caliber in New York is very difficult. I think it’d be a great addition for Orrick if they were able to make it happen.” But despite its steady growth from California bond firm to national player, Orrick has struggled to seal recent mergers. Aside from its on-again, off-again talks with Swidler, Orrick has unsuccessfully attempted to negotiate mergers with Silicon Valley’s 500-lawyer Cooley Goodward and tech boutique Venture Law Group. It has also dallied with London-based Bird & Bird and Los Angeles’ Riordan & McKinzie. In the event Orrick, Dickstein and Swidler cannot work a deal, however, it’s likely Swidler will continue to pursue other suitors. Says the former Swidler partner: “I doubt you’re going to find a law firm in the 300-lawyer range that isn’t thinking about merging.” Jason McLure is a reporter with Legal Times, a Recorder affiliate based in Washington, D.C.

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