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London’s DLA and the partners of Piper Rudnick voted to merge the firms Saturday, creating what on Jan. 1 will be the world’s third-largest law firm measured by lawyers and fifth-largest measured by revenues. The outcome of the voting wasn’t in doubt. Nigel Knowles, head of DLA, said three-quarters of his firm’s 135 equity partners had already cast their votes as of Friday. Gray Cary Ware & Freidenrich partners had OK’d the deal as part of their October vote to merge with Piper Rudnick. “There is a place in the world for some number of truly global full-service law firms, and we aim to be one of them,” Piper Co-Chairman Francis Burch Jr. said Friday. The combined firm, which touts as its strengths litigation, corporate finance, real estate and global government affairs, boasts 2,700 attorneys in the United States, Europe and Asia. Other firms will be watching to see how the combined firms knit together their cultures. DLA becomes one of a few U.K. firms, including Clifford Chance, attempting to combine with a major U.S. firm. Even before the vote, the firms had taken steps toward integration. DLA and Piper have been in talks for two years, and firm leaders have gone on the road to sell their vision to partners in all offices. There have been more than 70 partner-level meetings among Piper and Gray Cary partners, said Gray Cary Chairman J. Terence O’Malley. “There has been a very active program of building relationships and starting the planning process so that we could hit the ground running,” he said, adding that the firms have already referred work to each other. Burch said DLA and Piper are collaborating on some large mixed-use projects in Europe and that DLA assisted two Gray Cary clients involved in European M&A deals. “It will be interesting to see how DLA makes the adjustment in terms of servicing the European legal needs of Gray Cary and Piper Rudnick’s client base,” said Andrew Gowans, a partner at Europe’s Osborne Clarke, which has maintained a small Palo Alto office for four years. “Especially on corporate deals, there is a style of investing which in the U.K. can be more long form than the startup investing that happens here.” “I frankly think it will be amazing if they do this,” said Ian Feinberg, a longtime Gray Cary partner who left in 2003 for Mayer, Brown, Rowe & Maw, itself the product of a merger. “The Gray Cary bite is bigger than the biggest bite we took, which is Rowe & Maw.” He pointed out the culture shock that may come for Gray Cary Palo Alto partners, who had represented 40 percent of the firm and will now represent just 4 percent. Peter Engstrom, a San Francisco partner at 3,053-lawyer Baker & McKenzie, said DLA/Piper partners will confront all kinds of integration issues — from billing and financial systems to quality control. “To integrate an international law firm can’t be done overnight. We’ve been at it 50 years,” said Engstrom. Burch, Knowles and O’Malley said they were aiming for one firm, one global vision and one board. The partnership of 1,030 will be represented by a 15-member global board, consisting of six DLA partners, six Piper Rudnick/Gray Cary partners, two independents from outside the firm, and the firm’s non-executive chairman, former Sen. George Mitchell. The firm will be headed by three co-CEOs: Burch, Knowles and Lee Miller. Gray Cary’s O’Malley is on the board. Firm leaders spoke of the importance of maintaining differences. “We are not going to have a mid-Atlantic culture that would be a disaster to both firms,” Knowles said. Differences between the firms’ compensation systems will be worked out down the road, but firm leaders say they don’t anticipate difficulties. “One of the key attractive points about DLA is the fact that they have much more of an American-style compensation structure,” said O’Malley. Like other British firms, DLA does have tightly held equity. Knowles said average profits per capital partner were close to $1 million, but lawyers familiar with the firm said there is a wide disparity in partner pay, just as in U.S. firms. Clifford Chance has run into difficulties with a lockstep compensation system, exported to its U.S. offices, where partners are paid according to their tenure with the firm, rather than their relative books of business. “What we are not going to fool with are the differences in billable hour expectations,” said Burch. “The non-U.S. firms have more leverage, have a smaller percentage of their lawyers who are equity partners. “What we will try and do is respect cultural differences, so long as when all is said and done, everybody is making appropriate contributions,” he added. Firm leaders say they’ve already received a fair number of resumes from interested lateral candidates. “When the dust settles, there will be a few partners who will want to have a chat,” said Knowles. “My expectation is that we will have a number of new partners in the first quarter of 2005,” added O’Malley. “Our principal growth will be in corporate finance and patent litigation.” Knowles says all three firms have probably done enough merging for now. Still, if an interesting proposal were to surface next week, he said he wouldn’t rule it out.

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