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On Jan. 1, my firm, Kirkpatrick & Lockhart, combined with the English firm Nicholson Graham & Jones to form Kirkpatrick & Lockhart Nicholson Graham. With offices in 10 U.S. cities and now in London, we span eight time zones and field a team of nearly 1,000 lawyers. We see it as a great leap forward for both firms. With London partners admitted as partners of our U.S. limited liability partnership and with fully integrated governance, conflicts, and financial features between the United States and the United Kingdom, we feel we have achieved the one-firm functionality that is the goal of all merged law firms. Leaders of other law firms have told me that this combination seemed to them almost effortless. Because Nicholson Graham & Jones had no prior U.S. office and because Kirkpatrick & Lockhart had no office in London, they say that the pieces seemed to fall together naturally since by definition there were no local frictions to deal with. In effect, K&L and NGJ, were “lucky,” as one friend put it. Easy for them to say! It is often reported that the baseball genius Branch Rickey coined the phrase “Luck is the residue of design.” In the case of our combination with NGJ, luck was the residue of design, hard work, and good advice. From the standpoint of K&L, the Jan. 1 closing was the culmination of a multiyear strategy to enter the London market and Europe in a strategic way. Through a survey of our partners, we knew that there were ample opportunities to expand our business with existing clients and to secure new clients if we had a strategically significant presence in London. We defined as “strategic” a London office that would have the breadth and depth of practices that could meet virtually any sophisticated legal need of our varied clientele. We had analyzed more than 100 London offices of U.S. law firms and had been impressed with only a few. Most were modest London “branches” of American firms and simply did not have the capacity to handle sophisticated legal projects across a range of disciplines. In 2002, we set about to combine with an established, highly regarded firm of solicitors in the city of London. The process began when we recognized frankly that we knew little about one of the world’s most-sophisticated markets for legal services and concentrations of great law firms and lawyers. We sought to rectify our ignorance in two ways. First, we assembled a first-rate team of advisers. Giles Rubens of Hildebrandt International prepared a market analysis for us. Leigh Dance, a Rome-based consultant who advises U.S. law firms in Europe, and Tony Williams of Jomati Ltd., a London-based law firm consultancy, took on the thankless task of serving as our personal tutors on the London market. Finally, Ronnie Fox and Tina Williams of Fox Williams, Solicitors, shared generously both their legal acumen and their wisdom, and Smith & Williamson contributed its expertise on U.K. accounting issues. Second, we met with law firm leaders in the United Kingdom. In fact, as the chair of Kirkpatrick & Lockhart’s management committee, I met with my counterparts at more than 20 English firms. In advance of these meetings, I shared with them our thinking on why the forces of consolidation and globalization impelled a firm such as ours (and, by implication, theirs) to venture into the daunting world of international law firm combinations. I was curious, to say the least, at what their reaction would be to such a visitor with such an agenda. Frankly, I would be hard pressed to think of 20 more gracious, thoughtful, or generous individuals than my English hosts at these various meetings. They understood that I was there as part of my ongoing learning process, and they were willing teachers. They talked about their own markets and law firms, and in many cases they discussed their strategies to survive the test of the marketplace. I spent the year of 2003 learning more about the U.K. market for legal services and London law firms than I had imagined possible only a year or two earlier. And I will be forever grateful to my counterparts at the U.K. firms with whom I met for helping me to do so. As 2003 drew to a close, we were arriving at the point at which we could no longer hide behind our ignorance and had to begin in earnest to identify a willing partner. We had multiple meetings with several firms. With the confidence born of hard work and good advice, we ultimately focused on Nicholson Graham & Jones. THE LONDON SIDE Our friends at Nicholson Graham & Jones had themselves enjoyed an interesting process leading up to our talks. For a decade, the firm had participated in an international alliance of firms that included a highly respected U.S. firm. Through that association and many resulting client collaborations, NGJ had learned a great deal about the U.S. market. Nevertheless, when the NGJ partnership decided to participate in the consolidation then evident in the London market, they initially chose to focus on a merger with another U.K. firm. Fortunately for Kirkpatrick & Lockhart, those discussions did not lead to a combination. As it came off those discussions toward the end of 2003, NGJ’s focus became international, and K&L was at its doorstep. Our first focused discussions with NGJ occurred in early 2004. In London, we assembled leaders from each side for a two-day session in which we exchanged presentations on our practices, finances, strategies, and aspirations. All were struck by the way our practices complemented each other and by the shared view of our consolidating and globalizing markets. And — no small matter — we also enjoyed each other’s company a whole lot. These initial discussions led to more meetings in the United States and the United Kingdom, and we soon brought various practice leaders of both firms into the process. We made an early decision to announce our talks as soon as we had agreed upon a conditional term sheet. In July 2004, we went public with our discussions. Throughout, the two firms shared the goal of making it possible for our lawyers to start collaborating on client matters as soon as feasible. After the announcement, we held almost daily videoconferences in which practice groups from the two firms became acquainted and discussed their approaches to the marketplace, and we sponsored selected visits of partners of one firm to the other. BRITISH INVASION Kirkpatrick & Lockhart’s annual attorney retreat was scheduled for Boston in early October. Both leaderships saw it as crucial that Nicholson Graham & Jones partners come to it. This meant that we had to have the deal on paper and explained to both partnerships to allow them to vote prior to the retreat. K&L’s leadership toured the firm’s offices more than once to discuss the transaction, and we were accompanied by NGJ’s leadership on one of the tours. At the same time, I met individually with each NGJ partner and in groups with other of the firm’s stakeholders. Both partnerships voted unanimously in favor of the transaction, and thus the British invaded Boston in October. The retreat was a hit. Columnist George Will, as the guest speaker, contributed to the event’s success, as did well-planned programs, decent food and drink, and a nice location. Importantly, K&L and NGJ practice groups could meet in working sessions before we were even a combined firm. And, of course, we took seriously the opportunity to break bread with each other and otherwise to enjoy the company of new friends. By the time of the closing on Jan. 1, it was almost anti-climactic. Through the fourth quarter of 2004, the two firms had collaborated on more than 50 client matters. Now we are off and running as a combined law firm. Our challenges going forward will involve integration and strategic positioning, to be sure, but there is a surviving challenge, too. The forces of consolidation and globalization that impelled our search for a strategic partner persist and indeed gain velocity daily, and thus we must pursue both integration and further growth. This means hiring dozens of graduates straight from law schools, recruiting lateral partners and practice groups, and, yes, more mergers. This mutual understanding is at the core of our shared strategic view of the world. THE LESSONS WE LEARNED The saga of Kirkpatrick & Lockhart and Nicholson Graham & Jones must teach a few lessons. With the realization that each potential combination is unique, let me describe the lessons we learned from, or had reinforced by, the experience: • First, it’s important to invest in learning about a market with which you have little experience. It will make your subsequent strategic decisions sounder and more efficient. And you will likely avoid saying something totally stupid. • Second, in addressing the multitude of smaller issues that arise in such discussions, don’t sweat the small stuff and keep your eye on the greater good to be achieved for both sides. For instance, does it really matter that a middle-level manager’s title be prefaced by “Firmwide”? • Third, with respect to potential deal-breaking issues — name and partner compensation system are good examples — draw wisdom from the marketplace. NGJ and K&L got by the name issue in a few minutes. From the standpoint of the client markets, it didn’t make sense to squander good will on either side of the Atlantic since neither of us was well-known outside our home country. The combined firm’s name had to reflect elements of each of its predecessors, notwithstanding that K&L was the much-bigger firm. On compensation, NGJ was realistic enough to see that the days of the automatic tiers of a lockstep compensation system are numbered in London because so many U.S. firms with merit-based systems are setting up shop there. The market for talent dictated that the combined firm migrate toward a merit-based system of compensation. • Fourth, involve your partners and get lawyers from both firms working together as quickly as possible. Don’t think of your partners as “them.” • Fifth, manage the news by getting the word out yourself at the earliest realistic opportunity. Leaks are not inevitable, but they are likely. • Sixth, if a combination is truly strategic, by definition it is not an “acquisition.” The larger firm would do well to purge that word from its vocabulary as unworthy of the high purpose of the combination. Beyond that, lawyers don’t like to be acquired and may vent their feelings by not returning up the elevator the morning following the closing. • Finally, in one sense my friends at other firms were right. K&L and NGJ were indeed lucky on a number of fronts. Serendipity is part of the process. Recognize it as such, nod gratefully in the direction of the law gods, and move on to do a deal that will benefit your business, as the deal creating Kirkpatrick & Lockhart Nicholson Graham works for ours. Peter J. Kalis chairs the management committee of Kirkpatrick & Lockhart Nicholson Graham LLP.

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