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Sandi Nichols knows a thing or two about hanging in there when the going gets tough. In the space of a few months earlier this year, the managing partner of Stoel Rives’ small San Francisco office saw eight of her partners leave for other firms. Portland-based Stoel Rives even considered shutting the branch, which it had acquired in 2001 by merging with Washburn, Briscoe & McCarthy, then a 34-lawyer natural resources boutique. Instead, Nichols � and the firm � chose to stick it out. Now they’re ready to rebuild, with hopes of applying some of the lessons they’ve learned from the experience. Though they offered various reasons for leaving, several of the lawyers agreed the merger hadn’t been a success, in part because the firm didn’t do enough to stitch the two cultures together. Only one lawyer came down from Portland, for example, and he didn’t stay for long. This time around, Stoel is taking integration of the two firms more seriously. Four years after the merger, several Portland attorneys are moving to San Francisco to help the two cultures meld. And the firm has tapped a legal recruiter to help search for talent. Though Stoel does not have strict growth targets for the San Francisco office, firmwide Managing Partner Beth Ugoretz said she would like to see the office grow from its present 17 lawyers, including six partners, to about 40 attorneys in the next two years. Nichols said the departures made this the toughest year of her career. “Those who left were some of my dearest professional friends,” she said. She had served as managing partner at Washburn for more than four years prior to the merger, and has led the Stoel Rives office since. Among the first to leave was Edgar “Ned” Washburn, who jumped with two other partners to Morrison & Foerster. Nichols and Washburn had worked together for 24 years. “From my perspective it didn’t work out,” Washburn said. “What works well in Portland, Ore., in terms of how hard people have to work and the number of billable hours and [still] be at the top of the heap � which Stoel is there � and what you have to do in California, are different. It takes more in California.” A few weeks later, another name partner from Washburn, John Briscoe, set out with two partners to launch their own firm. Recruiters, sniffing out opportunity, tried to pick the best remaining apples off the tree, placing numerous calls to entice the remaining partners with better offers. Things looked bleak. “At the time we had departures we did consider all our options for that office, including rebuilding it and closing it,” Ugoretz said. But after a period of evaluation, firm management decided that enough talent remained on which to build afresh. “We decided to take a step back after the departures and make sure that we had stabilized so we felt we had a good story to tell,” Ugoretz said. “We now feel very comfortable and that we have a good story to tell and we’re recruiting actively.” Nichols said that what Stoel Rives handled well about the merger was technology and systems integration. But the trickier task of knitting the lawyers from Washburn into the fabric of a firm 10 times its size seemed to go underestimated. “What was lacking was a real integration of the culture,” Nichols said. Stoel sent one senior energy lawyer from Portland for a one-year sojourn, during a time when the energy sector was tanking thanks to the implosion of Enron and the California energy crisis. Moreover, a large project took that attorney back to Oregon much of the time. “You need to relocate people who have institutional knowledge,” Nichols said. “What we learned is we need to do a better job integrating,” she said. Four years after the merger three Portland-based lawyers � two of them partners � are relocating to San Francisco next year. Energy and business litigation partner Stephen Walters has been with Stoel Rives for more than 25 years. Among his notable cases, Walters points to a 1998 arbitration result for power plant operator Tenaska, which recovered $330 million for the alleged breach of a power purchase agreement. “Steve will play a significant role in our continual integration of the California offices into the larger firm,” Nichols said. Partner Peter Mostow and senior associate Samuel Panarella will contribute renewable energy expertise. Both already have clients in the area. A legal recruiting firm is helping with targeted growth of the core practice areas, including natural resources, energy, real estate, land use and complex litigation. Stoel recently hired Renee Robin, a land use attorney who previously worked with Sheppard, Mullin, Richter & Hampton and Baker & McKenzie. Robin, who is joining as of counsel, also has public-sector experience, having spent some time at environmental nonprofits. Robin said the office’s energy and the collaborative environment impressed her. “This is a firm that has a lot of talented people who really like each other,” she said. “They clearly enjoy what they’re doing.” Paul Meyer, chief financial officer at Legacy Partners Commercial Inc. and a real estate client of the Washburn firm and now Stoel Rives, said he felt unaffected by the shakeup, since none of the lawyers who left were in his area. To him, the merger gave the Washburn lawyers added depth. “There are more lawyers at all levels that can step up when the volume cranks up,” he said. But the firm isn’t so large that you get “the big firm shuffle,” he added. He said Stoel lawyers understand the real estate business and the compressed deadlines Meyer faces. The firm’s goal is to become the pre-eminent natural resources and energy firm in the Western United States. Stoel’s Sacramento office, also acquired in the merger, added former chief counsel to the State of California Water Resources Control Board Craig Wilson in September as of counsel. Stoel also took over the Washburn firm’s small offices in Tahoe City and Fresno. In 2004, the firm had revenue of $161 million, putting it at No. 124 on The American Lawyer’s top 200 list. But profits per equity partner were $385,000 � low for a firm competing for talent in the Bay Area. Only 14 firms in the Am Law 200 have lower average profits. Clients include the Port of Oakland and the Port of San Diego, Cargill, Rockwell Automation and IBM. Stoel originally chose to expand to California with what it saw as its strengths on the national scene, its natural resources, environmental and real estate practices. “Our California office is particularly well established in these areas,” Ugoretz said. “We feel we can compete particularly well in that market.” Mostow, one of the relocating partners, is moving down with his wife and first-grade son. The natural resources and land use specialist is ready to get going. “It’s exciting to build something,” Mostow said. “We know we have the brand and the skills.”

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