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In the end, Swidler Berlin did the asking. In late October, Jay Zimmerman, chairman of Boston-based Bingham McCutchen, got a call from Barry Direnfeld, Swidler’s managing partner. Zimmerman had met Direnfeld once before, in Washington, but had no idea what he was calling about. Direnfeld got to the point: Would Bingham be open to acquiring Swidler? “He asked if we were interested in talking,” Zimmerman says. “And I said, �Absolutely.’ “ A week later, Direnfeld was winging his way from Washington to Bingham’s main office in Boston. After a three-hour meeting with Zimmerman, a deal was in motion that would make Bingham a top-tier player in the nation’s capital and salvage the dwindling fortunes of Swidler, once a top firm in its own right. Last week the two firms announced they had signed a letter of intent, with 850-lawyer Bingham expected to absorb approximately 120 of Swidler’s 140 lawyers. The move would make the Washington outpost Bingham’s second-largest office, giving it a newfound batch of lobbyists and regulatory lawyers as well as a handful of attorneys from Swidler’s seven-lawyer New York outpost. For Swidler Berlin, the announcement followed a wave of partner defections and unsuccessful merger talks, and the deal would close a tumultuous final chapter in the firm’s 23-year history as a Washington institution. The firms are still in the process of completing due diligence and reviewing client conflicts. Even after a Bingham spokesman announced the deal on Thursday, much remained to be negotiated. Already, Swidler’s insurance practice, headed by Mark Plumer, will be cut out of any deal because of client conflicts, Zimmerman says. Conflicts might also prevent Swidler’s bankruptcy group from joining, as well. And Zimmerman says some staff layoffs are likely. Neither leader says he knows how many of Swidler’s partners would garner seats on Bingham’s management or compensation committee, nor even if Direnfeld would head the combined firm’s Washington office. Currently, Bingham has 55 lawyers in Washington.
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“It’s all fluid right now,” says Direnfeld. “We’re comfortable that we’ll have a strong and solid role in our future.” For Swidler, one of the appealing aspects of joining Bingham is that firm’s experience with mergers, Direnfeld says. Over the past 10 years, Bingham has absorbed five firms. “We saw that they could integrate a merged firm well,” Direnfeld says. Post-merger integration hasn’t worked as well for Swidler. In 1998 the Washington firm then known as Swidler & Berlin joined with 60-lawyer Shereff, Friedman, Hoffman & Goodman, in a much-ballyhooed combination. But the New York firm never meshed with Swidler’s Washington office. After Swidler’s merger discussions with Orrick, Herrington & Sutcliffe and Dickstein Shapiro Morin & Oshinsky broke down late last year, the New York lawyers voted to defect to Dechert. As the New York lawyers left, key antitrust and white-collar defense groups left the D.C. office for local rivals. Despite those departures, Swidler’s leadership voiced determination to continue as a slimmer, stand-alone firm. In a letter to Legal Times published last January, Direnfeld wrote that, among the firm’s D.C. partners, there was an “anti-merger consensus that was virtually evangelical.” But it’s clear not all the partners were singing with the choir. In the spring two intellectual property partners left for Holland & Knight, and in August, Swidler’s 14-lawyer energy group bolted en masse for Alston & Bird. “It was not a planned departure,” Direnfeld says of the energy group exodus. “It made us stop and think.” ROLLING UP AND RAMPING UP Bingham, too, knows what it means to take pause. It was just about a decade ago that Bingham, then a 170-lawyer regional firm, was struggling to get on stable footing. Known as Bingham, Dana & Gould, the firm had plunged into a financial crisis. Its client base was limited and relied heavily on a single client, the Bank of Boston Corp., whose legacy Fleet Blank is now part of Bank of America. But Zimmerman, who took over the firm leadership in 1994, sifted through the financial wreckage and began to rebuild. The method by which Bingham transformed itself from a New England regional firm into a national powerhouse reveals something of how it is likely to fold Swidler into its operations. First, Zimmerman cut partner pay and worked to bring in new clients. Then he turned to growth, rolling up a series of five successive mergers that quintupled the firm in size. By 2004, according to The American Lawyer magazine, Bingham was taking in $565.5 million in revenue per year, making it the 26th-highest-grossing firm in America, up from 81st in 1999. The acquisitions have augmented Bingham’s corporate practice with a robust litigation capability and helped it reel in a coterie of Fortune 100 companies as clients. This year alone, the firm shepherded AT&T Corp. through antitrust clearance in its merger with Cingular Wireless and handled litigation for Oracle Corp. stemming from its acquisition of PeopleSoft; in addition, it is now representing the bondholders in the bankruptcy proceedings of Italian food giant Parmalat Finanziaria. With 11 offices straddling both coasts, the firm boasts profits per partner of $1.1 million, matching Swidler’s $1.07 million. But Bingham’s acquisition spree had bypassed one important locale, the nation’s capital. Though the firm first set up shop inside the Beltway in 1981, its office remained small and largely focused on Securities and Exchange Commission regulatory work. In recent years the firm has reinforced its D.C. outpost, bringing in a steady stream of new attorneys, including a pair of SEC specialists, a four-partner intellectual property group, and two former presidential advisers. Small groups of laterals, however, weren’t enough to give Bingham a major Washington footprint, and the number of potential D.C. dance partners was fast dwindling. (In the past two years, Shaw Pittman, Wilmer Cutler & Pickering, and Shea & Gardner have all found out-of-town partners.) So when Zimmerman took Direnfeld’s call he was primed to swing a deal. “It is an important next step for us,” Zimmerman says. “There are fewer and fewer opportunities available down here in D.C.” for mergers. As Zimmerman sees it, the combination with Swidler presents needed room for client growth. He hopes that regulatory clients from Swidler’s telecommunications group will yield increased corporate work. And Bingham plans to meld Swidler’s federal lobby shop — which, with $22.2 million in revenue last year, was ranked No. 11 by Legal Times‘ sister publication Influence — with the firm’s existing legislative affairs subsidiary, which shares clients such as Exxon Mobil Corp. That practice, Bingham Consulting Group, focuses on devising state-level political strategies. Yet firm culture may become something of a flash point. Bingham is managed with a heavy hand, and Zimmerman is known as a top-down chairman. His firm supports his decision-making style because, so far, he has succeeded, but it remains to be seen how well Swidler’s high-flying rainmakers will cotton to taking orders from Boston. And Bingham is inheriting a firm still licking the wounds of internal conflict. “It may be that, given the difficult time Swidler has had over the past 12 months, Bingham will have to act even more quickly than normal in making the folks from Swidler comfortable with their new home,” says Stephen Huttler, vice chair of the merged Pillsbury Winthrop Shaw Pittman. Integrating large firms is a challenge. Zimmerman knows that well. But, he says, “Every time, we get a little better at it.” DECLINE AND FALL Swidler, as well, was once a firm on the rise. Founded in 1982 by Joseph Swidler and Edward Berlin, both well-regarded former utilities regulators, the firm enjoyed rapid growth throughout the late 1980s and 1990s. During that period the firm’s telecom regulatory practice took off under star partner Andrew Lipman, representing companies such as MCI Inc., Vonage Holdings Corp., and RCN Corp., which were making inroads into a market dominated by the Baby Bells. But by 1998, with the legal market consolidating, the firm was still trying to accomplish one of Berlin’s stated long-term goals: a New York expansion. The move was necessary, Berlin says, in order to continue to draw top-flight work that would attract talented young lawyers (Berlin retired in 2002, though he maintains an office at the firm). “The real question was, how do we fulfill the goal of being an enduring institution?” Berlin says. “That’s something that we struggled with over the years.” The firm, then 170-lawyers strong, found a partner in Shereff, Friedman, a firm with a midmarket corporate practice and a white-collar defense practice built around star Andrew Levander. The firm’s home office also thrived. At the zenith of the technology boom, in 2001, it had grown to 233 lawyers. But as the telecom upstarts began to flounder and the economy stalled, Swidler shed lawyers quickly. By April 2004 its D.C. head count had shrunk to 171. Worse still, it became apparent that the merger of the New York corporate practice with the D.C. regulatory lawyers was a bust. The problem, Berlin says, was not the choice of partner but the failure to put enough energy into executing the merger. “We were unable to mesh,” Berlin says. “We were too anxious to rush back to our practices that we didn’t give the time and energy necessary to making the merger work.” The firm sought a way out of its mounting difficulties by opening talks with Orrick. But those negotiations stalled in part because of conflicts. The Washington office then mulled joining Dickstein Shapiro, while the New York lawyers continued to talk with Orrick before jumping to Dechert in January. After the departures of four D.C. partners that same month, the firm was down to roughly 150 lawyers, leaving it as neither a specialized boutique nor a full-service powerhouse. Though Swidler vowed to press forward on its own, by this fall, Washington’s legal community was abuzz with rumors that Swidler had been talking to an assortment of California firms as well as to McDermott, Will & Emery and Bingham. SQUEEZING THE MIDDLE Swidler’s decision will certainly be noted by the District’s remaining midsize firms, a group that includes Arent Fox, Steptoe & Johnson, Venable, and Crowell & Moring. As the legal market consolidates, the conventional wisdom dictates that those firms must either grow or specialize in a niche practice in order to attract top-tier clients and talent. “If you have a firm that’s just viewed as a good D.C. firm, do you have enough people that are going to be on the short-list that out-of-town clients will want to call them?” says William Perlstein, who led the firm then known as Wilmer, Cutler & Pickering into a merger with Boston’s Hale and Dorr in 2004. The good news for midsize firms is that they’ll continue to find plenty of suitors. “Firms that have decided to have national footprints have to have a Washington practice,” says Peter Zeughauser, a consultant with the Zeughauser Group. Bingham will need time to integrate its new Washington lawyers. For now, Zimmerman says he’s not in talks for another merger. But he has his sights on bolstering the firm’s 120-lawyer New York office. “We continue to be opportunistic,” he says. As for Berlin, he says he has no regrets that his name will disappear from the letterhead of a powerful and profitable Washington law firm. “I am damn proud of the fact that I was able to build part of an institution that the people at Bingham find attractive,” he says. Still, it’s hard not to wonder what might have been for Swidler Berlin. “Had we remained a boutique . . . we would have survived to this day,” says Berlin. “But we decided we wanted to pursue a different path.”

Emma Schwartz and Jason McLure are reporters with Legal Times . They can be contacted at [email protected] and [email protected].

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