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Reed Smith has announced its intent to merge with 250-attorney, London-based Richards Butler. The merger — which is subject to due diligence, negotiation of a merger agreement, and partnership votes — is expected to be completed in late May, with the launch of the new firm by Jan. 1, 2007. As far as financials are concerned, the merger would not affect Reed Smith’s 2006 performance, firmwide Chairman Gregory Jordan says. In a statement issued by Richards Butler, the firm said the combination would come with a forecast of global revenues in the area of $725 million. The new entity will be known as Reed Smith, but certain markets in Europe will carry the name Reed Smith Richards Butler. The announcement comes six months after Pittsburgh-based Reed Smith ended merger discussions with 200-attorney Chicago firm Wildman Harrold Allen & Dixon due to client conflicts. Jordan says the firm is still interested in markets like Chicago and Texas, but “this one kind of took over.” Richards Butler, one of the top 30 U.K. law firms, is affiliated with Richards Butler Hong Kong. Jordan says the 100-lawyer firm is not currently a part of the letter of intent. “We are very intent in maintaining the relationship with that group,” he says. “If we can work things out with Richards Butler Hong Kong, that would put us in a great, great position.” According to Jordan, the Hong Kong firm is well respected in the area, and having a connection there would satisfy the firm’s immediate goal of entering the Asian market. A merger with Richards Butler would bring the combined firm to more than 1,300 attorneys and bring Reed Smith’s London presence to almost 300 attorneys. The combination would also come close to doubling the number of attorneys in the firm’s new Paris office, where it now has 12 lawyers. If the merger goes through, Reed Smith will have 100 lawyers in London working on corporate and finance transactions; 100 working on commercial disputes, arbitration, and shipping; 50 handling real estate; and 15 handling the combined employment and business immigration practice. Jordan says the merger will give Reed Smith a stronger litigation practice in London to supplement its U.S. litigation group. “The U.K. can sometimes be a challenging market with respect to expansion,” Frank D’Amore of Attorney Career Catalysts says. He says the merger speaks to the further stratification of law firms into categories of regional, national, international, and global firms. Jordan says Richards Butler brings the firm practices in shipping, international trade, finance, and media. The merger will strengthen both firms’ financial services practices, according to a statement by Reed Smith’s managing partner in England, Tim Foster. Richards Butler is one of the biggest firms in shipping and international trade, and it represents clients with significant U.S. operations, he said. Not only will the merger bulk up the firm’s presence in London, but it will expand Reed Smith into areas like Piraeus, Greece, and Abu Dhabi, United Arab Emirates. Claudia Spielman of BCG Attorney Search in Los Angeles said that after Hong Kong, the hottest area for firms to be is in the Middle East, particularly Dubai, United Arab Emirates, and Abu Dhabi. Jordan says part of Reed Smith’s strategy was to expand its presence in London and move into the Asian and Middle East markets. “Richards Butler is the kind of firm that allows you to do both of those things in one swing,” he says. Reed Smith’s strategy team identified several firms that would be potential merger candidates, and Jordan says that after expressing interest to Richards Butler around January, the discussions “really took off.” Over the past few months, the firms’ boards have met, and Richards Butler is planning on sending a delegate to Reed Smith’s retreat in May. Both firms predicted the move would place the new entity in the top 20 global law firms. In 2004, Reed Smith ranked 39 on The American Lawyer‘s ranking of top global firms. In 2005, the firm showed its fifth straight year of improved financials. Reed Smith saw a 21 percent increase in profits per partner in 2005, jumping from $662,000 in 2004 to $800,000 last year. Its revenue for 2005 was $563 million, a 12 percent increase over the $504 million in revenue in 2004. Revenue per lawyer also increased, going up about 10 percent from $553,000 in 2004 to $609,000 in 2005. According to information from a spokesperson for Reed Smith, Richards Butler works on an April-to-April fiscal calendar. The firm’s projected gross revenue for 2005 is $107 million and its projected RPL is $529,000, according to the spokesperson. Some media reports have said that Richards Butler was in merger talks with New York-based Proskauer Rose last year, but the talks failed because of a gap in the firms’ profits per equity partner, with Proskauer Rose reporting a PPP of $1.14 million in 2004.
Gina Passarella is a reporter for The Legal Intelligencer , the Philadelphia-based ALM publication in which this article first appeared.

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