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Pillsbury Winthrop’s merger with Shaw Pittman a year ago was touted by leaders of both law firms as creating a formidable new player among the nation’s top shops. But tough choices that the firms made to get the deal done have raised questions about whether the marriage was worth the sacrifices. One year after the merger, the firm is about 100 lawyers smaller, with an East Coast office shuttered and some strong players gone. Pillsbury’s leader for the last eight years will step down at the end of this year, and profits per partner slumped in 2005, even though Pillsbury slashed its number of equity partners before the merger. Whether the last 12 months have been merely a bumpy adjustment period or whether the merger had fundamental flaws is uncertain, but it is clear that bringing the two firms together has not been easy. “The marketplace is changing, and a lot of firms are unwilling to take a little discomfort,” said Mary Cranston, chairwoman of the firm. Less equity, new jobs It may be more than a little discomfort that the law firm is enduring, however. A reconfiguration of the partnership structure at 700-attorney Pillsbury Winthrop before it merged with 350-attorney Shaw Pittman left many lawyers holding less equity, and, in turn, looking for new jobs. Cranston said that about 10% of the firm’s full-equity partners were shifted to salary-equity compensation. The firm made compensation adjustments for other attorneys as well, and in June, it closed its 11-attorney Stamford, Conn., office. It said at the time that it did not have enough lawyers to justify the costs of the 26-year-old office. The firm also lost its head of litigation, Jason McDonell, who went to Jones Day, and 20 insurance litigation defense lawyers, who moved to Richmond, Va.-based Hunton & Williams. Potential conflicts of interest prompted many of the departures. At the time the merger was announced, leaders at both firms were up-front about the conflicts situation and its impact on attorneys’ jobs, a challenge that other firms considering a merger might walk away from, Cranston said. The firm also continues to tweak its support staff numbers, and just last week fired former mailroom attendant Martin Macy, who had worked at the firm for 41 years. A group of former partners at Pillsbury have vowed to set up a trust fund in Macy’s behalf. He will not be rehired, Cranston said. One of the first women in the country to run a major law firm, Cranston, 59, said that “eight years is enough” as the firm’s chair, a job that has increasingly required her to travel as the firm has grown. She said that with the merger concluded, it was an appropriate time to step aside. She called the Shaw Pittman fit “excellent,” adding, however, that she was expecting “some pushback” from people displeased with the merger. “Any time you change compensation, there will be some people who are unhappy,” she said. Slight dip in profits In 2005, profits per partner at the combined firm fell from $780,000 to $760,000, and revenue per lawyer went from $670,000 to $665,000. Cranston, who said that the firm expected the results for 2005 to reflect the costs of the merger, said that billable hours for the last six months of the year were up, although she would not disclose an amount. Most former Pillsbury Winthrop Shaw Pittman attorneys contacted for this story who would comment said that better opportunities elsewhere were the reasons for their departures. Brian Beatus, a partner who joined Pillsbury Winthrop through a merger in 1996, moved to the New York intellectual property boutique firm Kenyon & Kenyon in February. He said that despite “all the talk about cross-selling” that mergers generate, a boutique offered more nuts-and-bolts IP work. Gregg Vignos, a 20-year Pillsbury Winthrop veteran and former chair of its finance committee, said he went to the San Francisco office of Paul, Hastings, Janofsky & Walker because the merger created “the last clear chance to change” his job path as a corporate attorney. Paul Hastings, he said, offered a much stronger platform for international work. Vignos said he believed that Pillsbury Winthrop has “done well by the merger” but added that it may be experiencing some “growing pains.” Tim Toy, an energy and mergers and acquisitions partner now with the New York office of Houston’s Bracewell & Giuliani, said his new job gave him the chance to build a practice on his own. He said that Pillsbury “may have had a rough patch” and that “there were people out there with axes to grind.”

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