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Two of the larger law firms in Pennsylvania – and two giants in the Pittsburgh legal community – are far along in merger talks with the possibility of an agreement coming “sooner rather than later.” Sources in the Philadelphia, Pittsburgh and Harrisburg legal communities all confirmed Buchanan Ingersoll and Klett Rooney Lieber & Schorling were talking about a merger, with some of them suggesting it was all but a done deal. If completed – and barring any major defections or restructuring – it would make the combined firm the largest in Pennsylvania with an estimated 313 lawyers in the state, according to the last survey conducted by PaLaw. Reed Smith is currently listed as the largest firm in Pennsylvania with 308 attorneys. The combined firm would have approximately 532 lawyers across all offices, according to PaLaw. According to one source who did not wish to be identified, there have been a series of meetings between the firms, as well as internal meetings, although nothing has been signed. That source added that attorneys at the firms have been informed about the developments and that an agreement could happen “sooner rather than later.” Another source said that the firms were clearly talking and exchanging proposals, that things had apparently accelerated last week and that as of last Friday, the two firms were “very close.” “It seemed to happen quickly,” the source said. Buchanan Ingersoll chairman and CEO Thomas L. VanKirk and Klett Rooney president and managing shareholder John A. Barbour both confirmed that the firms were in talks, but said that nothing has been finalized. “We have had discussions with Klett Rooney just as we have had discussions with other firms,” VanKirk said, adding that the firm is currently speaking with other firms as well. VanKirk said that a final agreement has not been reached and neither firm’s shareholders have voted. Barbour said he and VanKirk have been friends for years, and the merger discussions started out of that friendship. He said a number of firms have approached Klett Rooney, and the discussions with Buchanan Ingersoll have become more involved “recently.” According to Barbour, there is no current time frame for a decision on the deal one way or another. Pittsburgh legal recruiter Maura McAnney of McAnney Esposito & Kraybill Associates said word of the possible merger officially came on the streets this week, but some in the community have known for months. “It’s definitely not a done deal,” she said. One source, pointing out that both firms are based in Pittsburgh, commented: “I don’t know that [the logic behind a merger] works.” However, law firm management consultant Joel Rose was a bit more optimistic in his assessment. “Based on who their clients are and the fact that these are very sophisticated firms, there have to be definite and good reasons why they would be talking,” he said. “Perhaps certain groups at the firms want to acquire groups from the other firm or enhance their areas.” Rose said that he assumed the firms had already looked to see if there were any major client conflicts and had not found any. Consultant Thomas Clay of Altman Weil, which represents both firms, said that while a merger would not put the new firm at the level of other Pittsburgh-based firms like Reed Smith and Kirkpatrick & Lockhart Nicholson Graham, Buchanan Ingersoll and Klett Rooney could be “very complementary of one another.” “It would make them almost the absolute for local business/corporate work,” Clay said. Greg Jordan, firmwide managing partner for Reed Smith, said he had a lot of respect for both VanKirk and Barbour as lawyers and businessmen. He said he thought the merger talks were indicative of what’s to come in the legal industry, predicting it would follow other industries, such as banking, in terms of consolidation. “On one level, we’re a living, breathing example of how mergers can transform a firm,” he said. “Consolidation does generally make sense” when the firms have good reputations and are culturally similar. Asked if he thought the logic behind the potential merger was curious given that both firms are Pittsburgh-based, Jordan said he didn’t think so. He said that any combination that gives a firm 313 lawyers in Pennsylvania, with sizable offices in Pittsburgh, Harrisburg and Philadelphia, would have an upside. “There is some advantage if you have the right fit to be bigger and stronger in the markets they’re in,” Jordan said. “We’ll have a lot of respect for them” if the merger happens. The merger might have an impact on other firms in Pennsylvania, he said. “I know some of the larger firms in Philadelphia have talked about in-market mergers,” Jordan said. If a merger goes through, there would be five cities where both firms already have offices. Those include Pittsburgh; Harrisburg; Philadelphia; Wilmington, Del.; and Washington, D.C. Klett Rooney has one other office in Newark, N.J. The firm would gain a presence in New York; Miami; Tampa; Aventura, Fla.; Princeton; San Diego; Silicon Valley; Cleveland; and Alexandria, Va., where Buchanan Ingersoll already has offices. McAnney said an intracity merger is not something that has happened in the Pittsburgh area for the 20 or so years she has been in the market. “The Pittsburgh market has changed so much over the years,” she said, as firms attempt to establish either a national or regional practice. McAnney didn’t think it was a negative for two firms in Pittsburgh to merge and subsequently have a large number of attorneys there. “Simply having a lot of lawyers in Pittsburgh is like Jones Day having a lot of lawyers in Cleveland,” she said, adding that for firms with national practices, the location is not as important. McAnney said she views Buchanan Ingersoll as a national firm, while Klett Rooney is more regional. “This could be an opportunity for Klett lawyers to have a more national platform,” she said. Clay said he sees Buchanan Ingersoll as an East Coast firm that may have aspirations of becoming national. He didn’t see a problem of overcrowding in Pittsburgh, however, if the two firms merged. “When you put the two firms together, you don’t automatically have anything different in terms of clients,” he said. Over the last year, Buchanan Ingersoll has been aggressive in the market. It has a strategic plan that has called for aggressive acquisitions, which many credited with bolstering its financial indicators for 2005. The numbers mark the first time in five years that the firm’s gross revenue has increased. According to figures provided to The Legal, the firm’s profits per equity partner (PPP) rose nearly 20 percent from $383,000 in 2004 to $457,082 in 2005. The firm managed to increase PPP even though the number of equity partners rose 15 percent, from 85 to 98. The number of non-equity partners rose by 7.5 percent, from 53 in 2004 to 57 in 2005. Revenue per lawyer increased nearly 11 percent from $454,000 in 2004 to $503,218 in 2005. The gross revenue reached $193.7 million in 2005, a 27 percent increase over 2004′s $152.8 million. As far as Klett Rooney’s financials are concerned, McAnney said she has “never heard that they were anything other than stable.” Buchanan Ingersoll kicked off 2005 by picking up New York’s Slotnick Shapiro & Crocker, a 10-lawyer criminal defense boutique that now handles white collar defense. In March, the firm took on seven tax and immigration lawyers from Steel Hector & Davis and opened a single-lawyer office in Cleveland to handle banking work. Two months later the firm merged with Alexandria, Va.’s Burns Doane Swecker & Mathis, a 55-lawyer patent boutique. Then in mid-October, Buchanan Ingersoll acquired Wayne-based lobbying firm Hill Solutions to add to its government relations practice. Six Saul Ewing partners came to the firm with a few associates toward the end of 2005 to join the litigation and white collar defense practices. McAnney said that Klett Rooney’s government relations practice would be a strong addition to Buchanan Ingersoll. Klett Rooney has six consultants and several attorneys who are spread among Pittsburgh, Philadelphia, Harrisburg and Washington, D.C. She also said that Klett Rooney’s well-respected labor and employment practice would help bolster that area for Buchanan Ingersoll which had a group defect from that practice area a few years ago. The merger talks come amid some major governance changes for Buchanan Ingersoll. The firm announced this week that it has streamlined its leadership by reducing the number of attorneys on the board of directors from 20 to 11 and doing away with the executive and operations committee as well as its chief operating officer position. In their place, the firm created two new executive shareholder positions – chief strategic officer and chief development officer. Former COO Francis A. Muracca II will take on the role of chief strategic officer and Douglas P. Coopersmith will handle the function of chief development officer. VanKirk was re-elected to another three-year term as chairman and CEO. He’s now scheduled to serve in that post through at least 2009.

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