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The managing partners of Kirkpatrick & Lockhart Nicholson Graham, a national firm with Pittsburgh roots, and Preston Gates & Ellis, a prominent Seattle firm, announced Monday night that they are in merger talks. If the deal goes through, the merger will produce a 1,400-lawyer firm with a significant presence in London and Asia and $665 million in revenues. The firms hope to complete the merger by the end of the year. “Our offices and practices across the United States and in London, Hong Kong, Taipei, and Beijing, and the combined talent of our lawyers, create an opportunity we are eager to explore for our clients and our respective firms,” Peter Kalis, Kirkpatrick’s chairman and managing partner, and Karen Glover, Preston Gates’ managing partner, said in a Sept. 25 joint statement. The firms have been in talks since July and say they hope to present their respective partnerships with formal proposals for a deal this autumn if the talks are successful. Both firms are said to have talked with other potential merger partners. Preston Gates has been in talks with several firms in recent months, sources say. Kirkpatrick spent several months in negotiations with Salans, an international law firm with a strong Eastern European presence, before those negotiations broke down earlier this month, according to the British newspaper The Lawyer. The merger with 420-lawyer Preston Gates would give Kirkpatrick, which has about 1,000 lawyers, a strong entree into the Asian legal market and a stronger West Coast practice, sources say. Moreover, the Seattle firm is well known for its close ties to Microsoft Corp. One of the firm’s founding partners, William Gates Sr., is the father of Microsoft founder Bill Gates. Kirkpatrick has a strong East Coast practice and one of the largest London offices of any U.S.-U.K. firm as a result of its merger with the U.K.’s Nicholson & Graham, in early 2005. The merger could be a boon to the firms’ D.C. offices. “It gives the firms a very broad reach in terms of practice groups and provides Kirkpatrick a significant government affairs practice that it lacked,” says Steve Nelson, an Arlington, Va.-based consultant at the legal recruiting firm the McCormick Group. While Kirkpatrick’s D.C. office has prominent investment management, securities enforcement, and mortgage finance practices, Preston Gates’ D.C. office has a leading lobby shop and a range of regulatory practices that would fill out Kirkpatrick’s scope well, Nelson says. In Washington, Kirkpatrick may be known best as the home to former Attorney General Richard Thornburgh. Firmwide, the deal could be a tougher sell, as the firms reported widely divergent profitability numbers for 2005, with Kirkpatrick hitting $725,000 in profits per partner and Preston Gates coming in at $410,000, based on data the firms reported for the most recent American Lawyer survey. According to one source, this difference might force Preston Gates to de-equitize some of its partners in order to reduce the dilutive effect the combination could have. The announcement marked the second time this month that major U.S. firms have publicly stated that they are engaged in merger talks. New York-based Dewey Ballantine and San Francisco’s Orrick Herrington & Sutcliffe confirmed two weeks ago that they are discussing a deal. Alexia Garamfalvi can be contacted at [email protected]

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