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Reed Smith has grown its tax controversy practice in Philadelphia with the addition of three partners and one counsel from Dechert. The group, led by Lee Zoeller, began working at Reed Smith yesterday, expanding the practice area from the West Coast, where the firm had picked up a similar group from Preston Gates & Ellis in May 2005. Zoeller was joined by partners Kyle Sollie and David Kraus and counsel Frank Gallo. Gallo will be a partner at Reed Smith. The move closed Dechert’s Harrisburg office, firm Chairman Barton J. Winokur said. Kraus, the managing partner of that office, and one other associate were the only Harrisburg attorneys listed on the firm’s Web site. Winokur said he never would have had the Harrisburg office if it weren’t for the state tax practice. He said he is working with the associates in the practice group to help facilitate their move to Reed Smith. Reed Smith firmwide Managing Partner Gregory B. Jordan said discussions about bringing over the associates haven’t taken place yet, but he hopes that they would come. Zoeller said the entire group would account for 16 people, including the four partners, two paralegals and some associates. Zoeller’s group represents companies in state tax controversy matters, particularly on the East Coast. He said some of the group’s clients, whom he did not consider firm clients of Dechert, include Wachovia, Mellon Financial, Ford Motor Co., FedEx and Electronic Data Systems. He said the majority of his clients have already said they would follow the group over to Reed Smith. Winokur agreed that Zoeller’s group “essentially stood on its own,” and said the practice is different than many others in the firm because the work is handled through corporate finance departments and not through a chief executive officer or general counsel. He said accountants have traditionally handled the work Zoeller does, but Zoeller does it at a “much higher level.” His group has “the best state tax practice of any law firm,” Winokur said. “Lee would like to [have] expanded [the practice] geographically, but we were unwilling to do that,” Winokur said, adding that the firm never found the right group of people to add. He said Zoeller was looking out for the younger attorneys in his group who would not have had the opportunity for advancement within the practice area at Dechert. Winokur said Sollie was an income partner, Gallo was counsel and Kraus worked on more of a part-time basis. They will all be partners at Reed Smith, and Zoeller said Kraus is now a full-time attorney. “This is a spin-off of a high-quality practice that had limited growth and [was] unconnected with everything else we do,” Winokur said. According to Zoeller, since the Sarbanes-Oxley legislation was enacted in 2002, accountants have been able to handle less and less of the state tax work. He said the accounting profession was really the architect of the practice, but now he and his group have the opportunity to handle the work on a more frequent basis. The goal, Zoeller said, is to offer large corporations a “one-stop shop” for all national state tax needs. Reed Smith’s California group was a plus in deciding to make the move, he said. According to Jordan, Zoeller was familiar with the California tax attorneys because at the time of their departure from Preston Gates, they had looked at both Reed Smith and Dechert. Frank D’Amore of Attorney Career Catalysts said state and local tax practices have been the “bread and butter” practice that will always be around because of corporate affiliations in several states. He said, however, that the federal and international tax practice often associated with mergers and acquisitions work often has higher rates and is more attractive to the largest firms. Jordan said the state and local practice fits in with Reed Smith’s growing national and international focus because some of the largest corporations are located in several states throughout the country, creating a national practice. Zoeller, who joined Dechert in 1989, was formerly the chairman of the firm’s state tax practice. He handles litigation of state tax matters before administrative boards, tax tribunals and state courts. Sollie had been with Dechert since 1996 and focuses his state tax litigation and appeals practice primarily within the mid-Atlantic and New England area. Kraus joined Dechert in 1987 and handles tax planning and compliance in addition to litigation and appeals. Jordan said the firm was trying to work something out so that Kraus would not have to travel to Philadelphia every day. He said the firm would not, however, be reopening a Harrisburg office. Gallo had been with Dechert since 1997 and specializes his practice in income/franchise taxes as well as sales and use taxes. Reed Smith launched its tax controversy group with Jim Kleier, Brian Toman and John Messenger from the San Francisco office of Preston Gates & Ellis in May 2005. The group added its first Philadelphia-based member � Phillip A. Pillar � in June of that year. He was the former mid-Atlantic director of the tax controversy and risk management services practice at Ernst & Young.

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