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Berg & Parker lawyers merged with Preston Gates & Ellis seeking stability and growth for their 13-lawyer boutique. But when Preston Gates was snapped up by mammoth Kirkpatrick & Lockhart Nicholson Graham about two years later, some former Berg lawyers say, they found their practice unsupported and they felt pressure to hike billing rates. Having gone from center stage, to sharing the stage, to being moved into the wings, several decided to look for a new home. Since January, when Preston and Kirkpatrick made the merger official, five of the former Berg firm lawyers have left 1,400-lawyer K&L Gates. Three of Berg’s five equity partners moved on to smaller firms, and two associates have left for more regional outfits. Five former Berg lawyers are still there. Partner F. Gale Connor, an eminent domain specialist, left K&L Gates at the start of October to join the San Francisco office of 130-lawyer Nossaman Guthner Knox & Elliott. Bankruptcy partner David Wiseblood joined 700-lawyer Seyfarth Shaw in June. Partner David Franklin, whose real estate and land use practice covers primarily California and Hawaii, joined Luce, Forward, Hamilton & Scripps as a partner in May. Connor and Franklin, both former Berg managing partners, were the architects of the merger with the 400-lawyer Seattle-based Preston Gates. That choice had made sense for their practice areas, they said. But at K&L, they said, they were squeezed to the sidelines. The three cited billing rates as a prominent reason in their decision to abandon ship. Connor, whose practice also includes real property acquisitions, said he realized that his rates, which had gone from between $300 and $400 to $450 at Preston Gates, would not be lining up with the goals at K&L, which expected him to hike them even further after this year. “I looked around and realized that my particular practice really wasn’t in step with where the firm in California seemed to be headed,” Connor said. K&L press representatives in Boston didn’t return repeated telephone calls for comment. Franklin, whose practice includes retailers such as Costco, said that at K&L his Berg rate of $350 remained unchanged for existing clients but went “north of $400″ for new clients. The big difference for him, though, was that while Preston Gates showed commitment to the real estate practice, K&L represented just one retail client, Target. And that was in litigation outside of California that had nothing to do with his practice, he said. Plus, of K&L’s 100 or so lawyers in California, only seven were real estate attorneys. That gave him pause. “Boy, they’re either going to have to pump a lot of effort into the real estate practice,” Franklin remembers thinking, “or they’re going to marginalize it.” He wasn’t going to wait around to find out. At Luce, Forward, 70 lawyers � more than a third of the firm � are devoted to real estate, he said. With about 170 lawyers, Luce, Forward reported 2006 per-partner profits of $565,000. Wiseblood, a bankruptcy lawyer serving regional institutions, said that he didn’t find a seat at the table at K&L. “On a personal level, I found it difficult to break into the ranks of the people on the Kirkpatrick side who did bank work,” he said. “They were not very [open] to embracing new partners,” Wiseblood said, adding that “it wasn’t the way I would’ve expected the integration to start.” The former Berg partners said they initially wanted to merge because of an expectation that practicing would be less rocky financially in the context of a larger firm. The boutique had weathered ups and downs in transactional and in litigation work, but those swings were increasingly tough to negotiate with heavier overhead. By 2000, the firm was paying within 10 percent of the market rate for associates. Franklin said the model worked well when firing on all cylinders. In a good year, he said, some partners made as much as Preston Gates partners. The Seattle-based firm had reported 2005 PPP of $410,000 and $500,000 for 2006, according to AmLaw 200 numbers. “If all five [equity partners] were going full steam, we were doing great,” Franklin said. “If four of us were on full steam, we did good.” But if only three were busy, Franklin said, the business model became “more difficult.”
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Though the firm’s “eat what you kill” model punished underperformers more, the overall drop in income meant that all partners paid a higher share of overhead, Franklin said. To steady the business, the partners at first tried bringing aboard lateral partners with books of business, Franklin said. But no one was biting, not even lateral associates, said Connor. Preston Gates seemed like the right fit at the right time, offering a similar culture and billing rates that weren’t too much higher than Berg’s, he added. Not all the Berg lawyers have departed K&L. Former Berg name partners James Berg and Robert Ted Parker truck on. Parker, who represents clients such as construction firm Saipem, agricultural firm Zucrum Foods and American Airlines, said his rates have not been a problem so far. “My rates are among the lower here,” he said, thanks in part to his effort to resist suggestions that he boost them. He declined to give specific figures. In many ways, leaving the boutique behind has been a relief for the 65-year-old Parker. These days, he doesn’t have to worry about being individually liable on a lease, for example. Some years ago, Parker had to take several months off to travel to the East Coast to care for his elderly parents. Being away from the business was “very difficult.” “That sort of liability can be highly inconvenient in times of personal need,” he said.

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