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A s the nation prepared for the Fourth of July celebration, San Francisco-based Graham & James sent a final salute to its 66-year independence as it prepares to merge with the Cleveland-based Squire, Sanders & Dempsey. The merger — announced last week by Squire Sanders — ends months of intense speculation about the fate of the beleaguered Graham & James, which in recent years has shrunk in stature and status. Squire, Sanders will hang its name on the doors of Graham’s San Francisco, Palo Alto, Calif., and Los Angeles offices, as well as outposts in Beijing and Tokyo, effective July 16. The deal also calls for an association with Graham’s 14-attorney Milan office. Graham’s 50-attorney New York office will not be a part of the merger, but expects in the coming days to announce a new home, said Lawrence Blume, the firm’s chairman and a resident of the Big Apple location. Blume said the firm’s partners voted late last Wednesday to go ahead with the merger. The 550-attorney Squire, Sanders will pick up 126 Graham & James attorneys: 33 from San Francisco, 60 from L.A., 13 from Palo Alto, eight from Beijing and 12 from Tokyo. “Do I feel relief — absolutely,” Blume said. “I went out and had two double martinis and had a very nice time, thank you very much.” While the merger effectively ends the life of the San Francisco firm, Graham & James attorneys seem excited about the future, and observers in the legal community said the merger was a positive step for Graham and Squire, Sanders. “I think it’s a great move for both firms,” said San Francisco legal recruiter Bob Majors. “Squire Sanders gets a credible and immediate entry into the Bay Area, which is one of the most vibrant areas in the country, and gets access to Graham & James’ international areas, especially in Japan. For Graham & James, it takes them from being a middling Bay Area firm to part of a law firm with national and increasingly international orientation.” Founded in 1934, Graham & James rose to prominence as a maritime firm. Later, it took the unusual step of expanding internationally and opening locations in Asia, long before crossing oceans, or even state lines, was popular among big firms. “I think Graham & James was one of a very few number of law firms that said the world needs legal services and stepped up to provide those services,” Blume said. That pioneer involvement in international markets, however, bit back. Graham was hit hard when the Asian economy collapsed in the early 1990s and found it increasingly difficult to distinguish itself as a truly international firm because it was centered largely in Asia, said Blume, who took over as chairman in January 1999. Blume’s tenure at the top of the firm was marked by numerous partner departures across the firm and the loss of branch offices, including those in Sacramento, Calif., and Seattle. In 1997, Graham & James had about 200 attorneys in California; today that number is about 100. The San Francisco office has 33 attorneys today; in 1997, there were about 70 and in 1998, about 45. The firm posted gross revenues of $138 million in 1999. Profits per partner were listed at $775,000, a boost over the previous year — an increase largely attributed to a $30 million contingency fee collected by the firm last year. Nicholas Unkovic, a partner in Graham’s San Francisco office and member of the management committee, said the merger with Squire, Sanders is the culmination of an 18-month strategic effort to find a match that would emphasize the firm’s continued reputation as a pre-eminent Pacific Rim firm. Talks with Squire Sanders began about a year ago, he said. “Clients want a law firm with greater scope, both in terms of geography and practice areas. In Squire, we have found a perfect match, so people are really charged,” said Unkovic. “We’re ecstatic.” Squire Sanders, founded in 1980, also considers itself an international firm, with offices throughout Europe and several in Asia. The merger boosts its presence in Asia, where the Graham & James name will continue to be used, Unkovic said. Domestically, the merger gives Squire Sanders its first-ever West Coast presence. In San Francisco, the name of the combined firms will be Squire, Sanders & Dempsey. “Graham & James has a long-standing reputation for excellence in serving technology and e-commerce clients, for its depth and expertise in intellectual property law and its strong Asian practice, both in-country and cross-border,” said R. Thomas Stanton, chairman of Squire Sanders. “By joining forces, we gain a substantial West Coast presence in thriving and financial markets, while also enhancing our presence and ability to serve Asian clients.” Graham provided Squire Sanders a convenient way to enter the West Coast market with a hefty presence, said Major, the recruiter, adding that other mid-size Bay Area firms would likely hook up with larger firms from the East Coast and elsewhere. “There are a lot of firms seeking entry into the Bay Area because of Silicon Valley,” he said. “It’s hard to do that by just hiring one or two — a partner here and a partner there. It’s a bold stroke: Squire Sanders established a credible presence here.” Squire Sanders had gross revenues of $188.5 million and profits per partner of $435,000. Squire predicts the merger will place it among the country’s 20 largest law firms, with an expected total of 675 attorneys and 25 locations. Dale Barnes Jr., managing partner of the San Francisco office of McCutchen, Doyle, Brown & Enersen, agreed that the merger makes sense. “The firms may face some challenges meshing their cultures and economies, but overall it makes sense for Squire Sanders to get a foothold in the California market, and at the same time it makes sense for Graham & James to create a stronger foundation for its practice,” Barnes said. As with any merger, Squires Sanders is expected to assume both assets and liabilities when merging with Graham & James’ offices. Blume said Squire Sanders will not, however, take on a suit filed by Graham & James against Minneapolis-based Oppenheimer Wolff & Donnelly for allegedly violating trade secrets after several Graham partners bolted from the Palo Alto office for Oppenheimer. Graham & James partners have voted to continue pursuing the suit on their own, said Blume. For that purpose, the partnership will remain in effect, he said. One Southern California legal recruiter predicts some Graham & James attorneys may leave for other ventures before the merger takes effect July 16. “It’s less than clear that all members will be joining [Squire Sanders], but the bulk will be,” he said. In Los Angeles recently, Graham’s prized intellectual property practice was hurt by the departures of several attorneys for the L.A. office of Morrison & Foerster. For Blume, Thursday’s announcement at last ensured a future for the attorneys who have stuck it out at Graham & James. He said the New York office will announce details about its plans in the coming days. Blume said the prevailing merger candidate for Graham’s New York office is not Chicago-based Baker & McKenzie, despite widespread rumors linking the two firms. In the meantime, staffers from Squire Sanders were in California last week to provide computer training for Graham & James attorneys and staff. Also on Thursday, workers began removing Graham & James signs from the L.A. office. “People are exceedingly pleased to have gotten where we’ve gotten,” Blume said. “We’ve certainly had difficult times and we knew to be successful, we had to go through a merger.” Staff writer Michael Joe contributed to this report.

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