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Don’t expect wholesale changes for Pennsylvania law firms representing First Union Corp. in light of its proposed merger with fellow North Carolina bank, Wachovia Corp. That’s the message being delivered by outside and in-house counsel in response to last week’s announcement. Pending regulatory and shareholder approval or the possibility of another suitor entering the fray, First Union is set to buy Wachovia for $13 billion and would assume the Wachovia name. First Union’s acquisitions have made it the largest bank in Philadelphia and the nation’s sixth largest. But the Wachovia addition would make the combined bank the nation’s fourth largest, with more than $300 billion in loans and investment assets. Unlike First Union’s past acquirees, CoreStates (1998) and First Fidelity (1996) banks, Wachovia does not have a Philadelphia area presence and there should not be any overlap with internal and external legal representation in the area. After those mergers a few years back, First Union’s in-house legal staff pared down the number of Philadelphia area firms — at the time reports were that it used at least 10 — that had been representing the financial institution via requests for proposals. According to several sources, the four local firms doing the most substantial amount of work for First Union now are Duane Morris & Heckscher, Klehr Harrison Harvey Branzberg & Ellers, Stevens & Lee and Weir & Partners. “Everything is subject to change but I’m not sure what kind of effect the Wachovia merger could have on the usage of those firms,” said Daniel Mazo, vice president and associate general counsel in First Union’s Philadelphia office. “There shouldn’t be much that is affected but a lot of things haven’t been decided, so you never know.” Mazo said there is some overlap between the two banks in terms of national banking and business, which could affect firms that are doing lending work for either one of the institutions. That could include firms in Philadelphia and other cities where there is a duplication of service. But he said litigation and bankruptcy work would most likely not be affected. “A lot of time and effort did go into improving our relationship with the [Philadelphia] firms we use,” Mazo said. “We certainly hope they continue.” First Union has taken heat since the 1998 CoreStates merger in the area of customer service. And while it was not discussed as much in the press, there were also problems with vendor relations. But the firms representing the bank say it has made tremendous strides in the past few years in that area. “They’ve done a really good job streamlining the number of firms they use, how lawyers are compensated and how the banks are used,” Klehr Harrison managing partner William Harvey said. “Lawyers have seen real improvement in terms of work flow, payment of invoices and generally making an effort to keep vendors happy. “First Union invested a lot of time and money in the firms it uses. When we had the RFP process a few years ago, we were looking for a long-term relationship. We think things have worked out well for the firms, and the bank so we don’t anticipate any changes if the merger goes through.” Duane Morris vice chairman and bankruptcy practice head David Sykes said it’s too early to make any concrete judgments about the future, considering that another offer could still knock First Union out of the Wachovia bidding. “To me, the most important issue is how the mid-Atlantic states fare in influencing those who are running the new company,” Sykes said. “From what I read, Wachovia will have an equal number on the board of directors and the chairman. They got a lot out of the deal for an entity that is supposed to be the one being acquired. But First Union is strong, and we are hopeful they will be the prevailing party and their local leadership will continue to thrive.” “I really believe that [Philadelphia] firms will continue to receive assignments. But long term, you have to look at where the center of power with the top officers lies. There certainly is a lot of talent at First Union in this region, and I think some great relationships have been formed [with local law firms].” The new Wachovia (pronounced wah-KO-vee-yah) would be based in Charlotte, N.C, where both banks are located. Though First Union is three times larger in assets and would get the top management jobs, each will have an equal number of members on the board of directors. First Union’s top two attorneys in its legal department, vice president and general counsel Marion Cowell and deputy Keith Lembo — both situated in Charlotte — have recently left the company. The new general counsel is Mark Treanor. Of the company’s 100-lawyer department, which also has offices in Boston and Sacramento, roughly 20 are located in Philadelphia.

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