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If Philadelphia-based Morgan Lewis or any other megafirm lost six partners in the space of eight months, it would just be chalked up to normal attrition. But when you’re 39-attorney firm Hoyle, Morris & Kerr, rumors begin to run rampant concerning the stability of the firm. Litigation partners Ralph Jacobs, William Herman and Elizabeth Fox, along with corporate partner Gerald Chalphin, have already left the Philadelphia-based firm. And sources say two other litigation partners have announced their intention to leave soon. “There’s no common theme there; they all left for different reasons,” managing partner and firm co-founder Lawrence Hoyle said. “I don’t mean any disrespect to these people because they’re all fine lawyers and they have some business. But if you put them all together, you wouldn’t have a rainmaker.” While Hoyle declined to get into specifics about the nature of the departures, sources familiar with the situation said that some of the lawyers in question were asked to leave. Jacobs and Herman left to open solo practices. Fox took a job with Philadelphia’s Berger & Montague. Chalphin signed on with Spector Gadon & Rosen, also based in Philadelphia. And sources say that one partner will be taking a position in government and that another is going in-house. Hoyle Morris also lost a good deal of work in April when client W.R. Grace & Co., a chemical maker based in Columbia, Md., filed for Chapter 11 bankruptcy protection in Wilmington, Del. This is not the first time the firm has had to deal with the loss of a major client during its 16-year history. In 1990, asbestos manufacturer National Gypsum, which was the firm’s top client at the time, filed for Chapter 11. The firm had more than 70 lawyers before that bankruptcy filing and saw its lawyer count shrink dramatically afterward. Just as it did for W.R. Grace, Hoyle Morris represented National Gypsum in asbestos litigation. “Just before the bankruptcy, we handled a lot of cases for Grace around the country,” Hoyle said. “Did I want to lose them? No. But it’s not National Gypsum, which was our bread and butter at that time. Grace wasn’t even in that league. “I think the firm is faced with having to work harder than before without the Grace business, but we’ve still got a lot coming through the door here.” Hoyle said none of the departing lawyers worked significantly on W.R. Grace litigation. And while the firm has lost revenue from W.R. Grace, sources familiar with the firm said that losing these particular lawyers will not hurt the firm’s bottom line. “In this case, I think thinning the ranks will have a positive effect because you are not losing partners that have major clients and the firm had too many partners anyway,” one source said. “We’re talking about people who were supported by rainmakers and did not have a significant amount of business. So on balance, it will have a beneficial effect because there will be bigger pieces of the pie for the other partners without losing significant revenue.” According to Martindale Hubbell, if the two unnamed litigation partners leave as expected, Hoyle Morris would have 34 lawyers — 15 partners, 13 associates, four counsel and two senior attorneys. Hoyle said three first-year associates are set to join the ranks next month. The loss of Chalphin on the heels of last year’s departure of partner John Gough means that two of the firm’s three partners in its business department are gone, and another attempt to build a transactional side to the litigation-heavy firm has failed. Gough and Chalphin both joined the firm in 1998 to work with department chairman Jack Hagele to build the department. Gough brought with him experience in health care and bankruptcy, while Chalphin brought a background in securities. “I was happy there,” Chalphin said. “I enjoyed the people and they are all fine lawyers. I just started getting pressure from clients to offer a broader range of services than was possible at Hoyle. I had to refer a lot of things out [to other firms] rather than keep it in-house. I’m talking about tax, employment, and after John Gough left, sophisticated bankruptcy matters.” Spector Gadon is also known as a litigation-heavy firm but the corporate side, headed by name partner Steve Gadon, has a wider variety of transactional practice disciplines than Hoyle Morris. Gough, who returned to Philadelphia-based Montgomery McCracken Walker & Rhoads after a second tour of duty at Hoyle Morris, said the corporate department at Hoyle Morris received much of its work from Hoyle and fellow name partner Alexander Kerr and was doomed because it was unable to recruit attorneys to supplement the three partners. Hoyle said the firm is committed to having a corporate department and has already begun the process of replacing Gough and Chalphin. Mark Fisher, formally with Suburban Cable, has joined the firm as counsel. And the firm has also added Buchanan Ingersoll’s Paul Keenan and Rapp White Janssen & German’s Henry Janssen to its litigation department in recent years. “We think the litigation department will be just fine,” Hoyle said. “The business department has not grown as fast as Jack and I had hoped. But we’ve done some major deals. I still have hopes for it.” As for the future of the firm, Hoyle said profits per partner will most likely increase this year. And although sources said the firm has discussed merger with other firms, Hoyle said nothing is currently in the pipeline.

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