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It’s been almost five years since blue-blooded Morgan Stanley Group Inc. and working-class Dean Witter Discover & Co. consummated their marriage. The union of the investment bank and the retail brokerage got off to a rocky start, with a clash of disparate corporate cultures. The new company’s in-house legal department wasn’t above the fray. When the Christian Curry scandal broke, Morgan Stanley Dean Witter & Co.’s (MSDW) law department was at the center of the imbroglio over its bungling of the junior analyst’s dismissal. Dean Witter’s Christine Edwards, who had nabbed the top law job, left shortly afterward. Longtime Kirkland & Ellis partner Donald Kempf Jr. took over the 300-lawyer department late in 1999. Kempf asserts that the ill will between the two sides is now gone. He points to the warm welcome Morgan Stanley lawyers gave their new office mates: the 200 Dean Witter lawyers who crowded into the firm’s midtown headquarters after losing their digs at New York’s World Trade Center. But others, inside and outside the company, say that there is still dissension in the law department. One point of contention, some say, is that senior Morgan Stanley veterans are losing their clout. CLO Kempf has made several controversial personnel decisions in recent months. Those changes involve three longtime Morgan lawyers who have left the company or now find themselves in new, lower-profile jobs. (Kempf was the only MSDW employee willing to be identified for this article.) � Managing director Ralph Pellecchio’s job — as general counsel for the prestigious Morgan Stanley Institutional Securities — no longer exists. The Institutional Securities unit was folded into a new division. He’s been made GC for strategic initiatives. In his previous position, Pellecchio had a number of direct reports; now, that number has shrunk. (Kempf acknowledges that Pellecchio does have significantly fewer lawyers reporting to him, but he says that is true of “essentially everyone” in the department.) � Jane Carlin, a managing director in Morgan Stanley Institutional Securities, now heads a new, lower-profile group: banking, regulatory and credit. � Another longtime MSDW lawyer, Stuart Breslow, who was a managing director and chief compliance officer, has left the company. He followed former Morgan Stanley president John Mack to Credit Suisse First Boston, where he directs global compliance. Breslow was replaced by David Elston, who followed Kempf from Chicago-based Kirkland & Ellis two years ago. � Kempf is also reaching outside the department to add to its bench strength overseas. He created an international GC spot Jan. 1 and recruited Keith Clark to fill it. The chairman of London’s Clifford Chance since 1993, Clark oversaw the firm’s three-way merger — with New York’s Rogers & Wells and German firm Pünder, Volhard, Weber & Axster — which produced the world’s largest law firm. Clark now ranks as MSDW’s most senior lawyer outside the United States and sits on its European executive committee. Kempf dismisses any fretting about the changes. He says he is restructuring the law department to mirror the company’s business needs. He also points out that he came from outside MSDW and thus has no allegiance to either the Morgan Stanley or the Dean Witter side. In any case, he says, the merger is now ancient history: “It’s clearly one firm today, with one leader, going in one direction.”

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