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After guarding the numbers for months, Palo Alto, Calif.-based Fenwick & West lifted the veil on its 2001 financial performance Tuesday to reveal a 7 percent increase in revenues and a 10 percent decline in per-partner profits. The firm’s fiscal year ends Oct. 31, but Fenwick & West had refused to divulge its year-end financial information for months while partners privately maintained the numbers were flat. Partners also had hinted the firm had been embroiled in sensitive lease negotiations and had to keep its finances under wraps, despite concerns the secrecy suggested a poor performance. Fenwick & West’s financial disclosure follows news that four of the firm’s tax partners have told their colleagues they plan to leave the firm for the Palo Alto office of Chicago’s McDermott, Will & Emery. Late Tuesday, however, Fenwick & West apparently was still holding out hope that at least one of the partners would stay. The announcement of financial data on the heels of the possible departures seemed calculated to illustrate that the firm is in no danger of collapse. In 2001, the 301-lawyer Fenwick & West logged $158 million in revenue, up from $148 million in 2000. Though the firm netted $57 million in profits last year — an increase of $5 million over the 2000 take — its partner ranks grew from 65 to 71. That pulled profits per partner down to $720,000 from $800,000 the year before. The new numbers allow Fenwick & West to hold its place at No. 10 among the highest-grossing firms in the San Francisco Bay Area. Before Fenwick & West’s announcement, Littler Mendelson ranked No. 10 after realizing $153 million in revenues in 2001. Of the 10 highest-grossing Bay Area firms, Fenwick & West has the third-highest profits per partner. Yet the comparatively high paychecks at Fenwick & West haven’t insulated the firm from partner poaching. McDermott has been aggressively courting lateral partners since hiring Anthony de Alcuaz from Howard, Rice, Nemerovski, Canady, Falk & Rabkin in June 2000 to oversee a growth campaign. De Alcuaz, however, said he couldn’t comment on the four partners even though Fenwick & West announced their departure internally on Monday. Apparently, Fenwick & West isn’t letting go without further negotiations. The four partners poised to leave Fenwick & West for McDermott are Frederick Chilton, Paolo “Paul” Dau, James Garahan and John Ryan. None of the four returned calls for comment by press time. Fenwick & West’s tax group, with some 30 lawyers and nine partners before the departures, is highly regarded nationally for representing Fortune 50 clients in complex and international tax matters. And while Valley firms typically rely upon resident tax partners to advise on deals involving corporate clients, Fenwick & West’s group operated as its own revenue center with its own clients. And the premium work has been profitable for Fenwick & West. Valley tax lawyers were surprised by the move, primarily because they aren’t accustomed to being targets of competitive bidding. With longtime Fenwick & West partner James Fuller still at the helm, the departures are seen as a potential loss of revenue for Fenwick & West but not a significant weakening of the group. “I’ve worked with Fred and Jim over the years and they’re both terrific tax lawyers,” said Ronald Roth, a Wilson Sonsini Goodrich & Rosati tax partner. Still, he added, “it’s a real coup for McDermott.” While profitable, the tax group is a small part of the firm’s overall revenue picture, said Laird Simons III, a Fenwick partner. “We’re fortunate enough to be, while located in Silicon Valley, a broad-based firm,” Simons said. The firm did lay off 32 associates and 15 paralegals in September but didn’t realize a significant savings in 2001 because it paid the associates their full salary through the end of the year and covered their health insurance costs, the firm said. While the corporate group, the firm’s largest, was slow in 2001, the firm’s intellectual property and litigation groups were firing on all cylinders, said Timothy Roake, a Fenwick & West partner who heads the litigation group. Roake said his group, which numbers about 80 lawyers, spent much of last year preparing more than a dozen major patent, employment and IP cases for trials that are scheduled for this spring and summer.

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