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During its brief life, Andersen Legal quickly ratcheted its way to the top ranks of the profession. Never was the Big Five multidisciplinary threat more explicit than when Andersen absorbed prestigious firms such as Spain’s J&A Garrigues and Scotland’s Dundas & Wilson. Or just last November, when it placed ninth in the American Lawyer‘s Global 100 ranking of law firms by revenue, and second on the basis of lawyers. Andersen Legal looked, for a while, like a juggernaut. At its peak, it fielded 2,880 lawyers in 36 countries. It grossed $590 million in 2000, on a par with Shearman & Sterling. It recruited as its new chief a former top partner from London’s Clifford Chance. And it made a great noise about being the single-source answer to corporations’ legal needs around the globe. But when Enron Corp. went off a cliff and pulled Arthur Andersen LLP with it, Andersen Legal showed that, whatever else it may have been, it wasn’t a single, united firm. Andersen Legal worldwide managing partner Tony Williams posted infrequent communiques on the Web about firmwide talks with KPMG International’s legal affiliate, KLegal International. But the overriding assumption among the Andersen Legal affiliates was clear from the start: every firm for itself. Within weeks, all affiliates were making their own arrangements. Some declared their independence. Others were moving piecemeal into competing Big Five (or should we say Four?) legal affiliates or law firms. Still others are undecided, except for knowing that anywhere but Andersen is their sole option. Such disintegration is not terribly surprising for a behemoth that was assembled over the space of just nine years. The question remains: Where was the glue that might have preserved Andersen Legal when disaster struck? Skeptics have long argued that Andersen Legal was never a law firm at all so much as an assemblage of local firms sharing a brand and a mutual affiliation with Arthur Andersen. In fact, there was no international partnership. The partnerships were local and self-contained, although some partners were also partners in Andersen Worldwide. But even had the firm been run along more traditional lines, it’s doubtful that a wholesale acquisition would have been possible. The enormous size of the practice, and the variation among offices, precluded easy integration with another firm. In some jurisdictions (for example, the United Kingdom, Italy, and, to a large extent, Germany), the member firms were created by Andersen Legal from scratch. In Scotland, France, and Spain, by contrast, Andersen wooed prestigious firms to share its global MDP vision. With market reputations established well before Andersen Legal came along, these are the most attractive merger prospects. The two best-known, Dundas & Wilson and Garrigues & Andersen, have declared their independence, at least for the time being. Related to the question of lineage is one of self-sufficiency. Andersen Legal says that in Italy, Arthur Andersen referrals accounted for approximately 70 percent of the law firm’s work. At Garretts, the English legal arm, that figure was closer to 20 percent. In France and Germany, referral work accounted for between 40 and 60 percent of the firm total. There was, says Andersen Legal spokesman Chris Hinze, no concerted attempt to establish consistency: “Our position always was that we had to be seen as a credible law practice first and foremost. That would be the only way we could effectively cross-sell both within Andersen Legal and across the wider organization.” It’s the perceived lack of consistent quality throughout Andersen Legal that competitors often zeroed in on. Now the U.K.’s elite Magic Circle firms are able to demonstrate their disdain for the Big Five by conspicuously opting out of the bidding for large components of Andersen Legal. Says a senior partner at a City firm, who spoke on the condition that his name not be used: “Andersen’s problem is that, with the exception of Garrigues, it’s short of good-quality people. The kind of work it does is low-value-added, and it operates with low [profit] margins.” He added: “I think all the accountant-linked firms have lost the plot somewhat. … Good lawyers come to you if you’re doing high-margin work, and you get the good work if you’ve got the right lawyers. As far as I can see, none of the accountancy-linked firms have cracked either of those issues.” A London headhunter, also unwilling to be quoted by name, gives the same explanation for why Garretts is splintering: “Some parts of the pie are so much more attractive than others.” Cherry-picking is the order of the day. Banking and corporate lawyers in, low-value-added employee benefits lawyers out. So what better place for Andersen refugees to turn than other Big Five law firms? It’s happening. One firm in particular, Ernst & Young International, is doing well as a result of Andersen’s collapse. In France, Andersen Legal will join E&Y affiliate Fidal. The two will operate in parallel for three years. E&Y has also signed deals with Andersen Legal in Russia, South Africa, Hungary, Switzerland, the Czech Republic, and Slovakia. An E&Y deal in Germany is also in the works. Andersen Luther managing partner Wolfgang von Meibom is busy negotiating the terms of the German unification. If a deal is struck, E&Y’s legal arm, Menold & Aulinger, which previously had scarcely registered as a player in the German market, will gain remarkable heft. Andersen Luther, though not yet top-tier, was steadily building a solid reputation. Deloitte Touche Tohmatsu could also benefit from the breakup. At press time there were talks between Andersen Legal and Deloitte’s legal arms in Scandinavia and the Netherlands. Countless other firms, Big Five or not, have joined the hunt. And what about KLegal, Tony Williams’ great white hope? It would have been a huge coup for KLegal to consume all of Andersen Legal, but that was called off after KPMG decided not to merge with Arthur Andersen on the accounting and consulting side. A major impediment to remaining intact was the firm’s shared identity with Andersen. That taint would probably be fatal�and ironic, given that Andersen Legal, says spokesman Hinze, handled “scarcely any” work for Enron. “The company wasn’t even in our list of top-1,000 clients,” he says. Any regrets about the brand? No, says Hinze: “We took a fundamental decision early on not to create an artificial name for ourselves. We wanted to benefit from the halo effect of our association with Arthur Andersen. You can manufacture a different name for yourself, but you don’t all of a sudden fool the regulators that you’re any less associated with an accountancy firm.” That association is crystal-clear now, to be sure. And it’s proving painful to the thousands of partners and employees who bought the Andersen story and now are left to salvage their firms and careers. It is, says one Andersen Legal insider, a “human tragedy.” Are people angry? “Yes, they’re very angry. There’s a lot of bitterness about this having happened.” Who could blame them? Related Chart: Before the Fall

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