Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Continuing its drive to become more of a regional, and ultimately a national, player, Newark, N.J.-based McCarter & English has strengthened its corporate side by acquiring a 12-lawyer corporate boutique with a strong niche in servicing mid-cap and small-cap companies here and in Europe. New Jersey’s largest firm will be joined by Krugman & Kailes of Saddle Brook, whose core practice is mergers and acquisitions, securities work and venture capital funding. Howard Kailes, who heads the firm, says its client list includes emerging industries, in particular high-technology and biomedical entities, as well as older industries. With the acquisition, and the addition of 14 new associates this fall, McCarter & English will top 280 lawyers. The firm’s five-year strategic plan, developed in 1999, called for 400 lawyers by the end of 2004. The firm’s chief operating officer, John Brefach, now says the revised plan focuses on building up certain core practices and geographic areas rather than reaching a set size. In 2000, McCarter expanded its New York office, and in mid-2001 it opened branches in Baltimore and Hartford, Conn., to go along with satellites in Philadelphia and Wilmington, Del. The firm, with seven offices in six states, now has about 60 lawyers outside of its Newark, N.J., headquarters. Brefach, the point man on the acquisition, says the move shores up McCarter’s geographic base as it continues expanding into a Mid-Atlantic regional firm. The firm now occupies 7 1/2 floors in the Gateway complex. The Krugman firm will move to Newark. Andrew Berry, who chairs McCarter’s executive committee, says plans include going national, and to that end the firm, bent upon not having to be acquired itself to compete nationally, is looking to expand into other regions. “Size isn’t everything, but it isn’t a bad thing,” says Berry. “If you run it right, it can be very powerful” and can boost per-partner profits. For 2001, profits per partner were $342,500, lower than the firm’s major in-state competitors. The toughest part is finding the right marriage, Berry says. Partners from both firms negotiated for eight months and held five social gatherings. Berry says McCarter banking partner Todd Poland had dealt with the Saddle Brook firm and highly recommended the lawyers’ work. “They wanted to kick our tires, as much as we wanted to kick theirs,” says Berry. Brefach says Krugman & Kailes, which was shopping itself, was introduced to the firm by a headhunter. Still, for all the talk about expansion, it was in part McCarter’s New Jersey base that attracted Kailes and his partners, in contrast to other large firms in and outside of New Jersey that had courted Krugman & Kailes. Kailes points to the Newark firm’s deep roots “and greatest commitment to … our region.” He adds, “We had discussions with many firms out of state, but sitting with McCarter & English was like a tonic, with their knowledge and commitment and longstanding relationships in New Jersey. It excited us from the beginning.” Krugman & Kailes partners Kailes, Robert Wexler and Alan Fox concentrate in mergers and acquisition and securities work, while partner Thomas Goodwin is a litigator, partner Ward Laracy handles taxation and trust and estate matters, and partner Kerry Flowers handles commercial real estate. SEEKING THE BIG DEALS The addition of seven corporate lawyers will bolster McCarter’s corporate department to 28, according to the head of the department, partner Kenneth Thompson, who notes that the total excludes tax, real estate and public finance lawyers. Kailes, Thompson and Berry say the additions, by increasing the firm’s depth in corporate law, will allow McCarter to compete for bigger deals, in New Jersey and nationally. “Right now McCarter & English does work for Fortune 100 companies. We do a certain-size deal,” says Thompson. “To the extent that [bigger] deals are out there, we are now in a better position.” Berry says the added breadth and depth beefs up the corporate side of a firm that grew for decades by doing litigation and then by offering national litigation coordinating services with its off-site, 35,000-square-foot litigation support facility. Getting more transactional work from the firm’s large cap litigation clients is now more of a possibility, says Berry. “I want us to be the New Jersey firm that corporations, who are reasonably unhappy with their current firm, will think about first, rather than the Kirkpatricks,” says Berry, referring to Kirkpatrick & Lockhart of Pittsburgh, the 700-lawyer firm that increased its Newark office by a third, to 21 lawyers, last month. One lawyer who closely follows the regional legal market agrees, saying the added depth should give McCarter more access not only to larger deals, but to deals of all sizes because it will have the capacity to handle unrelated transactions simultaneously. “This fuels their corporate practice and allows them to move up the food chain,” says the lawyer. One example is Lucent Technologies, which used Thompson last October when it sold its voice-enhancement business to NMS Communications of Framingham, Mass., for $60 million. For larger deals, Lucent goes to New York, as do most of the New Jersey-based Fortune 500 companies. Krugman & Kailes handles similar sized deals. In 1999, it represented Lamaze Publishing Co., a longtime client, when it was bought by iVillage for $86.7 million Now, Krugman & Kailes’ lawyers, as part of McCarter, can offer their corporate finance clients “the skills and experience available … in such integral fields as antitrust matters, intellectual property, labor and employment law, employee benefits, and large, complex litigation,” says Kailes. LOSING ‘OLD INDUSTRY’ CLIENTS In other words, Klugman & Kailes, like so many boutiques, needed the larger platform, not only because it cannot service clients in so many related fields, but because its clients, many of whom are $50 million to $800 million companies, tend to get gobbled up themselves. And when they do, there is always the chance that the legal work will go to the outside counsel of the acquiring firm. One source says Krugman & Kailes lost a major client a few years ago when it was bought. Krugman & Kailes lost another longstanding client two years ago when Instituform Technologies Inc. of St. Louis took its corporate work inside after a change of general counsel. The new general counsel, Thomas Cook, says his predecessor farmed out the corporate and securities work to Krugman & Kailes because he was a litigator, saying that he, Cook, now does that work himself because he is a corporate lawyer. Kailes had been listed as the company’s general counsel and secretary. Says Cook of the Bergen County, N.J., firm, “Kailes and Rob Wexler, who worked with Instituform, are both top drawer.” He adds that he is not surprised the firm sought a large partner. “I don’t know how firms under 20 survive. It’s tough to be highly specialized. You need the related practices, such as tax, real estate and litigation [to do transactional work]. Otherwise it stretches the number of deals you can do at one time, unless you have the depth.” Instituform is typical of Krugman & Kailes’ “old industry” clients, which are are all over the country. Publicly traded on the Nasdaq, it rehabilitates water and sewer pipes with new technology, and grossed $450 million in 2001. One of its venture capital clients is Hanseatic Americas LDC, which does private equity placements, often in the biomedical, biotech and medical devices fields, an area in which Krugman & Kailes specialize. Hanseatic was an investor in a $44-milion private placement last October for Noviro Pharmaceuticals of Cambridge, Mass., and France. This past June, Hanseatic led the $5.7-million equity funding placement for a medical devices firm in Mobile, Ala. Kailes declines to discuss specific clients or deals, but says that some clients are U.S. companies with business in Europe, while others primarily English or German, with U.S. interests. Krugman & Kailes maintains a London office to meet with clients. Within New Jersey, the acquisition strengthens McCarter’s hand in its competition with Lowenstein Sandler of Roseland, Sills Cummis Radin Tischman Epstein & Gross of Newark, and Florham Park’s Pitney, Hardin, Kipp & Szuch, all of which compete for the limited corporate pie on this side of the Hudson.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.