Thank you for sharing!

Your article was successfully shared with the contacts you provided.
When law firms merge, proud managing partners can be counted on to talk up both the great cultural fit between the two firms and the attainment of a “platform” for growth, facilitating the combined firm’s quest for greater prominence and higher profitability. But these twin merger accolades point to conflict ahead. Few mergers are true mergers of equals, and the larger firm’s maximization of the newly acquired platform frequently depends more on cultural shift at the smaller firm than on cultural fit. Of the nation’s 250 largest firms, almost 50 have participated in a merger within the last year. But as mergers have become more familiar, so have complaints among partners who are unhappy that their law firms’ desire to rise in The American Lawyer‘s Am Law 100 has led to abandonment of a firm culture where profits are not paramount. This may be most keenly felt among partners and former partners of New York’s midsize firms, the merger partners of choice for large out-of-town firms. Though the term “white shoe” has frequently been used to describe those elite New York law firms that have historically dominated mergers and acquisitions and capital markets practices, the term, with its connotations of country club gentility, equally applies to those less-than-dominant midsize firms whose chief attractions for lawyers have long been a collegial atmosphere and a less-stressful existence. But those attractions are no longer highly prized within the increasingly profit-obsessed legal profession. Indeed, a low-intensity atmosphere can alienate more productive partners, who may feel they are subsidizing their peers. Firms often seek mergers in the belief that only a merged firm with higher profits can hold onto those key partners tempted to leave for bigger firms and bigger paydays. “Of the highly productive partners, all it takes is for one or two to get frustrated,” said Michael F. Cusick, a former partner at New York’s Winthrop Stimson Putnam & Roberts, which is now Pillsbury Winthrop. Cusick, who began his career at Sullivan & Cromwell, said he joined Winthrop Stimson as a lateral associate because it was the sort of firm where he could work with capable lawyers on interesting matters without killing himself to bill hours. He said his desire to preserve Winthrop Stimson’s alternative to New York “sweatshop” firms was the main reason he opposed the firm’s merger with San Francisco’s Pillsbury, Madison & Sutro. Though both firms had reputations as old-line, white-shoe firms, and the mergers’ proponents claimed the firms had identical cultures, Cusick said he understood the merger would mean a more profit-driven enterprise. “The San Francisco folks seem to have already refocused their firm a lot,” he recalled. “We hadn’t done that yet.” But Cusick acknowledged his efforts to block the merger became a lost cause when certain key Winthrop Stimson partners threatened to leave if the merger did not go through. The merger creating Pillsbury Winthrop became effective at the beginning of 2001. Cusick declined to name the partners who threatened to leave, but other sources said Frode Jensen was one of them. Jensen became well known throughout the legal community when Pillsbury issued a Sept. 4 press statement accusing him of sexual harassment and lowered productivity. Pillsbury issued its statement in response to Latham & Watkins’ announcement that Jensen was leaving Pillsbury to join its New York office. Jensen withdrew his bid to join Latham shortly thereafter and sued Pillsbury for $45 million last month. But if Jensen’s intended departure to Latham illustrates that a firm’s merger is no guarantee that a partner will stay, Cusick’s earlier departure shows that a merger can drive others away. Shortly after the merger, Cusick left to join the New York office of Jones, Day, Reavis & Pogue. He has a sense of humor about his new firm’s reputation as a grind that law students and junior associates sometimes call “Jones, Days, Nights & Weekends.” “It’s not exactly a warm and friendly place, but it doesn’t hold itself out that way,” he said, noting that many lawyers were always aware they were making tradeoffs in terms of profits by choosing warmer and friendlier firms like Winthrop Stimson. But Cusick is adamant that he would have chosen to stay with the old Winthrop Stimson, and he said he believes many of the partners who are still with Pillsbury Winthrop also miss the old firm. “When you’re not used to it,” he said, “it’s a splash of cold water to have your life rigorously run.” But the viability of a firm like the old Winthrop Stimson is questionable, Cusick acknowledged, in an age where mega-firms seem to predominate. MISPLACED OPTIMISM? John Carroll, Clifford Chance’s managing partner-elect for the Americas, said that much criticism leveled at mergers stemmed from misplaced optimism about better alternatives. “In my view, it’s often nostalgia for a world that no longer exists,” he said. Like Cusick, Carroll knows that world well. He was a partner at Rogers & Wells before that firm merged with London-based Clifford Chance in 1999. “We were one of the 20 firms that claimed to be the 11th-best firm in New York,” Carroll said of Rogers & Wells. To jockey for that position, Carroll said, firms are obliged to pay enormous amounts to the star partners and live in constant fear that those partners could still leave at any time. In the long term, that was unsustainable, he said. “What faces firms in that market is a choice between becoming one thing or becoming another,” he said. “They can’t be what they were anymore.” Rogers & Wells chose to become part of the largest law firm in the world, using the Clifford Chance global brand to leverage itself into a position where it could compete for lateral partners who would never have considered joining the old Rogers & Wells. Clifford Chance, which dropped Rogers & Wells from the name of its U.S. operations in September, gained notoriety among partners at smaller firms when the firm de-equitized dozens of former Rogers & Wells partners in the merger’s wake. “We’d look at that and think we wouldn’t want that to happen to us,” said one former partner at Christy & Viener. He said the news out of Rogers & Wells colored his view of developments at Christy, the 70-lawyer New York firm that merged with Paris-based Salans Hertzfeld & Heilbronn in 1999. But if a merger with Salans Hertzfeld also considered a lower-intensity work environment, was perceived as giving both firms a chance to expand profitability while preserving a congenial firm culture, the result was a combined firm that was certainly larger but hardly more potent. The former partner, who asked to remain unnamed, said the two firms’ partners had excellent personal relations but little business contact. Initially, both firms had both looked to capitalize on transactional work coming out of post-Soviet Russia, booming for a short period in the mid-’90s. When that work slowed, however, the two firms had little business case for their combination. “It is almost as if the merger did not occur,” the partner said of the current situation facing the combined firm. OUTSIDE CONSULTANTS Fearing ambivalent attitudes toward a merger will lead to ambivalent results, some firms are turning to the outside for helping smoothing post-merger transitions. Chicago’s Sonnenschein Nath & Rosenthal recently hired law firm consultancy Altman Weil to study the firm’s June merger with New York’s RubinBaum. Altman Weil consultant William Brennan said poor merger integration can exacerbate some partners’ mixed feelings about joining a new, combined firm. Such partners often come to believe they would happier elsewhere. To that effect, Brennan’s post-merger plan for Sonnenschein Nath and RubinBaum emphasizes details of technology, benefits and finance. A less-than-seamless transition in seemingly innocuous areas like secretarial support can be the nudge for partners thinking about leaving, said Brennan. Clifford Chance’s Carroll takes a long view of merger integration, though. For now, most partners and senior associates understandably have feelings about the firm they joined, which was Rogers & Wells. As today’s junior associates become partners, Carroll said, the grip of the past will weaken. “No merger is fully integrated,” he said, “until enough time has passed that your institutional memory is that of one firm.”

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.