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When San Francisco’s McCutchen, Doyle, Brown & Enersen announced its plan to merge with Boston’s Bingham Dana last year, management at both firms pledged that the new entity would have a one-tier partnership structure. Every partner at the newly formed Bingham McCutchen would be an equity partner, drawing their compensation from the firm’s profits pool. The firm reported a healthy $920,000 average profits per equity partner for 2002. But while Bingham McCutchen counts 277 partners over all (according to Martindale-Hubbell), the $920,000 average profits per partner number applies only to a subset of 94 partners. This seeming contradiction has raised some questions about who is and isn’t a full equity partner at Bingham McCutchen and whether any partners have been stripped of their ownership stake in the firm as a result of the July 2002 merger. Bingham McCutchen Vice Chairman Donn Pickett said that no one has been de-equitized. All Bingham McCutchen partners are paid from the firm’s profits on a fixed-income basis. What sets the 94 partners apart from their fellow partners is that they have full equity voting rights, whereas the remaining partners have “less than full equity voting shares,” explained Pickett. “Some partners have more votes than others on an individual basis, but all partners have votes. In that sense it’s a different system than either firm had before,” said Pickett. Bingham McCutchen grossed revenues of $433 million in 2002 thanks in part to strong litigation, financial restructuring and intellectual property practices. While Bingham Dana and McCutchen combined in July, the firms kept their books separate through 2002 and combined the numbers at the end of the year. Details of Bingham McCutchen’s partnership structure were first reported in a March 7 Boston Business Journal article. The article noted that while McCutchen had 71 equity partners before its merger, only 25 were brought on as equity partners to the new firm. Pickett called this contention erroneous, though he could not say how many of McCutchen’s equity partners had retained full equity voting rights at the merged firm. The article raised a few eyebrows among current and former partners of the firm, since it implied that the majority of partners were partners in name only, rather than actual, equity partners. “It’s a one-tier, all-equity partnership. The partnership agreement clearly provides that,” said one partner at the firm who wished to remain anonymous. “That’s not to say that all partners have the same clout.” While Bingham McCutchen’s new partnership system may not have financially de-equitized any partners from the original firms, it has clearly watered down numerous partners’ influence through the two-class voting system. According to one former partner, however, the loss of voting rights is a moot point, since few matters are voted on. “In the seven months I was there after the merger, I’m not sure I can recall actual votes on anything,” said Neil Shapiro, a partner at Monterey’s Kennedy, Archer & Harray. “There might have been a couple of e-mail votes on lateral partners in those seven months, but I don’t recall any other issues coming up for vote.”

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