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The leaders of Smith, Gambrell & Russell and a Texas firm, Winstead Sechrest & Minick, recently acknowledged that there have been “strategic discussions” between the firms, but both men said they would not characterize them as merger talks. Smith Gambrell’s managing partner, Stephen M. Forte, said the firm had “discussed strategic things with [Winstead] from time to time,” but that no merger was in the offing. Smith Gambrell has about 185 lawyers in Atlanta, Washington and Jacksonville, Fla. “We’ve talked on and off about different things over some period of time, but there isn’t anything substantial right now,” agreed W. Mike Baggett, Winstead’s chairman and CEO. The firm has more than 300 lawyers in six Texas cities plus Washington and Mexico City. Winstead has shown interest in the Atlanta market in the past. The firm had been in merger talks with Long Aldridge & Norman before that firm’s 2002 merger with Washington-based McKenna & Cuneo. Although Baggett said Winstead was not looking to expand into any region in particular, he added, “Atlanta is a market that would help us serve our clients,” since the firm has clients with “substantial presences in Georgia and the Southeast.” Top management at the two firms know each other well, said both firm leaders, because they belong to the same domestic and international client referral networks, the Bridge Group and the Interlex Group, respectively. Firms can refer clients with business outside their geographic area to another firm in the group, Forte said. Downplaying talks with Winstead, Forte said that Smith Gambrell had been involved in strategic discussions with a number of firms over the last few years. “From time to time, we’ve been in discussions with firms in the last several years where we or they examined the possibility of a strategic combination,” Forte said, adding that he would not want to single out Winstead. “There is nothing in the offing, and we are not actively looking,” he said. Most “merger discussions or strategic discussions that occur don’t go anywhere.” A merger that expanded Smith Gambrell’s geographic reach and heft beyond its Atlanta and Washington strongholds might make the firm more attractive to large national clients. “There are obvious strategic advantages to being larger,” Forte acknowledged. However, he cautioned that the firm has some major clients who would not necessarily think such a deal would be to their benefit. “If the only thing a big merger does is bump up rates for clients and does not change the quality of their services, it would not be an advantage for clients. In some recent mergers, rates went up and client services did not improve.” He declined to name specific firms. There would have to be a real “strategic advantage” for Smith Gambrell to merge with a large firm from another region, Forte said, rather than “just to add numbers.” These advantages could include adding offices in areas where the firm has clients or regions that would strengthen practice areas, he said. The culture of the two firms also would have to be compatible, he said, since in any merger a firm risks the loss of “control, identity and culture.” For example, a merger with a large outside firm could change firm governance, he said. “You can’t hold partnership meetings in the same meeting place once a month as traditional partnerships have done and as we do,” he said. “Some partners don’t want to be part of an organization where management is by e-mail — where you can’t see, feel and touch the partners of the executive committee,” he said. “The larger you get, the more corporate you get. You become more like an employee than a partner. Those super-large firms who don’t have the history with the partners may take a change in the course of running their business that doesn’t take into consideration the views of the partners,” he added. And Smith Gambrell has its history and its established partnership to consider, Forte said. “We’ve been here 112 years. We have a stable partnership and a loyal following of clients. It would take a lot for us to seriously consider a merger partner.”

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