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Partners at Gray Cary Ware & Freidenrich and Piper Rudnick voted to merge the two firms late Monday, creating a firm with close to 1,400 lawyers in 20 offices and setting the stage for an even larger combination later this year. At least for now, the firm will be known as Piper Rudnick/Gray Cary, said Piper Co-Chairman Francis Burch Jr. But Piper Rudnick is still pursuing merger talks with British giant DLA, an 1,800-lawyer firm. If that proceeds — a vote is set for Dec. 4 — it would instantly create one of the largest law firms in the world. “People are very excited and committed to going forward with this,” said Gray Cary Chairman J. Terence O’Malley. “I expect all of our partners to be with us January 1,” when Monday’s merger takes effect. O’Malley said he has been sitting in on the DLA merger talks, too. The complications of a three-way merger are reflected in the new organizational chart. If all goes as planned with the second merger vote, Burch and Piper Co-Chairman Lee Miller will share CEO responsibilities with Nigel Knowles, current head of DLA. O’Malley would then co-manage the U.S. offices with Jeffrey Liss, Piper’s chief operating officer. O’Malley and Liss will also sit on the firm’s global board of directors. Former U.S. Sen. George Mitchell, a Piper partner, would become the new firm’s non-executive chairman. The merger gives Piper, an East Coast power, a strong technology practice and a big footprint in the important California market. Gray Cary, with 374 lawyers, has offices in Palo Alto, San Diego, San Francisco, Sacramento and Washington, D.C. For Gray Cary lawyers, the merger means an L.A. office — Piper has 46 lawyers there — and expected synergies from Piper’s national footprint and strong real estate, litigation and lobbying practices. O’Malley projected that the Piper Rudnick/Gray Cary combination would produce revenue of $850 million in 2005, placing it among the top 10 U.S. firms. Gray Cary lawyers will see some immediate effects beyond just new letterhead. Burch said Piper plans to move 50 of its lawyers into Gray Cary’s San Francisco offices, bringing the office to 76 lawyers. In Washington, D.C., Gray Cary lawyers will move into Piper’s space. The combined firm has 200 lawyers in Washington, and Burch said the firm would acquire a building there by 2007 to accommodate further growth. Lawyers outside the combined firm are watching to see how the firms manage the merger of two distinct cultures. “In the long run I don’t know how Gray Cary can stay the same,” said longtime Gray Cary partner Ian Feinberg, now at Mayer, Brown, Rowe & Maw. Luther Orton, who spent a year at Gray Cary, recalls an egalitarian culture with wide participation from associates. A merger on this scale would have to result in “greater administrative control,” the Snyder Miller & Orton partner said. Another former Gray Cary partner, Magan Pritam Ray, said it could take time for the merger’s effect on partners to fully shake out. “With a firm that large, I suspect they can afford to cover things for a year or two before making incisive cuts,” said Ray, now with GCA Law Partners in Mountain View, Calif. But Burch said the firms’ approach was not “slash and burn.” “It’s too short-term,” he said. “We are putting ourselves in a position to better serve our global clients.” Fast-growing Piper Rudnick was the product of a 1999 merger between Baltimore’s Piper & Marbury and Chicago’s Rudnick and Wolfe. Most recently, it merged with Paris firm Cariddi Mee Rue, its first international venture. Gray Cary has undergone its own transformation. Blessed by the boom, the firm has struggled, along with its Silicon Valley competitors, during the bust. Like Piper, DLA has been on a tear. The London-based firm has seen revenue increase 95 percent in five years, according to The Lawyer.com, a U.K. trade publication. “They have the same view of the world, the same upward trajectory,” said Burch. “They are focused on tomorrow.” Consultant Peter Zeughauser, who worked on the Gray Cary and Piper Rudnick portion of the deals, said three-way mergers are always more difficult. “Getting the leadership and the partners of all three firms comfortable that they have a common vision, that they will be able to manage comfortably, and putting the governance structures in place, can be challenging,” Zeughauser said. Another difficulty was integrating the compensation structures, he said. DLA has better leverage than its U.S. counterparts, with more associates per equity partner. But O’Malley noted that both Piper and Gray Cary are themselves the product of mergers. Both have an entrepreneurial culture, he said, and have proved themselves adaptable. “At Gray Cary, we’ll be having our best financial year ever this year,” O’Malley said. “We’re both coming in on strong earnings momentum. We will simply get stronger through this combination.”

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