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A dog in a turtleneck sweater. An elephant hang gliding on a beach. What in the world is Bingham McCutchen thinking with these crazy print advertisements? Do animals in costumes have anything to do with practicing law? Relax. That attitude is so yesterday. Does Coca-Cola fret about the relevance of cuddly soda-swigging polar bears? Do the Budweiser talking frogs have anything to do with beer? Bingham McCutchen, created in 2002 by the merger of an aggressive East Coast firm with an old-line West Coast firm, is run as close to a corporate model as any Am Law 100 firm. Let the traditionalists cluck, but at Bingham McCutchen it works quite well. With 850 lawyers and offices in 11 cities, Bingham’s revenues more than tripled from 1999 to 2003. During that time it rocketed from number 81 to 26 on the Am Law 100 list, the fastest rise of any firm. Revenues last year rose nearly 12 percent to roughly $565 million. Along the way it’s gobbled up five firms, and it doesn’t appear that the acquisition spree is over. Its leader runs the firm like a CEO of a Fortune 500 company, and makes no apologies for it. The mergers have brought geographic diversity, a smart blend of practices and a seemingly unquenchable thirst for more. The firm seems blessedly free of some illusions: It’s not Cravath, Swaine & Moore and doesn’t aim to be. But its partners, and especially its leader, are determined to keep climbing the ladder. The goal, in the words of Chairman Jay Zimmerman: “To become the best national firm in five to seven years.” If they don’t get there, it won’t be for lack of trying or planning. Jay Zimmerman, 50, projects the brisk efficiency of a CEO on the go. Impeccably dressed — invariably in a crisp suit that shows off his Hermes ties — he exudes a smooth confidence and is relentlessly disciplined about staying “on message.” Zimmerman was born and raised in St. Louis, the son of a successful retailer, who was the president of the city’s Famous Barr department store. He quickly compiled impressive credentials: Harvard College, Harvard Law School and a job at New York’s Debevoise & Plimpton. Two years later he moved to Boston and joined the firm then known as Bingham, Dana & Gould because it seemed a better place to raise a family. Zimmerman was plunged into management during a crisis. In 1994 he enjoyed a comfy arrangement as the head of Bingham’s small London office. But back in the States, the 175-lawyer firm was in trouble. Finances were a shambles, and Bingham depended perilously on one client, the Bank of Boston Corp., which accounted for a third of its business. “We had this tremendous dark cloud hanging over us,” Zimmerman recalls. “We were not likely to survive as an independent entity for long.” Bingham’s managing partner, Josep Hunt, shocked the firm by announcing his early retirement, with no clear successor. A group of young partners urged Zimmerman, then 40, to step up. He reluctantly agreed and in a contested election won more than two-thirds of the vote. “I thought, ‘What in the world had I gotten into?’” The new leader commuted between Boston and London for the first seven months. His initial tasks: telling partners they wouldn’t get any distributions for several months and asking major partners to take a 25 percent pay cut. Zimmerman, who describes that period as “highly depressing,” spent a lot of his early tenure simply talking to partners to boost their confidence in the firm. “If you lose confidence in the platform or the enterprise, you probably never can recover,” he remarks. The firm had to address problems with weak outposts in Washington, D.C., and Hartford, Conn., and decided to bring in laterals to shore them up. A few years later, with the firm on solid footing, Bingham began to break its regional bonds. The firm didn’t start with a grand strategy for national expansion, although there was consensus for growth. “I’d like to tell you we knew where we were going, but we didn’t,” says Zimmerman. “You’ve got to be lucky in terms of opportunity.” He adds, “You don’t want to get ahead of yourself and say, ‘Within x years we will be a national firm.’” Bingham started merging modestly. In 1997 it acquired New York’s 25-lawyer Marks & Murase and its Japanese client base. Two years later, it took over Hartford’s 55-lawyer Hebb & Gitlin, which had a good international financial restructuring practice. Then, in 2001, it increased its New York presence with the addition of 75 lawyers from the boutique Richards & O’Neil. Next came the biggest merger, with 300 lawyers from San Francisco’s McCutchen, Doyle, Brown & Enersen. In 2003 Bingham boosted its West Coast presence by picking up Los Angeles’ Riordan & McKinzie, a 60-lawyer corporate boutique. In part, these matches were opportunistic — a matter of two firms looking for partners at the same time. Zimmerman stresses that the firm seeks quality and the right values, but he notes that Bingham was also spotting practices that were undervalued or overlooked by the market. Marks & Murase joined the fold when Japan’s economy was in a deep slump. Hebb & Gitlin’s insolvency practice was snapped up during the height of the tech and corporate earnings boom, when bankruptcy might have seemed a thing of the past. McCutchen came on board when San Francisco was wallowing in a major downturn. Zimmerman has not relied much on consultants to make these matches. “In terms of our strategy,” says the chairman, “it’s something we largely do ourselves.” At times, when Zimmerman discusses the firm’s merger strategy, he sounds like a Procter & Gamble executive. “I think we spot great quality and great products,” he says. “Making that product part of a broader platform allows us to price it with more confidence.” He adds, “That’s what we were able to do in connection with McCutchen. McCutchen had not been as confident as it could be in terms of setting rates.” When Bingham and McCutchen hooked up, the fit on paper looked enticing. McCutchen: West Coast, litigation-dominated, 300 lawyers. Bingham: East Coast, corporate-dominated, 500 lawyers. But the cultural fit was questionable. Zimmerman’s Bingham was a model of management efficiency. McCutchen was anything but. McCutchen, founded in 1883, had long stood as a pillar of the San Francisco legal community. Known for top-drawer litigation work and an exceptionally collegial culture, its clients included AT&T Corp., Exxon Mobil Corp. and Microsoft Corp. McCutchen was so pleased with the wonderful little world it had created that for generations it didn’t see the need to change much. But eventually McCutchen sensed the ground shifting and began exploring a merger in 1996. The firm famously dawdled and fretted for more than five years [see "Still Single"]. “We met with literally 40 of the Am Law 100 firms,” says Donn Pickett, who was McCutchen’s chairman during the final years of this process. The search proved tiresome. “McCutchen traditionally had a town-hall-democracy kind of structure,” remarks Christopher Hockett, a career McCutchen partner who is now deputy chair of Bingham McCutchen’s litigation group. “It’s hard for a firm that manages itself that way to do a merger.” There was also a matter of pride. “We probably had a big ego,” notes partner Raymond Marshall. “We didn’t feel we had to settle.” One McCutchen requirement for any merger partner was a New York office with at least 100 lawyers. Bingham’s acquisition of Richards & O’Neil put it over the minimum, and a few months later, in the summer of 2001, Pickett sat down for a breakfast with Zimmerman. (Consultant Brad Hildebrandt, who worked for McCutchen, brought the two firms together.) They liked each other, but each side had its deal breakers. Zimmerman insisted from the start that he alone would sit at the top. No co-chair arrangements for him. Done: Pickett agreed to be vice-chair. (Zimmerman says the issue wasn’t even on the table for negotiation.) McCutchen refused to become a two-tier partnership, like Bingham. Roughly 65 percent of Bingham’s partners were nonequity, with no voting rights. Zimmerman proposed a hybrid system with weighted votes: Those in the top third of the compensation grid would get four votes; the middle third would get two votes; and the bottom third would get one. McCutchen accepted. Zimmerman also made it clear that the McCutchen lawyers would have to get with a centralized corporate mind-set. No more collective hand-wringing. “I don’t believe in too much process,” says the Bingham chairman about decision making. “We had to really convince ourselves the McCutchen folks … had a real appetite for change.” By then, those McCutchen folks felt so worn down by their merger odyssey that most were, in fact, eager for something new. “You can be inclusive or you can be efficient,” says San Francisco partner Michael Begert, a 41-year-old litigator who started his career at McCutchen. “We realized that through the process of doing the [merger talks]. We tried to have everybody involved, and you can’t do it.” Over eight months of negotiations, the two firms painstakingly worked out the deal. Before a merger agreement was drafted, they produced a “white paper.” That was then refined into a summary of major deal terms, which included 15 exhibits. By the time the merger document was drafted, it covered 40 pages plus 34 attachments. It specified who would sit on the major management committees and which partners would head the new practice groups, and it outlined the compensation procedure. (The McCutchen lawyers remained on their firm’s compensation system until the end of the year, then switched to Bingham’s system.) Appended was a new partnership agreement and policy statements on retirement plans and the partner election process. There were so many different documents that the signing, held in New York in July 2002, took nearly 40 minutes. The parties celebrated with a meal at the Four Seasons. A year later, Bingham’s practiced dealmaking skills gave it the edge to win Riordan & McKinzie, a Los Angeles firm with a coveted private equity practice. (It was founded by former Los Angeles Mayor Richard Riordan, who is no longer affiliated with it.) Roughly a dozen national firms had already approached the firm when Bingham popped up in March 2003. “It was a bit of a Seabiscuit kind of race,” says consultant Ralph Savarese, who was advising Riordan. “[Riordan] knew the least about Bingham going into it. Bingham started behind the others.” Nevertheless, by May the two firms had a deal. “What stood out head above heels [about Bingham] was their decisiveness,” says Richard Welch, the partner who led the negotiations for the Riordan firm. Welch notes, for example, that his firm had a significant liability for an unfunded retirement plan. “We resolved that within 10 minutes of talking. Other firms had to run a lot of numbers and made it a bigger issue than it needed to be.” (Bingham assumed the liability.) At times, Zimmerman’s dizzying efficiency stunned Welch. “Six months into this, I literally came out of a room with Jay and was trying to figure out how to slow things down. … The firm at every turn was decisive.” Welch is now managing partner of the 110-lawyer Los Angeles office and sits on Bingham McCutchen’s nine-person management committee. The firm has also attracted quality laterals outside of mergers. Bingham McCutchen’s expansive partner compensation ratio, which is nearly 8 to 1, gives it the latitude to pay stars more than $2 million annually. (Its profits per equity partner in 2003 were $1.1 million, although compensation for all partners was a more modest $680,000.) Tina Brozman, the former chief judge of the U.S. Bankruptcy Court for the Southern District of New York, joined in 2000, and Donald Stern, the former U.S. Attorney for the district of Massachusetts, came on board in 2001. Last year it also hired two general counsel of major financial institutions: Herbert Janick III from UBS Financial Services Inc. and W. Hardy Callcott from Charles Schwab & Co. Bingham McCutchen enhanced its profile in London in 2001 with the addition of James Roome, an international bankruptcy expert from Cadwalader, Wickersham & Taft. In the last five years, the London office has grown from three to 30 lawyers. This growth spurt has not burdened the firm’s balance sheet. Bingham has just $6 million in long-term debt, all of which it assumed from McCutchen. Its borrowings under its line of credit rarely exceed $20 million, against an inventory of roughly $200 million. The firm has at times had to carry duplicative office space in cities where it acquired a firm, but not much. The firm prides itself on its fiscal conservatism. “One of the things about the firm coming out of Boston, it’s got that old Yankee mentality,” says Zimmerman. “It’s what allows all the partners to sleep well at night.” The partners can also take comfort from the talented team of professionals who support Zimmerman. The firm’s chief operating officer, William Bachman, is a West Point graduate with an MBA and has been with the firm since 1989. A former platoon leader in Vietnam, he has helped integrate all five of the firm’s mergers. Last year Bingham hired former McKinsey & Co. partner Elizabeth Chambers to be its chief marketing and strategy officer. Chambers’ responsibilities extend far beyond advertising and Web sites. Like Bachman, the Harvard Business School graduate sits on the firm’s management committee as a nonvoting member. She also has a major hand in the development of the firm’s 24 practice groups, lateral hiring and overall growth plans. All the planning in the world, however, can’t foresee every bump in the road. Zimmerman faced a potential disaster a few months after the McCutchen merger when partners met at the Bellagio Hotel & Casino in Las Vegas for their first joint retreat. A prominent partner from the Bingham side made a tasteless, and to some offensive, presentation that superimposed the faces of two women partners on pictures of snarling Dobermans used in a firm ad, and used the term “bitches” at one point. Zimmerman at once denounced the partner’s presentation from the stage, and told partners individually that his actions were unacceptable. The next day the firm distributed to all partners a letter of apology from the offender. Zimmerman rejected the partner’s offer to resign, concluding that he suffered from a medical problem. (He remains at the firm.) Soon after the merger, Zimmerman also realized he needed to stay in better touch with the new troops. Some West Coast lawyers grumbled when they started getting a flurry of memos from Boston informing them of new policies. “With a touchy-feely group of lawyers, it can be a culture clash,” he admits. “We made a pretty significant, mid-course correction.” There wasn’t anything as dramatic as an uprising to quell, but Zimmerman sensed he needed to do more internal public relations. “I thought I communicated well, but I didn’t communicate well enough. I realized I needed to get out here [on the West Coast] every third week,” he says. Sometimes communicating meant laying down the law of the new world order. Zimmerman relates a meeting in Los Angeles with associates from the McCutchen side soon after the merger. “The associates were complaining that we put in new telephones. But the old system was antiquated,” he says. “As you can imagine, I was not terribly patient. I said, ‘If you want to work in a mom-and-pop operation down the street, you can find simpler phones.’” Some associates might still be pining for those old phones. The firm ranked 89th (out of 148) in last year’s survey of midlevel associate satisfaction. Zimmerman says he’s not completely surprised. “A variety of people in that survey joined a firm that is not the firm they’re with today,” he explains. He says he expects to see a “dramatic uptick” in the rankings, as the firm recruits more associates who want to be part of a big national firm. McCutchen lawyers have also seen their firm’s pro bono ranking drop. Premerger, McCutchen had consistently ranked in the top 10 nationwide. In 2003 the combined firm ranked a less than impressive 50th. “We think that’s an anomaly,” says Zimmerman. “Pro bono is one of our major initiatives.” Last year the firm devoted 3,600 pro bono hours to win the first injunction against the federal partial birth abortion ban on behalf of Planned Parenthood Federation of America Inc. At the partner level, some legacy McCutchen partners have been upset to see their firm classified as a two-tier partnership in the Am Law 100, given their refusal to join a two-tier firm. Zimmerman insists that the firm still isn’t a two-tier system, but is simply following this magazine’s definition of an equity partner. (The firm counts roughly the top third of its partners as equity.) “Lawyers as a group are probably pretty change-averse,” notes San Francisco partner Begert. “There were all sorts of boogeymen that could be erected … just because of change. If you’re a smart leader, you suck it up and accept it.” That’s what Zimmerman has done. “If you go down the hall today, I’m not sure you’d find everybody in complete agreement,” says Zimmerman. “The key is that you have to have enough agreement.” Enough, apparently, do agree that life at Bingham McCutchen is good. Last month the firm was one of only five law firms named on Fortune magazine’s 100 Best Companies To Work For list, ranking 78th. If anyone represents the soul and spirit of the old McCutchen, it’s 66-year-old David Balabanian. He joined the firm in 1967 and became one of its leading litigators and rainmakers. From 1995 to 1999 he served as the firm’s chairman. A virtuoso storyteller, he exudes the sort of old-fashioned bonhomie that evokes a time when partnerships were brotherhoods. So, how wistful is Balabanian for the old days? Not one bit. “I think the corporate model is better,” he says without a second’s hesitation. “It’s good to be able to move in a decisive fashion, which we had a very hard time doing before. You simply can’t operate that way.” Balabanian, in fact, had pushed hard for McCutchen to merge: “A regional law firm, no matter how successful, how highly regarded, how congenial, would ultimately have difficulty holding on in a rapidly consolidating world. “From my perspective it’s been a colossal success,” he says, adding that the change has been energizing at this stage of his career. “I’m working for new clients, doing new kinds of work for old clients. … The merger has made me a lot better lawyer.” More than two years after the McCutchen merger, there’s no doubt where the power lies. “Jay and I consult on a lot of issues daily,” says vice-chairman Pickett, “but there’s no question that Jay is the chairman.” In contrast to Zimmerman, who has not practiced in a decade, Pickett, 53, still maintains a busy litigation schedule. Management committee member Michael Reilly says the firm can move quickly because partners trust Zimmerman. He notes, “He has an easy time building consensus because so many people have faith in him.” It’s grueling at the top. Zimmerman spends only one week a month on average at his home in Boston. He keeps an apartment in New York, and has a room reserved at the San Francisco Ritz-Carlton. When traveling, he never checks luggage, to avoid wasting precious minutes at baggage carousels. For respites, he spends time with his family at a new home on Martha’s Vineyard, where he loves to kayak. “I think people see my personal commitment,” says the chairman, who claims he doesn’t even know how many hours he devotes to the job. “There’s a lot of sacrifice to do this.” Zimmerman and Pickett assert that since the McCutchen merger, the firm has won assignments that neither firm would have gotten on its own. In 2004, for instance, it secured antitrust clearance for AT&T Wireless Services Inc. in its $41 billion merger with Cingular Wireless LLC. The firm also advised Frank McCourt in his $430 million purchase of the Los Angeles Dodgers baseball team from The News Corp. Limited last year. Nice enough, but nothing to make Skadden, Arps, Slate, Meagher & Flom quiver. The firm ranked a distant 77th on Thomson Financial’s M&A list for 2004. But it can throw its weight around in other corporate niches. Its private equity practice provides a steady stream of deals in the $50 million to $500 million range. Its international financial restructuring work for large bond funds is highly regarded. In proceedings over the insolvency of Italian food giant Parmalat Finanziaria S.p.A. in New York and Italy, Bingham McCutchen represents a bondholders committee holding $10 billion of debt. It also is counsel to bondholders in the high-profile $6 billion U.K. restructuring of Marconi Corp. plc, a British telecommunications company. The firm’s broker-dealer practice gives it regular exposure to major financial institutions. Janus Capital Management last fall selected Bingham McCutchen in a competitive bid to help it comply with terms of a Securities and Exchange Commission settlement over market-timing charges. Merrill Lynch & Co. Inc. chose the firm as national coordinating co-counsel for a slew of arbitrations over “research integrity” claims. In litigation, it defended First Data Corp. in a U.S. Department of Justice antitrust challenge to its $7 billion merger with Concord EFS Inc. (The case settled in late 2003 before trial.) It represented Oracle Corp. in a $2 billion suit brought by PeopleSoft Inc. in California state court, claiming that Oracle’s takeover attempt hurt PeopleSoft’s business. (The suit was dropped after PeopleSoft agreed in December to be acquired.) On the East Coast, it’s enmeshed in litigation over Boston’s Big Dig public works project, defending Bechtel Group Inc. and others that served as construction managers in a suit brought by the Commonwealth of Massachusetts. The days of perilous dependency on the Bank of Boston clearly are long gone. In fact, Bank of Boston is gone; it was acquired in 1999 by Fleet Financial Group, which was in turn bought by Bank of America Corp. last year. Bingham McCutchen does substantial work for Bank of America, and Zimmerman calls it “a great client we value tremendously.” But today it’s one of 50 clients whose annual billings top $2 million. If that’s not enough, the firm has branched into three ancillary businesses. Bingham Consulting Group promotes the firm’s political contacts in statehouses. (They are not registered lobbyists.) Last year former California Republican governor Pete Wilson joined the group. Bingham Legg Advisers provides investment services for wealthy individuals, and Bingham Strategic Advisers offers business advisory services. BSA gave financial advice to the owners of the Boston Red Sox when they sold the club in 2002; Bingham was legal counsel. “They don’t make a lot of money right now,” says COO Bachman about these businesses. “[But] we do see this as the wave of the future.” The biggest challenge on the horizon is New York. The firm has 110 lawyers there, but it’s hardly where it needs to be to realize its lofty ambitions. The two Manhattan mergers haven’t been a seamless fit. Some New York partners grumbled that no one from that office sat on the management committee, and half a dozen real estate partners left last year. “Big firms are not for everybody,” notes Zimmerman. He appointed a new office managing partner in 2004 who now sits on the management committee. “Geographically, our clear emphasis is New York,” says Chambers, the new chief marketing and strategy officer, who adds that the firm wants to be two to three times its current size there. She has asked every practice group to articulate specific goals for New York, including a realistic list of which clients to pursue. “By doing that hard work, granularly thinking it through, you get to where you want to be,” she states. “Otherwise you grow in a stupid way.” She also notes that the firm won’t get big enough by taking in partners one or two at a time. “We’re actively looking at groups and opportunities.” Does Bingham McCutchen really need to compete head-to-head with the big New York firms to succeed? “I think about this a lot,” says Zimmerman. “I think there are seven to 10 New York firms that don’t have to worry too much. … They’re the go-to firms in bet-the-company litigation and mergers and acquisitions.” But, he points out, “the work these firms do is just a fraction of the overall market. … A lot of firms are competing in the space right below.” And Zimmerman wants to win that contest. After more than a decade at the helm, Bingham’s chairman has no plans to step down. His current three-year term is up in September. “I certainly plan to stand for re-election,” Zimmerman says. And most of his partners are perfectly happy with this. “Jay enjoys running a business,” says Boston partner Justin Morreale. “One reason he’s good at it is he loves it so much.” Zimmerman, for his part, admits to being “hyperambitious.” “You’ve got to be,” he says. “Otherwise, what’s to drive you?” Editor’s note: See related story, “Streamlining the Merger Process.”

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