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The jockeying at Shearman & Sterling has begun. Senior partner David Heleniak resigned from the partnership in May to become vice-chairman of the embattled investment bank Morgan Stanley. The firm made all the appropriate sounds about how Heleniak’s departure for a valued client will only benefit the firm. But it left the top job open at a time when the firm has been beset by troubles. Heleniak’s predecessor, Stephen Volk, left for a Wall Street behemoth, too. He became vice-chairman at Credit Suisse First Boston after retiring from the firm in 2001. But, says one former Shearman lawyer, “there were a couple of obvious choices after Volk, but I’m not sure there are such obvious choices now.” In 2001 senior M&A lawyer Heleniak was presumed to have Volk’s endorsement, and John Madden, also from the M&A department, was the favored alternative. Elections at Shearman are typically peaceful affairs. The firm’s nine-member policy committee nominates a candidate following a broad survey of the partnership. Partners then formally vote on that candidate, but it’s largely an academic exercise, say lawyers, since the committee only nominates candidates who enjoy broad support. But there is still intrigue in the current race — the potential contenders are more varied in background, and they face a more challenging landscape. Shearman & Sterling’s profitability has lagged behind that of its peers in recent years, thanks to downturns in the securities and merger markets. Other deal firms, though, have thrived thanks to robust litigation practices, something that Shearman lacks. The firm’s aggressive global expansion has further eaten away at profits. Profits per partner were $1.15 million in 2004, a modest increase from 2003 and at least 43 percent below rivals such as Sullivan & Cromwell and Davis Polk & Wardwell. But recent efforts to boost profitability by trimming the partnership ranks have taken a toll on firm morale. An anonymous memo calling for Heleniak’s resignation circulated among the partners earlier this year. “This election really matters,” says one former partner. “I think people have to decide what the right vision for the firm is.” Madden is the front-runner. He is Shearman’s acting senior partner and has been global co-managing partner since last November. A Vietnam veteran, he has a long history of leadership at the firm, having served as head of M&A and as the managing partner of the European offices. Partners say his forthright nature and wide breadth of responsibilities will translate into a broad base of support. “You never hear anything mean about John,” says one partner. But Madden is far from a shoo-in. His problem: Can an entrenched manager provide fresh leadership? The next strongest contender, if selected, would break the M&A group’s 14-year hold on the senior partner seat. Corporate and securities partner Rohan Weerasinghe, 55, has served on the policy committee and is widely credited with having strengthened the firm’s capital markets practice. He has strong relationships with several top 10 firm clients, including Merrill Lynch & Co. Inc. and Bank of America Corp. With J.D., MBA and undergraduate degrees from Harvard University, he is regularly described by colleagues as well-polished, tough and one of the best lawyers at the firm. Weerasinghe’s strong affiliation with capital markets, however, may translate into a narrower set of supporters. His problem: Some of his partners find him abrasive, says one former partner. Weerasinghe did not return calls for comment. There are more radical ideas afoot too. Shearman “is now such a global institution that it’s not completely out of the question to have a senior partner that is not American,” says Emmanuel Gaillard, a member of the policy committee and a former managing partner of the Paris office. The most mentioned international candidate is D�sseldorf, Germany-based Georg Thoma, Madden’s global co-managing partner. Germany has been a profit bright spot for the firm in recent years, and Thoma, 61, is largely credited for its success. But some partners question Thoma’s appetite for day-to-day administration. Two other partners, Creighton Condon and Linda Rappaport, are dark horses. Both are members of the policy committee. Condon, 49, is an M&A star but perhaps has too few gray hairs for the senior partner seat. Rappaport, 53, is head of the executive compensation and employee benefits group and is immensely popular, according to current partners. But Rappaport’s gender and her group’s smaller revenue contribution may limit her odds, say some. Heleniak’s successor is expected to be named by mid-June.

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