It’s been a busy week for Husch Blackwell.
The St. Louis–based Am Law 200 firm announced Wednesday that it is merging with Brown McCarroll, a 65-lawyer firm based in Austin that also has offices in Dallas and Houston.
The merger, which becomes official July 1, creates a 608-lawyer entity with 17 offices and combined 2012 gross revenue of roughly $322 million, according to the most recent financial data gathered by The American Lawyer and sibling publication Texas Lawyer. At that size the firm, which will operate under the Husch Blackwell name, would have qualified for inclusion on this year’s Am Law 100 list.
Wednesday’s announcement came just two days after 11 Husch lawyers—eight of them shareholders—jumped to cross-state rival Polsinelli, where they will, among other things, open a Chattanooga, Tennessee, office and launch a Washington, D.C.–based government contracts practice. ( Polsinelli's announcement of the group hire did not mention which firms the lawyers were coming from.)
Interviewed by The Am Law Daily Tuesday about the departures—and before announcing his firm’s merger with Brown McCarroll—Husch CEO and managing partner Gregory Smith took a swipe at Kansas City–based Polsinelli, whose growth in recent years is the subject of a feature story in the June issue of The American Lawyer.
“Polsinelli is interested in nothing but adding numbers,” Smith said. “The firm is not about real revenue increase—it is about head count increase.”
Asked to respond to Smith’s remarks, Polsinelli chairman and CEO Russ Welsh was mostly dismissive: “We are not chasing some artificial head count or gross revenue number,” Welsh said. “This sounds like someone is throwing sour grapes to me, and we do not engage in that type of behavior.”
As American Lawyer senior writer Ross Todd notes in his June feature, Polsinelli has seen its gross revenue, which reached $275 million last year, increase nearly 150 percent since 2008. The firm’s gross revenue grew 17.2 percent in 2012 alone, according to the latest Am Law 200 data. Husch, meanwhile, had $282 million in gross revenue last year—a 6 percent increase over 2011.
By joining forces with Brown McCarroll, Husch enters a Texas market where it previously lacked a presence by adding new offices in three of the state’s main business hubs—one of which, Dallas, is already home to a Polsinelli office.
Smith insists that his firm’s decision to expand via merger makes more sense than Polsinelli’s move to grow by hiring laterals in bunches.
“Growth for growth’s sake is unfocused and unstrategic," he says. "Brown McCarroll is a firm that aligns with our six focus areas.” In particular, he says, the Texas firm shares Husch’s strength in the energy, health care, and real estate sectors.
A list of Brown McCarroll clients published Texas Lawyer appears to support Smith’s claim, with Community Health Systems, Fortress Investments, and Direct Energy among the companies identified as relying on the firm’s services. Husch’s clients include Algonquin Power Co., Express Scripts Inc., Monsanto Co., Olin Co., and Saint Luke’s Health System.
Discussing the merger with Texas Lawyer, Brown McCarroll chairman David Hilgers echoed Smith’s view. “We have complementary expertise and…culture, “ Hilgers said. “Their culture is very accommodating to ours, and that was a key issue for us.”
Those leaving Husch, meanwhile, include Walter A.I. Wilson, who led the government contracts practice after joining the firm in 2009 and will hold a take on a similar role as a senior partner in Polsinelli's D.C. office. Making the move with him are Claude Goddard, who was also named a senior partner, and Daniel Donohue and Steven Weber, who join Polsinelli as shareholders.
Welsh notes that Polsinelli already has robust health care, manufacturing, and construction practices and that a government contracts group was a logical addition: “There was an increasing need for government contract lawyers since many of our health care and construction clients provide services for the government.”
For his part, Wilson says it was Polsinelli’s health care practice specifically—which began its national expansion in 2008 with the addition of Fredric Entin from Foley & Lardner and now accounts for 20 percent of the firm’s revenue—that drew him to the firm. “Many of our clients have health care provisions in their government contracts.”
Smith—whose own firm is set to gain 20 health care lawyers, including Hilgers, in the merger with Brown McCarroll—was particularly harsh in questioning Wilson’s move to Polsinelli.
“I believe Walter Wilson’s decision to move was in direct response to our decision to replace him as chair of our government contract practice with Mike Gatje,” Smith said. “Walt has not been as active in the practice in a number of years, and he spends a lot of time in Naples, Florida. Gatje is younger, and the people who stayed in that practice are younger.”
Gatje assumed his new role at Husch Blackwell on June 1, a year after the firm informed Wilson that he would no longer be the leader of the government contracts group.
Wilson defends his decision to leave Husch. “I would never speak ill of Husch Blackwell,” he says. “Polsinelli is a very dynamic firm that offers my clients an opportunity to be better served. It has 650 lawyers, a supplies service, and a construction practice that ensures my clients’ needs will be better served. Gatje taking over my position had been in the works for awhile, and I would not be upset even if I had not had this opportunity.”
Asked whether he was aware that the merger—which, according to Texas Lawyer, was approved by partnership votes at both firms between June 11 and June 18—was in the works, Wilson says he had heard mention of it during one meeting in the D.C. office, but that it did not influence his decision to switch firms.
In addition to the new arrivals in D.C., Polsinelli is also expanding its St. Louis office with the addition of William Curtis and Michael Wetmore as shareholders, and Marissa Curran as an associate. Finally, the firm is opening a Chattanooga office to be staffed by new shareholders Ralph Killebrew Jr. and Gregory Leitner and associate Chris Collins. (Former Husch associate Dustin Manning moved to Polsinelli a year ago.).
Though Polsinelli is likely to benefit from the clients—including national and international chemical manufacturers—that the former Husch attorneys in Chattanooga are bringing with them, Welsh says that was not the motivation for the hires.
“The attorneys knocked on our door individually, and they happened to fit very well with our group,” he says. “We come up against a lot of law firms and Husch Blackwell is one we come up against frequently in Kansas City, Denver, and other locations.”