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Embattled US firm Jenkens & Gilchrist is facing possible dissolution, it emerged last week, with the vast majority of the Dallas outfit’s offices already set to join rival firms.

As revealed by legalweek.com (27 February), the firm is currently in discussions over its future, with management hoping to resolve the matter by the end of this month.

All of the firm’s offices outside its Texas hub have now left and three of its four Texas arms look set to join other firms. Offices in Austin, Houston and San Antonio all look set to join rivals. This would just leave its 165-lawyer Dallas operation, which is understood to be talking to other firms, including Hunton & Williams. Without a deal, it is possible the office could remain under the Jenkens banner.

The firm’s Los Angeles branch last week announced it will be joining 550-lawyer national firm Baker Hostetler, while Jenkens’ Chicago arm has already confirmed it is to become the local office for Boston’s Nixon Peabody. Jenkens’ San Antonio office, meanwhile, is to join Texas firm Jackson Walker’s Alamo City arm.

At its peak, Jenkens was a top 100 US firm by revenue, with 611 lawyers, a figure that has now fallen to 211. The firm’s problems follow a long-running dispute over its role in a controversial tax shelter scheme that was targeted by the US tax authorities. In January 2005, the firm paid out $81.5m (£41m) to settle legal action over its role in the controversy.

In April 2005, Jenkens’ 90-lawyer New York arm split off to launch a Manhattan office for Atlanta firm Troutman Sanders.

If the firm does dissolve, it would be the latest in a line of sizable US law firms to have collapsed in recent years.

In August 2005, Coudert Brothers, widely regarded as one of the international pioneers of the legal sector, announced it was to dissolve following a string of senior departures and the failure of a last-ditch attempt to merge with Baker & McKenzie.

In January 2005, Boston venture capital leader Testa Hurwitz & Thibeault closed its doors for business, while West Coast giant Brobeck Phleger & Harrison and Chicago’s Altheimer & Gray both folded in 2003.

Dissolution is less common among UK firms as partners have more restrictions when they move and clients in the UK are less likely to move with individual partners.

One rival partner commented: “If Jenkens does fold it will not be a Brobeck-style collapse, which was more due to over-expansion than anything else. Tax was Jenken’s flagship practice, so the tax shelter scandal was a blow straight to the heart.”

A Jenkens spokesman said: “The end result of discussions could take any number of forms and we are not prepared to speculate as to what they might be.”

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