After months of working with it on the investigation into Penn State’s handling of the Jerry Sandusky scandal, Pepper Hamilton is acquiring former FBI director Louis Freeh’s law firm, Freeh, Sporkin & Sullivan, and his consulting firm, Freeh Group International Solutions LLC, the firms announced Tuesday.

The combination, effective September 1, broadens Pepper Hamilton’s corporate investigations, white-collar defense and enforcement practice in New York and Washington, D.C., the firm said.

Freeh’s firm has 11 lawyers across offices in New York, Washington and Wilmington, Del. — all markets where Pepper Hamilton already maintains offices. Freeh Sporkin focuses on representing clients regarding the Foreign Corrupt Practices Act, white-collar defense and regulatory enforcement, internal investigations, alternative dispute resolutions and government relations. Freeh Group International Solutions is a consulting firm focused on risk management in the areas of compliance, investigations and due diligence and security.

Freeh Group International Solutions will retain its name and, while wholly owned by Pepper, will continue to operate independently of the law firm under the leadership of James R. Bucknam, its president and chief executive officer, the firms said. Freeh will become a member of Pepper’s executive committee and will continue to serve as chairman of the board of Freeh Group International Solutions. The attorneys joining Pepper from Freeh Sporkin will join Pepper’s white-collar litigation and investigations practice group headed by Thomas M. Gallagher.

All of the Freeh Sporkin attorneys and consulting firm members will remain with the combined organizations, though three of the law firm’s attorneys will remain with the consulting firm given the focus of their practice, Pepper CEO Scott Green said.

Name partner Stanley Sporkin is retired, Freeh noted.
Green said the acquisition of both the law firm and the consulting practice enables Pepper to give a full-service approach to corporate governance matters, including the ability to tap into the consulting firm’s consultants, forensic analysts and former FBI resources around the world. Green said he expects the acquisition of both the consulting firm and law firm to be accretive, benefiting both the sellers of the consulting firm and Pepper as the buyer.

When Freeh Sporkin was hired by Penn State to conduct an internal investigation into the school’s handling of the sex-abuse scandal surrounding former assistant football coach Sandusky, it brought on a team of several Pepper lawyers to assist in the investigation. A number of them were in attendance with Freeh when he announced his findings at a July 12 press conference in Philadelphia. Freeh’s report was issued just weeks after Sandusky was convicted of 45 of 48 counts related to sexual abuse of children.

The Penn State report wasn’t the first time the two firms had worked together, however, with Freeh noting in a statement Tuesday that the firms have teamed up in several arenas, including cases involving white-collar defense, pharmaceutical and medical devices, education and financial services.

Pepper Hamilton even represented Freeh Group International Solutions and Freeh Sporkin in their relocations earlier this year to new offices in New York.

Freeh said in an interview Tuesday that, while the Penn State work is complete for Freeh Sporkin and Pepper, the two firms are working on matters together currently, some of which he said are public. The two have consulted for MF Global Holdings Ltd. in its bankruptcy and Freeh has worked with Pepper as part of his role as the compliance monitor for Daimler AG after the company reached a settlement with the U.S. government on FCPA allegations.

Freeh said his firm’s work with Pepper dates back at least four years. Both firms have attorneys who used to be colleagues at the U.S. Department of Justice. Freeh Sporkin managing partner Joel M. Friedman used to head up the organized crime unit of the U.S. Attorney’s Office for the Eastern District of Pennsylvania. He also served as the deputy U.S. attorney and chief ethics officer for that office. Friedman had previously been a partner at Dilworth Paxson in Philadelphia, where he headed the firm’s white-collar practice group.

“The relationship is a very strong one, very practiced, and we’ve involved each other in some of the largest cases we’ve done,” Freeh said of the relationship between his firm and Pepper. He said the two firms have been discussing a possible merger for about a year.

Freeh also noted the merger would give his firm the ability to do more for clients than investigations and compliance work. Freeh Sporkin has handled a lot of FCPA work, represented clients in regulatory matters and before government agencies, has handled some bankruptcy work and done significant compliance work for corporate clients. Now he can offer his clients tax, construction or insurance advice if need be, he said, offering some examples of his new firm’s bench strength.

“This transaction will allow us to do a lot more than conduct investigations and uncover problems,” Freeh said in the statement. “We will now have the depth to react quickly to sophisticated, complex issues anywhere in the world. Even more unique is our ability to give our clients real solutions, not merely determine facts, and then work with all parties to implement those solutions. That’s what clients want. That is where we will provide extraordinary value.”

Pepper Hamilton’s acquisition comes on the heels of some major leadership changes at the firm. It became what appears to be the first Am Law 100 firm to hire a nonlawyer CEO to lead the firm. Green was hired in February to oversee the strategic direction of the firm while rainmaker Nina Gussack remains chairwoman of Pepper. Longtime executive partner Robert Heideck will hand over that role at the end of the year to labor and employment partner Thomas Cole Jr.

Gussack said in an interview Tuesday the acquisition of Freeh’s firms is part of Pepper’s goal not only to increase its white-collar defense practice, but also to better assist clients who are facing increasing government scrutiny by offering answers to regulatory and compliance questions as well as crisis management.

This isn’t the first time Pepper Hamilton has had a subsidiary or affiliate but Freeh Group International Solutions will be the only wholly owned subsidiary the firm currently has. The subsidiary gives the firm a leg up on the competition, Green said, noting that he thinks Pepper is the only firm that can independently generate this specific type of legal and consulting service.

Growth in the white-collar defense and corporate governance space isn’t over for Pepper, Green said, adding he wants the firm to be a go-to firm in the practice area.

Recruiter Frank D’Amore of Attorney Career Catalysts said white-collar defense and corporate investigations has been a consistently hot practice area over the past few years. The practice has become important for a broader range of companies beyond multi-national, public companies, he noted. Any company that sells or has contacts abroad could be at risk of FCPA violations, for example.

While initially it might have seemed more likely for a firm of Freeh’s background and location to merge with a larger Washington or New York-based shop, D’Amore said firms often combine after working together on matters and really getting to know each other’s lawyers and cultures. D’Amore also noted that Pepper has been building up its white-collar practice over the last few years.

Gina Passarella can be contacted at 215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI.