Published June 14, 2006
Buchanan Ingersoll and Klett Rooney Lieber & Schorling have become one after a shareholder vote at both firms yesterday morning gave the merger the go-ahead.
The new firm, BuchananIngersoll & Rooney, will become the largest law firm in Pennsylvania in terms of number of attorneys in the state with roughly 313 lawyers according to the last survey conducted by PaLaw. As a whole, the firmwill have more than 525 attorneys nationwide.
Leaders of the new firm anticipate that it willbe in the top 80 of national firms with an estimated combined gross revenue of $265 million.
The deal is effective July 1, andwill give Klett Rooney president and managing shareholder John A. Barbour one of three executive shareholder roles at the new firm.
Buchanan Ingersoll chairman Thomas L. VanKirk was recently re-elected to another three-year term, which will last through 2009.
This is the largest combination our firm has ever done, and it was an obvious match for us in terms of culture, practice area and the continued development of our strategic plan, VanKirk said in a statement. Strengthening our mid-Atlantic presence better enables us to continue to pursue our goal of being a strong national firm operating as one unified entity.
VanKirk said in an interview that he is looking to build upon the strength of the combined firm in the Philadelphia market, possibly by bringing on groups in intellectual property or adding to other practice areas such as labor. The firm would still look to expand in either its core competencies or core geographic areas, he said, such as on the West Coast or in Miami or in the labor practice area.
Howard Scher, BuchananIngersoll’s Philadelphia office managing partner, said the office already has a number of groups in the pipeline, and VanKirk told him to start building immediately.
Four labor attorneys that were against the merger did leave Klett Rooney for Cozen O’Connor, Stephen A. Cozen confirmed yesterday. (For more information, see the story on page 9.)
The group was said by some sources to be against the merger between Klett RooneyandBuchananIngersoll, and their departure dispelled most concerns that the shareholders would voice opposition to the combination of the two firms.
Buchanan Ingersoll and Klett Rooney had been talking for the past few months. Barbour said he and VanKirk have been friends for years, and the merger discussions started out of that friendship.
I’ve known Tom VanKirk, Fran Muracca andBuchananIngersoll for many years, so it was easy to see how we could create a strong partnership out of our two firms, Barbour said in a statement. The geography fit. Our clients fit. The practices fit. This was one of those rare decisions in life that almost makes itself.
In total, approximately 250 Klett Rooney attorneys, government affairs professionals and staff members will join BuchananIngersoll.
Scher said staff redundancies would not be an issue with this merger.
We are right-sized in both offices, he said of the Philadelphia offices. There will not be a reduction in staff.
VanKirk said that Klett Rooney ran a lean ship and had administrative strengths in areas wereBuchananIngersoll had needs.
There had been some question about how the shareholders of Klett Rooney, which has one tier, would fit into the three-tiered shareholder structure of BuchananIngersoll.
Alfred J. D’Angelo Jr., one of the labor partners who was on board with the merger from the beginning, said that the transition went smoothly. He said about 90 to 95 percent of the shareholders realized where they should fit in, and only about six went back and forth in discussions.
Klett Rooney has a national client base and serves companies such as Chubb Insurance, UPMC Health Systems, The Pittsburgh Steelers, Reliant Energy and Verizon.
Klett Rooney bankruptcy shareholder William H. Schorling said the combined firmwill have one of the largest creditors’ rights and financial institutions practice in the mid-Atlantic region. He said there would not be a major lender in that region that is not represented by the combined firm in a major way.
Both sides said they were surprised at the lack of conflicts they faced. Scher said most of the clients he spoke with said they had already used Klett Rooney for other legal needs. He said the firmsare accomplishing convergence with clients.
VanKirk said there are a few conflicts that still need to be ironed out, but Barbour said there is more overlap than conflict.
The firm’s new logo, BuchananIngersoll & Rooney: Attorneys & Government Relations Professionals, shows the emphasis the combined firmis placing on its lobbying business. The firm said that it now has one of the largest government relations practices of any law firm in Pennsylvania with 35 attorneys and professionals.
The new firmwill now have an energy law sub-specialty with the addition of Klett Rooney’s John Quain who is the former chairman of the Pennsylvania Public Utility Commission.
Daniel E. Beren, head of BuchananIngersoll’s state government relations group in the Harrisburg office said the Klett Rooney government relations specialists have a strong Pennsylvania practice with a focus in Harrisburg and some in Pittsburgh.
It’ll be one of those situations where one plus one will make four, Beren said of the combination.
Beren will take on more of an emeritus role while Klett Rooney’s Thomas G. Paese will lead the firm’s government relations group.
Michael Coleman of Coleman Legal Search said the merger is an opportunity for Buchanan to continue on the growth track it has been on after a comeback year last year.
Klett Rooney’s labor and employment group was its crown jewel, particularly in the Philadelphia area, Coleman said, adding that the firm also has a strong bankruptcy practice with Schorling and Teresa K.D. Currier.
People knew the labor and employment group from the time they were at Pepper [Hamilton], but the firm didn’t have a high level of identity in the [Philadelphia] community, Coleman said.
Klett Rooneywas at a difficult size with 130 attorneys and needed to do something, Coleman said, pointing out that this merger will increase awareness of the firm in Philadelphia.
The firm’s labor and employment and bankruptcy groups are a complement to BuchananIngersoll’s litigation and business groups in Philadelphia, Coleman said.
The merger changes the landscape of the Pittsburgh legal community, moving the firm in the top three in the city behind only Kirkpatrick & Lockhart Nicholson Graham and Reed Smith.
The merger will point more to the Pittsburgh legal community as being a force nationally, recruiter Maura McAnney of McAnney Esposito & Kraybill Associates in Pittsburgh said. I think it’s exciting for the Pittsburgh legal community to have a firm that was able to strengthen itself on a national basis.
The intra-city merger was one that hasn’t been done in at least the last 20 years in Pittsburgh, but VanKirk said the merger fit into both firms’ goals.
We set out in 1986 to be the dominant firm in Pennsylvania, VanKirk said, adding that BuchananIngersoll became important but not necessarily dominant. This [merger] gives us the opportunity to be dominant in Pennsylvania and the mid-Atlantic region.
With a strong financial basis in the region, VanKirk said the firm could achieve its national goals.
Schorling pointed out that while both firms began in Pittsburgh, the majority of each firm’s governing body is not in that city.
Barbour said the firm would also be dominant in Harrisburg with 34 lawyers. The firmwill have 20 attorneys in Wilmington, Del., and more than 30 in New Jersey.
VanKirk said that he does not expect the merger to have the same effect on the firm’s financial indicators as some of the double-digit increases it saw in 2005, but said that he thinks the revenue per lawyer (RPL) and profits per equity partner (PPP) numbers will increase.
VanKirk said the effect of this merger probably would not be financially visible until 2007 to as late as 2009.
The two firms’ PPP were remarkably similar, VanKirk said. Barbour said that Klett Rooney shareholders would see an increase in both RPL and PPP.
We wouldn’t have done the deal had we not been confident of that, he said.
Buchanan Ingersoll’s PPP for 2005 was $455,000 and its RPL was $505,000.
The discrepancy in the starting salary between the two firms, with BuchananIngersoll at $125,000 in Philadelphia and Klett Rooney at $115,000, was resolved in favor of BuchananIngersoll’s number, the firm leaders said.
Schorling said he believes the merger might set off similar ones in the Philadelphia or Pennsylvania market.
I think it will have a significant competitive impact, Schorling said. It will make life more difficult for other firms.
Leaders of the new firm said they have a few things to iron out before the July 1 close date. The issue of space was left on the table until after the shareholder votes. Scher said, however, that his office has plenty of space to house the Klett Rooney attorneys in Philadelphia. VanKirk said that as the Philadelphia office grows, more space might be needed.
The leases for some of Klett Rooney’s offices in the state will end soon, and further decisions can be made then, firm leaders said.
The issue of who will head various practice areas has not been fully decided on yet, but labor and employment attorney Anthony J. Messina will co-head the firm’s Philadelphia office with Scher.
It was rumored that Messina was on the fence about whether to stick with the combined firm post-merger, but D’Angelo said that was never the case.