Editors' Blog

Once bitten, twice... well up for it

Posted 30/08/2007 by Alex Novarese

Dewey Ballantine must be thanking its lucky stars that it so narrowly avoided a union with an expansive mid-tier firm run by a forceful leader who calls all the shots in favour of its current impending union with an, er, expansive mid-tier firm run by a forceful leader who calls all the shots.

After all, LeBoeuf Lamb Greene & MacRae is helmed by a respected long-time chair in the shape of Steven Davis who has put his firm through a robust restructuring that has dramatically hiked profitability in the last five years.

And despite the decision to call the combined practice Dewey & LeBoeuf, clearly the larger LeBoeuf will be the slightly more equal in this merger of equals, a reality underlined by the early decision to hand Davis the top leadership role for a full five years.

One LeBoeuf partner this week proudly described his own firm as an “elected dictatorship”, a factor underlined by claims that some partners were unaware of the talks until last Friday (24 August).

Likewise, the Manhattan rah-rah-rah line the two firms have put out regarding the talks suggests that the combined practice should shed some of its less more profitable bits. After all, in a market that has never prized scale, you don’t really need 550 lawyers and merely sticking two decent mid-tier firms together won’t take the firm upmarket in the highly-stratified New York legal community.

All this suggests that Dewey will face some tough choices with a LeBoeuf union. So why the enthusiasm?

Well, as students of mergers will tell you, making such tie-ups work is mainly about will, meaning a genuine hunger to make a deal work rather than indulging in power struggles and one-upmanship.  Having been bruised by its turbulent talks with Orrick Herrington & Sutcliffe, which finally bit the dust in January, Dewey has clearly entered its current talks with LeBoeuf having learned some painful but necessary lessons.

One of those lessons was that a bit of management and strategy might not be a bad idea - a contrast to its recent history of being run by an M&A heavyweight (Morton Pierce), who regularly clocks up 3,000-plus billables a year. And having lost more than 10 partners in the closing stages of the Orrick talks - including, most damagingly, two of Pierce’s key M&A point-men - Dewey appears to have entered its talks with LeBoeuf with the willpower to make some tough choices about its direction.

Plenty of other factors appear to be supporting the talks, which in London at least are enjoying unusually wide support on both sides. The culture of the two firms - both hailing from New York - looks a little more aligned than with the West Coast-based Orrick.

Likewise, it’s easy to see why both sides argue that the practice fit - marrying Dewey’s still-decent M&A brand with LeBoeuf’s strengths in insurance and energy, not to mention a complementary international network - makes a deal look tempting. Similarly, with Dewey coming out fighting after the Orrick collapse with an aggressive run of senior recruitment, the firm still packs a considerable punch.

“It’s hard to think that it hasn’t been specially engineered; it’s like a nut and a bolt - it fits together without much chaffing,” gushed one partner this week.

That chaff-free fit is particularly notable in London, where LeBoeuf has respected securities partner Camille Abouslemain, who quit Dewey amid the Orrick talks but (perhaps surprisingly) has been cited as one of the main European cheerleaders for a union. Both firms have also helped themselves to senior lawyers from Freshfields Bruckhaus Deringer in recent months, further bolstering that common ground.

In London, LeBoeuf is expected to be in the driving seat, as the firm has built a 120-plus lawyer City arm after two years of sustained recruitment. And while any US firm can ship in bodies in London, LeBoeuf gets credit for making some astute appointments. In contrast, Dewey’s far smaller London arm is viewed, even by the charitable, as still a work in progress. This is partly down to the fact that the firm is perceived to have never quite decided which element of its practice it wanted to roll out in London.

All in all, the momentum is building behind the deal, with no-one seriously questioning that the merger will be sealed by its October target, in what would be the largest union ever in New York.

Forget that Dewey is apparently still sitting on multimillion-dollar pension liabilities and that the last mega-merger in the US (the 2004 union between Wilmer Cutler & Pickering and Hale and Dorr) has proved underwhelming. The will is there... now you just need that pesky way.

alex.novarese@legalweek.com