The Wall Street Journal-20080123-Merger Talks Break Down At 2 Law Firms
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Merger Talks Break Down At 2 Law Firms
Two prominent law firms yesterday agreed that merger talks between them had broken down. Beyond that, firm representatives agreed on little about why.
New York-based Anderson Kill & Olick PC, which has a significant practice representing policyholders against insurers, and the much larger Reed Smith LLP, said talks failed and that about 50 lawyers, including the president and chief executive of Anderson, plan to leave for Reed Smith.
Reed Smith says 56 lawyers will join the firm from Anderson, while Anderson says 44 have notified the firm they are leaving to join Reed Smith.
The talks began last summer when Reed Smith, a 1,600-attorney firm in Pittsburgh that has merged with three other firms over the last year, approached Anderson, with more than 120 lawyers, as a merger candidate.
Robert Horkovich, an executive committee member and chairman of Anderson's insurance recovery group, says there were several obstacles to joining his firm with a "megafirm." He said it would conflict with Anderson's main business of representing policyholders against the insurance industry because big firms like Reed Smith often represent insurance companies.
Gregory Jordan, Reed Smith's managing partner, says the firm doesn't represent property and casualty insurers and that it has 35 insurance- recovery lawyers prior to the addition of Anderson's lawyers. "It's the most profitable practice we have," he says.
Anderson's Mr. Horkovich said another reason for the breakdown is that billing rates at firms such as Reed Smith are "20% to 40%" higher than his firm's, and "we didn't want to impose that rate structure on our clients." Reed Smith's Mr. Jordan says the firms' rates are comparable.
Anderson is losing more than a third of its 127 attorneys. Jeffrey L. Glatzer, formerly Anderson's president and chief executive, who is moving to Reed Smith, says he's "seeing a substantial number of significant clients who are joining us at Reed Smith."
