December 14, 2011
THE DAILY JOURNAL
By Casey Sullivan
Law firms are ultimately about key partners. Rainmakers who have the ability to connect with clients and lure enough steady business to feed not only their own salaries but often scores of other partners, associates and staff.
True rainmakers can also carry the fates of firms on their backs, inflicting devastating consequences on those they depart, and showering tremendous fortune on firms blessed with their arrivals.
This year’s lateral activity claimed some key rainmakers in California, and industry watchers say they expect more of the same in 2012.
“I haven’t seen this level of activity in years; and it’s all over the state,” said recruiter Larry Watanabe of Watanabe Nason, LLC, who was behind two of the largest deals this year. “In 2012, we’ll see a number of law firms close in a number of cities… It may be the busiest first quarter we’ve seen in at least the last three years.”
Moving toward the new year, we decided to take a look back at five key lateral hires of 2011 and the consequences that flowed from their movement to gain some insight into what we might see in the first quarter of 2012:
Two-for-one deal, $30 million jackpot
The year’s single most momentous move came in May when Edward W. Zaelke and Adam S. Umanoff, among a group of 18 lawyers, left Chadbourne & Parke LLP for Akin Gump Strauss Hauer & Feld LLP. The deal decimated Chadbourne’s only California office located in downtown Los Angeles and catapulted Akin Gump’s project finance and renewable energy practices to become one of the most desired destinations in the nation for lawyers specializing in those fields.
Since bringing their group to Akin Gump seven months ago – along with a book valued at $30 million – Zaelke and Umanoff have grown the Dallas-based firm’s global project finance and renewable energy practice from five to 35 lawyers nationwide.
Among the lawyers to join Zaelke and Umanoff at Akin Gump are Baird Fogel, former general counsel of BP Solar International Inc., who arrived in the firm’s San Francisco office in November; David Burton, former senior counsel of GE Energy Financial Services, who joined the firm’s New York office in September; and Thomas Trimble, former co-chair of Hunton & Williams LLP’s renewable energy practice group, who joined the firm’s Washington, D.C. office in August.
In addition, Akin Gump opened a downtown Los Angeles office primarily to provide a home for the newly acquired ex-Chadbourne group. Zaelke said the office has served as a perk for some laterals who may not have been as willing to come to Akin Gump if they had had to make the longer trip to Akin Gump’s other L.A. office in Century City.
Meanwhile, Chadbourne in Los Angeles barely remained intact after being whittled down from 24 lawyers to six. Chadbourne’s spokesperson, Andrew Blum, said in a statement the firm remains committed to expanding its 25-year-old Los Angeles office in project finance and litigation. He said the firm remains one of the top tier firms in the nation for renewable energy and project finance, but industry watchers say they believe Zaelke and Umanoff’s defections were signs those practices at Chadbourne weren’t doing as strongly as they once were.
“Chadbourne used to be at the top of the project finance practice along with Latham, Milbank, and Simpson Thacher, but over the years they have been slipping,” said Bobbie McMorrow of consulting firm McMorrow Savarese, who brokered the deal. “I think Chadbourne would argue this, but I think it’s an enormous loss. They are the next generation of business developers.”
Dewey pads bankruptcy practice, Hennigan Dorman gets married
McMorrow was the same recruiter behind perhaps the second highest-impact deal of the year, which brought bankruptcy specialist Bruce Bennett, who is currently representing the Los Angeles Dodgers in Chapter 11 proceedings, to Dewey & LeBoeuf LLP in February from his former litigation boutique Hennigan Dorman LLP. Bennett brought with him nine other lawyers and a book of $15 million to Dewey. Hennigan Dorman’s merger with McKool Smith seven months after Bennett’s departure was enough to make industry observers ponder whether the merger was induced by Bennett taking his business away from the firm. Bennett dismissed that notion. He said the Hennigan firm sought a merger partner before his departure. Some firms that engaged Hennigan Dorman (then, Hennigan Bennett & Dorman) in talks before he left were more interested in certain parts of the firm rather than its whole, Bennett said, which prompted him to explore leaving.
“The fact the firm as a whole had started looking was probably the most significant starting point period,” Bennett said. “Because as that was happening the bankers focused on the kind of place that would be best for its practice. And early on we thought that we wanted a greater presence in New York and potentially worldwide.”
In the end, Bennett’s departure to Dewey was spurred primarily from his seeking an international platform and the opportunity to join forces with Martin Bienenstock’s robust New York practice, which touted complementary private equity and hedge fund clients on the East Coast. For Dewey, Bennett and his team added an anchoring West Coast bankruptcy component for Dewey’s business solutions and governance practice group, padding the practice with a total headcount of 73 attorneys, according to the firm’s website.
“Now we would like to think we are regarded as one of the largest shops in the nation with as much depth as anyone, and we ought to be on the very short list for all of the most difficult, largest assignments,” Bennett said.
On Hennigan’s end, McKool is now aggressively looking to expand its commercial litigation practice in Northern California, particularly in intellectual property, according to industry insiders.
Dechert gains LA, but Orrick takes loses on both coasts
Commercial litigator Edwin Woodsome, who departed Orrick, Herrington & Sutcliffe LLP, where he was once national chair of the litigation department, opened a Los Angeles office for Philadelphia-based Dechert LLP with a team of three other partners.
The April move, brokered by Larry Watanabe of Watanabe Nason LLC, took Woodsome’s $10 million to $15 million book out of Orrick and placed it toward Dechert’s efforts to expand in newly charted territory. Dechert’s Los Angeles office, which focuses on litigation, has already doubled in size from four to eight lawyers with the acquisition of lateral associates to support the four ex-Orrick partners’ business. Woodsome said multiple lateral deals are currently being brokered for the beginning of the New Year, but added they could be done faster than that.
“We’ve added several lawyers and we’re about to add some more,” Woodsome said. “We’ve been very fortunate. It was easier than I thought it was going to be.”
The Los Angeles office was the fourth in California for Dechert. The firm has offices in San Francisco, Orange County and Silicon Valley.
The already humbling Orrick defections were amplified for the San Francisco firm because they came at the same time four other partners in New York – Daniel Thomasch, Richard Mark, Lauren Elliot and Joseph Evall – left for Gibson, Dunn & Crutcher LLP. Those partners specialized in litigation as well, representing clients in life sciences, pharmaceutical and biotech industries.
Riding a Jenner wave, questioning Hogan’s West Coast plans
In November, commercial litigator Richard Stone, who focuses much of his work in the media and entertainment industries, took his $11 million book and team of five other partners from Hogan Lovells US LLP’s Los Angeles office to Jenner & Block. The deal, brokered by Watanabe, cut Hogan’s Los Angeles partner headcount from 12 to six and almost doubled Jenner’s Los Angeles partner headcount – now 14. Three Hogan associates have since followed Stone’s group.
Recruiters said this move puts a cramp in Hogan’s expansion efforts in California and calls into question how significant its Golden State offices are within the firm. The firm that staffs more than 2,300 lawyers in 40 international offices houses 20 lawyers in San Francisco, 12 lawyers in Silicon Valley, and, with the defections to Jenner, the Los Angeles office is down to 24 lawyers, according to the firm’s website.
One departing partner in Stone’s group said, privately, after the move:”Hogan has more of a diffuse reputation. They do much international and regulatory work. Jenner just has a different niche… It’s easier to know more of your partners [at Jenner] and things are done more by consensus.”
Hogan’s Los Angeles managing partner Stephen Kay responded by saying the city remains a key piece to Hogan’s global strategy and despite the losses the firm has strengths in commercial litigation in Northern California as well.
As for Jenner, industry insiders point to the Stone group as proof the Chicago firm is committed to sharp growth in Los Angeles. Since the office was opened in April 2009, the firm has grown from two lawyers – its initial managing partners Rick Richmond and Brent Caslin were brought to Jenner via Watanabe from Kirkland & Ellis LLP – to the 25 lawyers it houses today, according to the firm’s website.
The office previously expanded its insurance coverage practice with the additions of partners Jerold Oshinsky, Linda Kornfeld and Mary Calkins, who came from Gilbert Oshinsky, Dickstein Shapiro LLP and Howrey LLP, respectively. Stone’s group gives the Jenner office resources to do more in intellectual property, antitrust and other commercial litigation.
Honorable mentions
Other rainmakers who made a splash in 2011 include O’Melveny & Myers LLP’s former securitization practice head Dan Passage, who moved to Bingham McCutchen LLP in Los Angeles. Passage had been at O’Melveny for 14 years and served on the firm’s 11-person policy committee. His departure – with a book between $5 million and $6 million – only fueled speculation over lateral departures from O’Melveny, and might as well have served to put its partners on every recruiters’ speed dial.
Intellectual property heavyweight Henry Bunsow’s departure from Howrey LLP to Dewey & LeBoeuf LLP’s San Francisco office is also worth noting. His practice put Dewey on the map as one of the few premier firms capable of landing top tier intellectual property work.