November 14, 2014
LAW360
By Michael Lipkin
Morgan Lewis & Bockius LLP’s announced deal Friday to take on 227 Bingham McCutchen LLP partners isn’t the first time Chair Jami Wintz McKeon has overseen a mass defection of partners from a distressed firm to Morgan Lewis.
McKeon, who became the first female chair of Morgan Lewis last month, also played a crucial role in the firm’s 2003 absorption of 50 partners and more than 100 other lawyers from dissolving Brobeck Phleger & Harrison LLP. Then a senior litigation partner, McKeon was tasked with persuading the lawyers to join Morgan Lewis and overseeing their integration, leading the Philadelphia-based firm’s major expansion into California.
Former chair Frank Milone has said that he chose McKeon because many of the Brobeck attorneys were litigators too, and that her positive personality proved instrumental in bringing the lawyers aboard. McKeon shuttled between Philadelphia and San Francisco to negotiate and manage the move, eventually relocating her family to San Francisco to keep a close eye on its progress.
“It’s ironic that in her first month in as chair, this deal is happening,” Larry Watanabe of legal recruiting firm Watanabe Nason LLC told Law360. “[The Brobeck deal] was one of the most successful integrations, in terms of retention rate, in a deal of its type in a long time.”
Watanabe, who described himself as a close friend of McKeon’s, said one of the challenges to the 2003 integration was that more than 700 of Morgan Lewis’ lawyers were based on the East Coast, making it difficult to ensure the Brobeck lawyers felt like part of their new firm, with its limited infrastructure in California.
McKeon became very involved with the new lawyers and implemented a “buddy system,” where incoming lawyers were paired with Morgan Lewis attorneys who took them under their wings, Watanabe said.
“She made sure they were in close contact,” Watanabe said. “Many firms have attempted deals like this in the past, and most have failed. Even with systems in place to help, you need someone driving the train hard and making sure the systems are working. Jami was really on top of making sure those things stuck.”
Rather than allowing its new partners to flounder during a lingering “study period,” McKeon is likely to employ similar action-oriented tactics to make the Bingham deal succeed, according to Michael Rynowecer, president of BTI Consulting Group Inc. Any new business development initiative will likely involve some of Morgan Lewis’ new attorneys, he said.
“Certainly the buddy system will take place here too,” Rynowecer said. “Morgan Lewis didn’t just sit back and wait for partners to get to know everybody [during the Brobeck deal]. I would expect to see teams and early training, with the firm working toward some concrete outcome.”
As with Brobeck, the Bingham deal will allow Morgan Lewis to pick up valuable clients and expand its reach in key markets, without assuming the full liabilities that come with a merger or acquisition, according to Rynowecer.
“The lesson learned seems to be applied here, because Morgan Lewis is getting a really valuable presence in Boston and improving their position in Silicon Valley,” he said. “They’ve learned they can strategically add assets to the organization without necessarily taking on the full burden of a law firm.”
Peter Zeughauser, founder of the Zeughauser Group, told Law360 that deciding how to deal with prospective liabilities, including the specter of clawback suits, is crucial when managing complicated lateral transfers from financially troubled firms. Morgan Lewis was eventually forced to shell out $10.2 million in Brobeck’s bankruptcy to settle claims that its partner acquisition helped lead to the firm’s demise “ a relatively small figure, given the number of attorneys who left.
“There’s a lot to learn in how to structure deals to make assuming those liabilities prudent, and I’m sure it’s Morgan Lewis’ great advantage to have been through that,” Zeughauser said. “They handled it extremely well in the Brobeck deal.”
For her part, McKeon has said her role overseeing the Brobeck lawyers’ transition reinforced for her that networking is the key to success in the legal industry. Following the Brobeck integration, McKeon took on a series of leadership roles that culminated in her election last year as firmwide chair.
“In a law firm, you don’t have bricks and mortar,” McKeon told Law360 last month. “You have two things of value: your clients and your talent, and both of those are about relationships. The firm’s investment of putting me into that environment [with the Brobeck attorneys] sent a strong message about the value we place on integration.”