By now it’s been amply reported that 55 of Anderson Kill’s 126 lawyers are leaving for Reed Smith, effective February 1. In classically hyper-ventilating fashion, the Brits (Legal Week) reported that Reed Smith "has swooped, …taking almost half the fee-earners." Adding to the somewhat melodramatic coverage given the story were confused and even conflicting statements initially coming from the two firms. For example, on law.com the two firms couldn’t seem to agree on the number actually departing, with Reed Smith sticking by the figure of 55 and Anderson Kill rather obliquely calling the number departing "fluid." Meanwhile, on the widely read WSJ Law Blog, their second story about it said:
"Law Blog colleague Amir Efrati spent a good part of today tracking down the story behind the story. The Law Blog’s conclusion: given how little the firms agree on the circumstances surrounding the failed merger, it might be just as well that they didn’t tie the knot."
I decided I’d prefer to get to the bottom of things on my own, so last weekI had a chance to catch up with Greg Jordan, Reed Smith’s managing partner, and the real story is a bit more complex (and human, and nuanced) than the immediate and somewhat sexed-up reports would have had it.
First, here are some of the basic facts:
- As noted, the deal is effective 1 Feb 2008
- A total of 56 lawyers out of about 120 at Anderson-Kill are coming over to Reed Smith: 25 partners, 3 counsel, 27 associates.
- Some of the key personnel who came over include:
- Jeffrey Glatzer, a bankruptcy litigator, and former Anderson Kill firm-wide president and CEO
- Lawrence Kill, an antitrust lawyer and a name partner
- James Davis, managing partner, Chicago
- John Ellison, managing partner, Philadelphia
- Steven Cooper, head of litigation, and J. Andrew Rahl, Jr., head of bankruptcy, both members of the executive committee.
As for how the talks began—and they were merger talks at the outset—Greg reported, which is not news, that Reed Smith is always on the lookout for ways to build key practice areas, and since insurance recovery work is an important practice, the talks with Anderson Kill were logical.
Another aspect of the early reports was also correct: That the merger talks ultimately broke down over conflicts. The exact nature of the conflicts, however, is slightly different than typically implied—it was not that Reed Smith represents large swaths of the insurance industry and Anderson Kill typically sues the insurance industry—but rather that the two firms found themselves representing different interests in some large bankruptcy proceedings. (The rules and customs of the federal bankruptcy court are, shall we say, beyond the scope of "Adam Smith, Esq.," but suffice to note that they are a land unto themselves where, among other things, even knowing and informed consent to waiving potential conflicts is often a non-starter.)
Things then got complicated.
Whether or not the conflicts were irreconcilable, ultimately, it was simply too hard—quite understandably—to ask one or both of two groups of dedicated lawyers who had worked long and hard on sizable matters to resign their client representations. And so the merger talks broke off.
But introductions had been made and some unmistakably positive impresions formed. Soon, some senior Anderson Kill partners came back to Reed Smith and asked if they could still merge if they could do it with almost everyone instead of everyone. Reed Smith’s response was that since it wouldn’t work as a "whole firm" merger, then it was really up to Anderson Kill to solve their partnership issues and work out any alternative they’d like to propose, but that Reed Smith would entertain continuing discussions if they could do that and there was anything they wanted to come back with.
Ultimately, the Anderson partners did resolve their issues and Reed Smith extended offers to 57 lawyers at Anderson Kill and 56 accepted. As Greg somewhat ruefully put it, "it ended up being a heck of a lot more complicated than a straight merger would have been."
Does Greg have any regrets as to how it played out?
"In terms of the business for both firms, going forward, absolutely not! For us, it’s one more step in our plan of filling in gaps in our practice areas, helping us build out our litigation and restructuring practices, and continuing to invest in our key offices in New York, Chicago, and Philadelphia. And as for Anderson Kill, we think, they are going to do very well going forward; they have a good group and a good plan and we wish them all the success in the world."
Absolutely no regrets?
"Well, I have to admit the way it was reported made us look a little predatory—that was unfortunate and unfair. But I guess I understand it made for a better story."
What, then, are we left to learn from this? My read is that both firms—and, on the whole, the individuals involved—are going to be far better off in the long run. And I don’t think this is happy talk.
One of the peculiarities of the practice of almost any individual lawyer, and one of the few abiding truths in our world, is that some people are better off having a platform behind them that provides a diver
unse practice set, high capacity when needed, and a relatively ambitious geographic footprint, and for others those characteristics are irrelevant at best and an expensive and irritating distraction at worst.
My working hypothesis about all this, then, is that the people involved understood that—intuitively and subconsciously if not analytically and with cold rigor—and made their self-enlightened choices.
Where I come from, that’s the way the market is supposed to work.
And don’t we, after all, see this all the time on a smaller scale (one admittedly not lending itself to breathless leads in the press)? Don’t we see people migrating laterally from smaller boutiques, regional and specialty firms, to larger national and international platforms, and don’t we also see exactly the reverse? This was simply a bunch of people doing both those things simultaneously.
