Firm Watch
Aug. 6, 2002
Firm Celebrates Anniversary of Merger With a Pair of Parties
When law firm partners describe successful mergers, they talk about things like synergy, cultural fits and cross-selling. So it's not surprising that those words have been in the vocabulary of two of the architects of Lillick & Charles' merger with Nixon Peabody last year.
When law firm partners describe successful mergers, they talk about things like synergy, cultural fits and cross-selling. So it's not surprising that those words have been in the vocabulary of two of the architects of Lillick & Charles' merger with Nixon Peabody last year.
Lillick & Charles, a venerable 104-year-old San Francisco institution, wedded the much larger, East Coast-based Nixon Peabody on Aug. 1, 2001. Last week, the firm celebrated its one-year anniversary with parties in San Francisco and Orange County.
So far, the merger has worked for all the right reasons, according to John Rosenthal, the former managing partner of the 80-lawyer Lillick & Charles, and Richard Hoffman, the managing partner of Nixon Peabody's San Francisco and Orange County offices.
Lillick, Hoffman says, was facing something common at many smaller firms: It just didn't have enough lawyers, staff and offices "to cover everything equally well."
It also was having a hard time attracting associates and lateral partners, at a time, two years ago, when lawyers weren't flocking to midsize firms.
Finally, he says, many of the firm's large, institutional clients were based on the East Coast, and they kept saying things like, "If only you had an office here."
From the perspective of the two California lawyers, those problems are resolved at the 550-lawyer Nixon Peabody.
The firm has a huge East Coast presence, with offices in New York, Boston, Washington, D.C., Rochester, and eight smaller towns. Those offices, and the sheer size of the firm, attracted new clients to the California lawyers.
"People uniformly have found that the larger-firm format has opened doors," says Rosenthal, who is the co-chair of Nixon's 230-lawyer business and technology group.
Rosenthal, for instance, credits the merger for one of the firm's newest clients, the California power authority. In a much larger firm, the partners in San Francisco were able to attract Howard Golub, the former general counsel at Pacific Gas & Electric, to their office. Golub in turn wooed the state agency.
"Howard probably wouldn't have come without the merger," Rosenthal says.
Nixon also is attracting attention among partners and associates looking to move.
"A lot of people were attracted here when it was a bigger firm," Rosenthal says, referring to the days before 200 Los Angeles partners broke off from Lillick & Charles to form Lillick & McHose in the 1980s.
The same, he says, may be true again.
In the past few months, Nixon's California offices have picked up two lateral partners in real estate and energy law. The firm also has convinced two of its East Coast partners to move West, and in the last year, Nixon Peabody has lost only one partner, who left just before the merger to form his own small firm.
Nixon Peabody also upped associate salaries to $105,000 for first-years. With bonuses and lower-than-average billable-hour requirements of 1,850 hours, that salary matches what's paid elsewhere, Rosenthal says.
Next year, Hoffman says, he wouldn't be surprised if Nixon's California offices grew 10 percent to 20 percent. Nixon Peabody likely will add lawyers in Orange County and is eyeing West Los Angeles, where it eventually may open a new outpost.
The Lillick & Charles partners also realized another benefit in the past year. Nixon is large enough to avoid the cyclical ups and downs of a smaller firm. Diverse practices such as litigation, bankruptcy and finance work, for instance, buoyed practices like business and technology.
On the most objective level, revenues are up. In 2001, the firm saw its revenues rise 7 percent to $244 million.
Average profits per partner are $430,000, according to published reports.
"The average has definitely gone up," Hoffman says of profits for former Lillick partners. "People are pleased."
One unexpected setback came after Sept. 11. The Lillick & Charles lawyers were set to celebrate their new look at a party for clients on Sept. 14.
Understandably, Rosenthal says, "people weren't really open to you coming by and saying, 'Let me tell you about my new firm.'"
The event was canceled and rescheduled for December. That month was more celebratory, as several hundred lawyers and clients partied at San Francisco's Legion of Honor museum.
Although the Lillick & Charles lawyers found new work "right out of the shoot," Hoffman predicts that the benefits of the merger really will be felt in the next 18 months to three years.
"It's accelerating," he says. "Many people's practices are rejuvenated and stepped up. It's kind of like having a new job."
Erik Cummins
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