Pillsbury Winthrop Shaw Pittman and Orrick, Herrington & Sutcliffe Merger Called Off
The ongoing merger talks between San Francisco-based Pillsbury Winthrop Shaw Pittman LLP and Orrick Herrington & Sutcliffe LLP has been called off. The potential merger could have created establishment of one of the largest law firms in United States with 1,700 lawyers and combined revenue of about $1.4 billion.
The firms cited conflicts between clients as the main reason for calling off this merger and said that they will not be able to proceed unless these conflicts are resolved. Amidst a flat demand market for legal services, many law firm majors are turning towards mergers as a means of savior to cope with the unstable conditions in the legal industry.
According to a joint statement by Orrick Chairman Mitch Zuklie and Pillsbury Chairman James Rishwain, a conflict of interest between clients in Orrick's public finance practice and tax, environmental and real estate practices of Pillsbury killed the merger. While the chairmen declined to identify specific clients, the legal industry as a whole had its eyes on this proposed merger considering the size of both the firms and histories in Northern California. They were engaged in talks since July this fiscal.
Legal experts opine that it is uncommon for proposed law firm mergers to be derailed by client conflicts. According to a spokesperson from Orrick, both firms have entered into a non-solicitation agreement under which they have agreed to not recruit from each other for one year.
According to a data compiled by law firm consultant, Altman Weil Inc. the number of law firm mergers have grown to 78 from 60 last year. Mitch Zuklie, Chairman, Orrick states that the large law firm combinations are always complex, and expressed that both firms couldn't find a clear way out to make the merger possible. With law firms facing increasing pressure to boost revenues, considering the diminished demand for their services, such mergers and tie-ups are looked at as opportunities to growth. Also addition of new practice areas and opening up of new markets are been tried out. However such combinations can be both costly and logistically onerous.
This decision was reached prior to putting up the matter to a vote before partners of both the firms.
Orrick, a 977-lawyer firm, had $866 million in gross revenue last year, which makes it the 27th wealthiest firm in the country, according to the American Lawyer. In the meanwhile, Orrick has been in merger talks with several law firms in the past. Notwithstanding to each firm's best interest, if the deal would have materialized, the new firm would have been named Orrick Pillsbury.