Another Big Law Firm Merger Called Off
While 2013 has been hailed as one of the best years for law firm mergers, there's no shortage of big law mergers being called off. The latest news of the proposed merger between Patton Boggs and Locke Lord being discarded is not raising eyebrows, as just in November, we heard of two other big law mergers, between Orrick and Pillsbury and the one between Dentons and McKenna falling apart.
Be that as it may be, the proposed merger between Patton Boggs and Locke Lord had been hailed as one of the biggest possible this year and made news even when preliminary talks had been announced. Both firms went a long way to do due diligence but the talks did not materialize, apparently for multiple reasons.
Reuters reported that according to its sources there were two reasons that stood out more than the others. The first is the involvement of Patton Boggs in a controversial matter in a multibillion-dollar environmental judgment against Patton Boggs in Ecuador, and the other is the extent to which Patton Boggs wanted to retain its control of the firm and its brand.
Locke Lord seems to have reservations about the court battle between Chevron and Patton Boggs in which Patton Boggs is seeking to have the Ecuadorean judgment enforced. Patton Boggs sued Chevron alleging the company is trying to cut off the ability of the plaintiff's in the Ecuadorean judgment to fund their case.
In response, Chevron has moved to file a counterclaim alleging that Patton Boggs was aware the Ecuadorean judgment had been secured through corruption and that the lead attorney in the matter, James Tyrrell, had reservations about the matter over ethical concerns, but accepted it due to the firm's financial situation. Both Tyrell and Patton Boggs have denied the claims, but Locke Lord has a major part of its custom from energy companies, and possibly it did not want to sour its relationship with Chevron and the energy industry lobby.
By all indications, Patton Boggs desperately needs a merger to return balance to its otherwise dwindling fortunes. According to American Lawyer profits per partner has already dropped by 15 percent compared with similar periods in 2012, and earlier this year, the firm had laid off 30 lawyers and 35 staff members. However, Edward Newberry, the managing partner of Patton Boggs had indicated to the media that the firm was not downsizing, but rightsizing itself.