Legal News

Two Sides to the Anderson Kill, Reed Smith Merger Talks

By Ashby Jones

Earlier today we reported that merger talks between Anderson Kill and Reed Smith had broken down, but that several dozen lawyers were leaving Anderson to join Reed Smith. 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.

Robert Horkovich, the chair of Anderson’s insurance recovery group, says there were several obstacles to joining a “megafirm” like Reed Smith. Such a move, he says, would have conflicted with Anderson’s main business of representing policy holders against the insurance industry because big firms like Reed Smith often represent insurance companies.

But Gregory Jordan, Reed Smith’s managing partner says the firm doesn’t represent property and casualty insurers and that it had 35 insurance-recovery lawyers prior to the addition of Anderson’s lawyers. “It’s the most profitable practice we have,” he says.

Anderson’s Horkovich says another reason for the breakdown was that billing rates at firms such as Reed Smith are “20% to 40%” higher than his firm’s, and “we didn’t want to impose that rate structure on our clients.” But Reed Smith’s Jordan said the firms’ rates are comparable.

So far, so good, right? Well, Horkovich says that after talks broke down last fall, numerous shareholders, a designation similar to partner, who had offers to go to Reed Smith decided to stay. “I’m gratified by the number of attorneys who were offered positions at one of the top 10 firms in the world and said ‘no,’” he says. But Reed Smith’s Jordan says once the talks broke down, all but one of the Anderson shareholders who were offered positions at Reed Smith accepted them.

And the disagreements don’t end there. Though Anderson is losing more than a third of its 127 attorneys, Horkovich says “a substantial number” of the outgoing lawyers’ clients are staying, so the exodus is “a net gain, financially, for our firm.” Jeffrey L. Glatzer, formerly Anderson’s president and chief executive who is moving to Reed Smith, says he’s “seeing a substantial number of significant clients who are joining us at Reed Smith.”

And the firms aren’t even square on how many lawyers are moving over. Reed Smith says 56 lawyers will join the firm from Anderson, while Anderson says only 44 have given notice of their intention to join Reed Smith.

The firms agree on at least two things: The firms represent clients on opposite sides of asbestos-company bankruptcies, which created conflict issues. Also, personnel changes will take effect on Feb. 1.

Full post as published by Law Blog - WSJ.com on January 22, 2008 (boomark / email).