Irreconcilable differences

Getting Dewey Ballantine, a New York white shoe law firm, would have been a jewel in the crown of Ralph Baxter, chairman and chief executive officer of Orrick, Herrington and Sutcliffe. But just two months after Dewey and Orrick admitted that they were discussing a merger, talks fell apart.
Baxter has had a track record of trying to grow his firm both organically and inorganically. Orrick has been reportedly in talks with no less than four other US law firms in the past two years, but none as large or high-profile as Dewey. The combined firm, which would have been named Dewey Orrick, would have had almost $1 billion in revenues and over 1,200 lawyers, with 500 in New York alone, making it the city’s seventh largest law firm.
Having Dewey, known for its mergers and acquisitions expertise, would have been a nice complement to Orrick’s strength in debt financing, particularly for private equity deals, the value of which reached over $700 billion last year. Dewey’s own chairman, Morton Pierce, is a top M&A lawyer; he advised HCA in its $33 billion buyout offer last year.
According to Dealogic, a financial data provider, Dewey ranked 19th globally in volume of private equity deals advised in 2006, at $59.2 billion. In the same year, Orrick did not even figure in the top 100 ranking of legal advisors to private equity deals. But Orrick did advise on $110 million or five, private equity deals, a vast improvement over the previous year when it had advised on no such deals. Its largest deal was advising VLST, a health care firm, on its $55 million financing led by Texas Pacific Group Ventures.
Pierce and Baxter would have co-chaired Dewey Orrick, but Baxter wanted more—he would have assumed an additional title of “presiding partner.” He also reportedly lobbied for six seats on a management committee of 11.
As both firms tried to iron out their differences, as well as resolve the issue of Dewey’s unfunded retirement benefits, partners voted with their feet. Two star M&A partners who had worked closely with Pierce, Michael Aiello and Jack Bodner, left for Weil, Gotshal and Manges, and Covington and Burling, respectively. At least nine other lawyers also left, including Dewey’s top bankruptcy and energy partners. Dewey commented that not all departures were related to the merger.
For Orrick to leap into the big leagues of private equity deals now, Baxter will have to keep hunting.