How $16Bn Mellon Corp Drove Reed Smith to Get Parker and Richards Butler Reed Smith Richards Butler

DEC 2006/JAN 2007 ISSUE 170 Pittsburgh steal How $16bn Mellon Corp drove Reed Smith to get Parker and Richards Butler Reed Smith Richards Butler Touchdown When $16bn key client Mellon Corp got active in London, Reed Smith realised it needed to move fast. Richards Butler is the latest part of a high-risk global expansion project TOM FREEMAN IN OCTOBER LAST YEAR, REED SMITH Jordan already had experi- managing partner Greg Jordan was sent a ence of a UK law firm takeover, Legal Business feature article. The piece albeit on a much smaller scale. concerned Richards Butler managing partner On the day he took over the Roger Parker’s desire for his firm to achieve a reins at Reed Smith, 1 January US merger. The title was ‘Get Parker’. 2001, his firm acquired a small In the feature, Parker rationalised, as LB London and Coventry outfit has long argued, that in future an elite group with a respected corporate and of global law firms of the Clifford Chance AIM practice, called Warner and Skadden Arps genus, would exist, as Cranston. That began the era of would up to 20 other large international an international Reed Smith. outfits. He realised that for his firm to The move – a relatively modest survive and not fade into mid-level obscurity acquisition of fewer than 100 and mediocrity, it would have to be part of UK lawyers – was precipitated by this latter group. Jordan liked the article, and the actions of a key client that what his Richards Butler counterpart had to had been talismanic for his firm say. He decided to try and get Parker. for over a century: the $16bn market cap Mellon Financial Corporation, a world leader in asset management, with nearly Roger Parker will become part of a transatlantic giant when his firm $5 trillion under its control. merges on 1 January to create Rarely have the fortunes of one Reed Smith Richards Butler 2 Legal Business December 2006/January 2007 Photography PHOTOSHOT, ADRIAN HOBBS Image manipulation COOK DESIGN Reed Smith Richards Butler client and one law firm been so MELLON AND REED SMITH – IN THE BEGINNING… closely intertwined and for so long, in this case since each other’s near-simultaneous foun- Judge Thomas Mellon was an Ulster Scot whose parents – farmers – set off for the USA in 1818. He dations in Pittsburgh: Mellon in was five years old. By 1869, he was a wealthy man, having used law as a stepping-stone into great 1869, Reed Smith in 1877. entrepreneurial endeavours, as Pittsburgh’s golden age (or rather, iron and steel age) was in its By 2001, of course, a glob- ascendence. That year he founded T Mellon & Sons – a bank that sons Andrew and Richard would alised economy had taken hold. come to transform into a US powerhouse. Mellon was acquiring a UK In 1877, James Hay Reed and Philander Chase Knox launched a law firm in Pittsburgh: Knox & finance house, Newton Invest- Reed. They had previously worked for Reed’s uncle, David Reed, who died in that year. Knox was a ment Management, and would boyhood friend of Henry Clay Frick, the coke-making billionaire; Reed went to university with Andrew need substantive English law Mellon. Such connections were peerless, as Pittsburgh powered America’s industrial revolution. From advice. The risk of Reed Smith a standing start, fees rocketed to $110,000 in 1889. The two partners split the profits down the missing out on the action of middle. The average wage at the time was $500 a year. such a key growth client – it ‘Andrew Mellon was in many ways the original venture capitalist,’ remarks Mellon Corp general bills Mellon in excess of $10m counsel, Carl Krasik. Reed Smith was Mellon’s key legal adviser then, and remains so 130 years on. each year – was a potential Today, the wealth has been spread: 256 equity partners will expect a profit share averaging almost disaster in the making. $900,000 each. Fast-forward four years, and to Warner Cranston’s legacy senior partner, Ian Fagelson. He chatted with Jordan about a potential Richards Butler deal. Jordan, an atypically impulsive and energetic young leader, flew straight into London after the LB article had been digested. It was Fagelson who put in the initial call to Parker, in mid- October 2005. ‘Greg Jordan’s in town,’ he said. ‘Would you like Andrew Mellon Richard Mellon James Hay Reed to meet up?’ Size matters was promoted to the On 1 January 2007, the Reed general counsel Smith Richards Butler merger ‘Mellon has directly influenced position in June goes live. Several banking clients 2006. When at Reed have emerged out of Mellon con- our strategy.’ Greg Jordan, Reed Smith Smith, he’d made a nections and there is more work point of getting to to be exploited, particularly know every single one of the 350 across Europe and Asia. But a sin- lawyers at the firm. ‘That would gularly successful, tight-knit Reed be impossible now,’ he notes. Smith culture will be severely put Reed Smith will comprise 1,300 to the test. Mellon’s new general lawyers as of January, and over counsel, Carl Krasik, in an 1,500 lawyers after a planned exclusive interview with Legal Chicago tie-up next March. Business, is under no illusions. Jordan is clearly now con- ‘Greg deserves an enormous pat fronted by the biggest challenge on the back,’ he says. ‘But a managing partner of an inter- looking from the outside, the national law firm can face: more places and time zones living up to a globalised you’re in, the greater the pressure ambition. He’s got Parker. But on management to create a firm.’ there is plenty more still to do. Krasik was an executive-level This piece examines partner at Reed Smith before the clients that drove the Fagelson: put the initial call in to Parker moving to Mellon in 1995. He expansion, the financial risks > December 2006/January 2007 Legal Business 3 Reed Smith Richards Butler > involved, and the one of Jordan’s closest allies, Reed Smith’s expansion strategy. Key chances of success corporate partner and director partners were dispatched to California in in a market littered of strategic planning Michael 2003 after the firm acquired a venerable but with US-UK flirta- Pollack, was dispatched with a financially patchy 250-lawyer litigation tions and shotgun one-way ticket to the UK. Parker firm, Crosby, Heafey, Roach & May, and marriages. Today, says: ‘When Mike arrived, it this will happen again when Reed Smith Coudert Brothers is quickly became a case of “Can and 140-lawyer Chicago firm Sachnoff & in the bankruptcy we do a deal?”’ Weaver become one in March 2007. In that courts, and Clifford Parker assessed the potential instance, the head of litigation, Tom Chance is a dirty for a Reed Smith tie-up, not McGough (son of Walter McGough, the pair of words in a least on account of its most former head of litigation at Reed Smith and post-Brobeck Cali- famous client. ‘Reed Smith had a mentor of Greg Jordan), will move to fornia. Meanwhile, had some successes in making Chicago. The seniority of the dispatched the likes of Latham sure it was an important partner lends credence to the gravity of the & Watkins, DLA provider to Mellon in Europe, commitment. This isn’t lip service; it’s Piper and a Cohen: Sullivan supremo also close to Mellon but it undoubtedly needs senior partners making genuine sacrifices in potential Dewey more,’ Parker notes. ‘There’s order to try and create an ongoing culture Orrick threaten to leave less glob- something about US law firms: as a new, much larger firm emerges. But the alised multi-site firms looking if you don’t track your clients rapidity of growth has caused Jordan to sparse. As the competition intensi- as they expand internationally, pause on a planned launch in Texas. ‘We’ll fies, so clients pare down their you’re going to be pretty vul- wait till the dust settles,’ he confirms. favoured adviser lists, and value nerable in your own back Expect a move towards the end of next billing starts to mean what it says. yard. There’s a threat to the year, sources say. The fatal mistake is to forget about business there.’ your core values and core clients. On the day that Reed Smith Ties that bind On that count, certainly, Reed took over Warner Cranston, it As it enters a tumultuous year involving the Smith has its corporate survival sent its primary Mellon client bedding down of two major mergers, Reed head tightly screwed on. In reality, relationship partner, Tom Todd, Smith is set to embark on raising the quality it had no choice. to London, to make the right of the core client base and the standard of introductions and develop the complex, ongoing, multi-office work that Follow your client client relationships. He’s still can be executed. Again, Mellon has been Parker is in charge of a 300-lawyer there, nearly six years on. influential in all this – a tree-trunk of operation with offices in France, This is an illuminating continuity from which new branches are Greece, Dubai and other centres – example of a notable element of springing. ‘Mellon has directly influenced plus a semi-detached Hong Kong group that shares the name, if not REED SMITH RICHARDS BUTLER – MAKING IT WORK all the management agreements, with London. The fate of Parker’s all-too-autonomous Hong Kong It’s all very well to talk up the global synergies – but execution is all, as any law firm leader will admit.

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