Washington: Troubled US lobbying giant Patton Boggs avoided a financial cliff on Friday when a larger law firm agreed to acquire many of its partners and its name, which for decades was synonymous with influence in Washington, DC.
The acquisition of Patton Boggs by Squire Sanders, a firm with roots in Ohio, followed furious talks that a day earlier appeared on the verge of collapse. Late on Friday, the two firms announced they had reached a deal, concluding negotiations that had stretched back at least to February. They said they would begin operating under the name Squire Patton Boggs effective June 1.
Financial terms of the deal were not disclosed, but the combined entity would rank 23rd among US law firms with more than $1bn in revenue, according to financial figures in the American Lawyer and a Patton Boggs memo.
Patton Boggs was viewed by many in the legal industry, including former partners, as being in need of a rescue, despite a storied history of representing US presidential campaigns, major corporations and governments around the world. Its revenues were slipping and its headcount had shrunk by about half since 2011, down to 300 lawyers.
The firm’s problems included becoming entangled in a complex case in which Ecuadorean villagers sought to enforce an $18bn pollution judgment against Chevron Corp. Once seen by the firm as a potential source of lucrative legal fees, the case became a liability and Patton Boggs agreed this month to pay the oil company a $15m settlement after a court found the judgment had been obtained fraudulently.
Its problems also stemmed from the drying up of one major case, defending New York City against health-related claims by firefighters and emergency workers who responded to the September 11, 2001, attacks on the World Trade Center, several former Patton Boggs partners said.
Its revenue dropped by 12 percent from 2012 to 2013, to $278m, according to figures in an internal memo in January, and the firm hired restructuring advisers. The firm also struggled under an outdated pay structure and a stagnant demand for lobbyists amid political gridlock, lawyers inside and outside Patton Boggs said.
With 1,300 lawyers from Sydney to Bratislava but few in Washington, DC, Squire Sanders now stands to gain a stronger presence there. It is best known for its practices in bankruptcy, business litigation, tax, labor and employment and mergers and acquisitions. The combined firm will consist of roughly 1,600 lawyers spanning 45 offices in 21 countries around the world, with 280 of the lawyers in Washington, DC.
As of Tuesday, the acquisition appeared to be headed for approval, with Patton Boggs partners casting their votes on the combination and remarking to colleagues they would be shocked if it were turned down. At Squire Sanders, insiders also expected smooth sailing.
On Thursday, however, the deal ran into a snag. Squire Sanders halted its partnership vote after a motion was filed by a group of Ecuadorean villagers urging a New York federal judge to revisit a May 7 settlement resolving claims that Patton Boggs tried to enforce a fraudulent judgment against the oil giant on behalf of the Ecuadoreans. The motion was filed by Steven Donziger, a lawyer for the villagers, who has been an outspoken critic of the firm, claiming it abandoned its duty to its clients.
The merger between Patton Boggs and Squire Sanders was conditional on the resolution of the case between Chevron and Patton Boggs, and the late motion caused Squire Sanders to worry the case was not truly resolved, according to one source close to the deal. Fear was spreading that the delayed voting process would mean Patton Boggs partners would become impatient and jump ship, disrupting the deal, according to three former Patton Boggs partners and another source close to the deal. A handful of Patton Boggs partners already had informed their colleagues that they planned to leave, according to two former Patton Boggs partners.