Dec 19 (Reuters) - Washington law firm Patton Boggs has ended merger talks with the larger Texas-based Locke Lord, according to two sources familiar with the negotiations.
In October two former Patton Boggs partners told Reuters the firm, known for its lobbying and public policy work with nearly 500 lawyers and strategists, was in merger talks with Locke Lord of Dallas, which has more than 650 lawyers and consultants.
The merger would have created the 36th largest U.S. law firm.
Edward Newberry, managing partner of Patton Boggs, declined to comment. Locke Lord managing partner Jerry Clements did not respond to requests for comment on Thursday.
It is the third closely watched proposed merger between two big law firms to have failed in less than a month.
On Thursday, the two sources said that the talks had fallen through in part because Patton Boggs wanted to retain its brand and control of the firm. Patton Boggs was concerned that it would have been absorbed by the larger Locke Lord, one of the sources said.
At the same time, Locke Lord had reservations about an ongoing legal battle between Patton Boggs and Chevron over a multibillion-dollar environmental judgment against Chevron in Ecuador, according to two attorneys close to Patton Boggs. Patton Boggs partner James Tyrrell represents the Ecuadorean villagers who have sought to secure and enforce the judgment in the United States and foreign courts.
Patton Boggs sued Chevron in February, accusing the company, among other things, of trying to cut off the villagers' ability to fund the case.
In response, Chevron has asked a federal judge in Manhattan for permission to bring counterclaims against Patton Boggs, saying the firm knew that the judgment was secured through corruption. The company said Tyrrell took the case despite having ethical concerns about its merits but did so because of "enormous financial pressure at Patton Boggs," according to court papers.
Tyrrell and Patton Boggs have denied the claims.
The two attorneys said Locke Lord was concerned that Patton Boggs's involvement in the case could jeopardize future business relationships with Chevron or other energy companies.
Locke Lord, which is known for its energy practice, has recently represented companies such as Natural Gas Partners, Argent Energy and White Deer Energy, in acquisitions and financing arrangements, according to its website.
The failure of the merger talks comes as Patton Boggs has been hit by financial struggles.
In March, the firm said it had laid off 30 lawyers and 35 staff members. Profits per partner, at $736,000, were 15 percent down in 2012 compared with the previous year, according to the legal trade publication American Lawyer.
Newberry told Reuters in November that the firm's financial picture was improving.
"We have aligned our staffing and attorney headcount levels with our revenue in a way to produce strong profitability for the firm," he said.
In November, talks fell through between Orrick Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman. The following day, Dentons and McKenna Long & Aldridge called off merger discussions.