(Recasts throughout, adding details of takeover effort and
voting, context and background)
By Casey Sullivan and David Ingram
May 23 Troubled U.S. 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, D.C.
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 U.S. law firms with more
than $1 billion in revenue, according to financial figures in
the American Lawyer and a Patton Boggs memo obtained by Reuters.
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 U.S. 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 $18
billion 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 $15 million 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 Sept.
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 $278
million, according to figures in an internal memo obtained by
Reuters 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The firm also struggled under an outdated pay structure and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, D.C., 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, D.C.
DOWN TO THE WIRE
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
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
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
Patton Boggs moved quickly, employing prominent New York
lawyer Elkan Abramowitz to request a speedy dismissal of the
Ecuadoreans' bid to block the Chevron-Patton Boggs settlement.
Abramowitz called it a "publicity stunt" that was aimed at
casting a cloud over Patton Boggs.
Meanwhile, Patton Boggs held a special meeting on Thursday
to reassure the firm's associates that Squire Sanders's decision
to suspend the vote was temporary, according to a former Patton
By 11:25 p.m. that night, Patton Boggs managing partner
Edward Newberry sent a memo assuring the firm's partners that
Squire Sanders had reviewed the Ecuadoreans' motion, planned to
disregard it and had resumed voting.
By Friday, momentum for the deal had resumed. Newberry held
a partners meeting via conference call at noon to reassure
Patton Boggs partners, and the Squire Sanders vote concluded
favorably at 4:30 pm.
DEEP WASHINGTON TIES
Not all Patton Boggs lawyers are joining the combined firm.
Most prominently, James Tyrell, the partner who led the firm's
representation of New York City in the 9-11 responder litigation
and who brought in the Ecuadorean villagers as clients, will be
left out of the deal. He did not respond to a request for
In an email, Newberry did not respond when asked about
Tyrell's departure but said the other departures were expected
and were a "normal part of a major law firm combination."
James Maiwurm, chair and CEO of Squire Sanders, said in a
statement that the combination "establishes us as the 'go-to'
firm for public policy work."
Newberry said in a statement that the combination would
provide "opportunities to access new markets" in Americas,
Europe, Asia-Pacific and the Middle East.
Patton Boggs, which has long wielded influence in the
corridors of Washington, honed its specialty over many decades.
In 1962, lawyers from a well-known Washington firm, Covington &
Burling, launched Patton Boggs. Although not one of the original
founders, Thomas Hale Boggs Jr, a former economist for President
Lyndon Johnson and the son of a powerful congressman, rose to
become the firm's chairman.
Former U.S. senators, including former Republican Senate
majority leader Trent Lott, are lobbyists at Patton Boggs.
Benjamin Ginsberg, counsel to Republican President George W.
Bush's campaigns in 2000 and 2004 and to Republican Mitt
Romney's campaigns in 2008 and 2012, is a partner.
Patton Boggs's lobbying clients include governments
worldwide that are seeking to influence U.S. policy, including
China, Georgia, Libya, Saudi Arabia and South Korea, according
to public disclosures filed this month.
But as political gridlock led corporate clients to spend
less on campaigns lobbying for the interests on Capitol Hill,
Patton Boggs's revenue suffered.
The firm had expanded geographically, opening offices in
large legal markets such as New York and New Jersey, but they
became part of its business problems. Patton Boggs acknowledged
the "unprofitability" of those two offices in a 2013 internal
memo obtained by Reuters.
Weighing down the firm further was a formulaic compensation
system that created perverse incentives, according to sources
inside and outside the firm.
Partners were paid based on three factors, sources said:
origination of work, number of lawyers they supervised and hours
they billed. As a result, partners were encouraged to keep
lawyers on staff whom they did not need, and they got paid for
work they brought in years ago even if they were not generating
The firm changed the model in recent months so that its
leaders had more discretion to reward partners.
Major U.S. law firms have faced strained finances for more
than five years. Some did not survive, as when Dewey & LeBoeuf
collapsed in 2012.
(Editing by Noeleen Walder, Eric Effron, Grant McCool and Ken