Heller Ehrman Talking Merger with Mayer Brown

[WSJ_law_blog]

Heller has certainly made the rounds in recent months as it searches for a suitable merger mate.

Fresh off its aborted tie-up with Baker & McKenzie, San Francisco-based Heller is now in merger talks with another Chicago-based firm, according to this American Lawyer blog posting.

Mayer Brown and Heller declined comment. Earlier in the year, the firms had shelved the idea of merging, according to AmLaw, because Mayer’s management was leery of conflicts with Heller’s insurance recovery practice.

The purported merger talks are surprising from one standpoint: Mayer Brown was significantly more profitable than Heller last year, with $1.3 million in average partner profits compared to Heller’s $1 million in average profits, according to American Lawyer.

But firms often look to merge when they have faced turmoil, and Heller and Mayer have had plenty.

Last year, Mayer Brown fired or demoted 45 partners—about 10% of its equity partnership—to try to improve its profitability. Some top partners have since left the firm, including Raniero D’Aversa Jr., it’s former co-chair of bankruptcy, who departed this week to Orrick, Herrington & Sutcliffe LLP in New York. And one of Mayer Brown’s partners, Joseph Collins, who is on leave from the firm, was indicted last year on fraud and other charges in connection with his representation of the failed commodities and derivatives firm Refco Inc. The firm was not charged, and Mr. Collins has said he is innocent and is fighting the charges.

Heller has also seen many of its partners defect recently to competitors. On the plus side, Heller and Mayer Brown have been able to poach lawyers from other firms.

“We have seen much greater merger interest this year by law firms, especially large law firms,” William Brennan, a law-firm consultant with Altman Weil, Inc., told the Law Blog. “By the end of the year, we expect some mega mergers to be consummated, involving law firms with more than 200 lawyers merging with another firm of at least that size.” Law firms, he adds, “do not decide to merge just because there is a recessions; however, some firms that are intensely affected by the current economic crisis have been forced to consider a merger strategy.”