Follow Amtrak's Northeast Corridor line and you can pretty accurately plot the growth path of McCarter & English.
Baltimore, Wilmington, Philadelphia, Newark, New York, Hartford and now ... Boston, where it plans to merge with 67-lawyer Gadsby Hannah.
The deal, McCarter & English's largest acquisition yet, would create a firm of 430 lawyers in eight offices in seven states. Partners at both firms will vote on the merger in the next 30 to 60 days.
Gadsby Hannah partner Brian Leary said the deal is to be completed by June 1.
McCarter & English said it wanted to enter the Boston market -- which has a concentration of life-science companies similar to New Jersey's -- but needed an established local firm as a pied à terre.
"Boston is a vibrant and self-contained legal market -- if you're not from Boston and you want to practice law in Boston, you're going to have a tough time," said executive board chairman Andrew Berry. "You can't just parachute two or three people into Boston and say, 'OK, here we are.' This gives us the opportunity to combine with an established, highly reputable name."
Gadsby Hannah is primarily a litigation firm, with 28 lawyers doing a range of trial work from international law to arbitration to divorce. It also has 11 lawyers in construction law, a practice area McCarter & English has been building.
Another Gadsby Hannah focus is on representation of startup companies and on government contracting law, mainly in Massachusetts. While those areas have not been mainstays for his firm, Berry said that post-merger, "I would expect the diffuse nature of McCarter & English's government relations activities is going to become more organized and focused."
Gadsby Hannah's Web site also touts the firm's cross-disciplinary teams targeting utilities and transportation, higher education, hotels and restaurants, and car dealerships. Its clients include American Airlines, Staples Inc., Raytheon and Penn National Gaming.
The firm's chairman, Leonard Lewin, said it sought a merger partner to develop a larger platform to serve clientele.
"We've been limited in the service we can provide our clients, being a one-city law firm. This gives us the opportunity to be in some of the cities we weren't before," said Lewin, who has been the chief counsel to two Massachusetts governors, Jane Swift and Paul Cellucci.
The firms were brought together by a headhunter, whom Berry and Lewin declined to name. McCarter & English's B. John Pendleton, who had business in Boston, had the first meeting with Gadsby Hannah partners about a year ago. Lewin, then fielding inquiries from other merger candidates, knew little of the Newark firm but was won over, he said, by Pendleton's description of "the McCarter & English philosophy of doing things, how their lawyers interact among themselves."
Gadsby Hannah was founded in 1963 by Edward Gadsby, former chairman of the Securities and Exchange Commission, and Paul Hannah, former general counsel for Raytheon. The firm once had New York and Washington branches but now has only the Boston office. The seven-lawyer New York office closed in 1988 and the Washington branch, which reached a high of 10 lawyers in the mid-1980s, closed in 2001 after 37 years. The end was precipitated by the departure of five intellectual property lawyers for Holland & Knight in late 2000.
Gadsby Hannah has started several nonlegal subsidiaries, a strategy McCarter & English has studied and rejected, but those entities won't be part of the merger. In the late 1990s Gadsby Hannah started businesses offering services ranging from environmental and government procurement consulting to assistance for start-up companies seeking capital. Lewin said those multidisciplinary practice operations are all inactive now because partners who championed the MDP cause found they didn't have the time to pursue their side ventures.
One segment of the economy where Gadsby Hannah isn't particularly well represented is the Boston region's drug and medical industry. But Berry said Gadsby Hannah's local reputation, combined with McCarter & English's size and strength in the life-sciences industry, will help it secure a foothold.
David Garber of Princeton Legal Staffing Group, a former McCarter & English lawyer, said that's a viable business plan.
"A home run would be to go with a firm that has an established client base among life science companies. If you're not able to do that, the next best thing is to have a merger where you have a significant physical presence and experience that would be attractive to life science companies," said Garber.
Another staffing consultant, Stuart Michaels of Topaz Attorney Search in Livingston, said McCarter & English would be better served by opening in Los Angeles or Texas than in Boston, since corporate general counsel are looking for firms with a broad footprint, not a regional concentration. "It's a global market," Michaels said. "You have to be a player around the country, around the world."
Berry said the success of its 2003 acquisition of Cummings & Lockwood's Hartford office, where it picked up 30 lawyers, and that of other regional expansions convinced McCarter & English that the Boston move is a sound one.
Instead of becoming a nationwide firm, McCarter & English has chosen to stay in the eastern states and play to its strengths in the pharmaceutical, biotechnology and financial services industries. In recent years, it has expanded in New York, Philadelphia, Wilmington and Baltimore, and its next step is likely to be an office in Washington, D.C. (Berry won't say whether the firm is actively pursuing negotiations there.)
The firm has made other strategic acquisitions in recent years. In September 2002, it added 12-lawyer Krugman & Kailes, a boutique focusing on mergers and acquisitions, securities and venture capital. In July 2003, it took on six intellectual property and life sciences lawyers from Selitto Behr & Kim.
In 2004, McCarter & English added six construction lawyers from Buchanan Ingersoll to its New York office. Four more came in 2003 in the Cummings & Lockwood deal. With Gadsby Hannah's 11 construction lawyers, McCarter & English's practice group will grow to 25.
McCarter & English is the largest firm in New Jersey, according to rankings done by The Legal Intelligencer 's sister paper, The New Jersey Law Journal .
According to the rankings, the firm's gross revenue for 2004 was $149.2 million. Its revenue per lawyer was $472,100 and its profits per partner was $601,400. That was based upon a total of 316 attorneys. The firm has a little fewer than 30 attorneys in its Philadelphia office.
Berry said he expects all 67 Gadsby Hannah lawyers to join McCarter & English largely at the same rank as in their old firm.
Once the deal is approved, Gadsby Hannah's Diane McDermott will become managing partner of the Boston office. The firm's executive committee will expand to 10 members with the addition of two Gadsby Hannah lawyers, and its compensation committee will grow to eight with one Gadsby Hannah member.
The move will lead to efficiencies as the firms combine their billing systems and IT departments, Berry said.
He adds that the firms initially planned to announce the deal after its approval but moved up the announcement upon learning the Boston media were planning to break the story.
Gina Passarella of The Legal Intelligencer contributed to this report.
Source- New Jersey Law Journal