Pillsbury-Orrick law firm merger killed by conflicts

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Pillsbury Winthrop Shaw Pittman and Orrick Herrington & Sutcliffe, two law firms based in San Francisco, have decided not to pursue a merger, the firms said in a joint statement.

“We mutually determined that we will not be able to proceed due to prospective client conflicts that we have not been able to resolve, notwithstanding each firm’s best efforts,” according to the statement, which didn’t provide details on the conflicts.

The firms jointly announced their talks last month about a possible combination. A decision not to merge was reached before the signing of a letter of intent or a partnership vote, according to the firms’ statement.

There has been an increase in law firm combinations this year. The number of merger announcements in the fourth quarter reached 20 last week, according to data compiled by law firm consultancy Altman Weil. The total so far for 2013 stands at 78, compared with 60 a year ago.

Orrick, a 977-lawyer firm, had $866 million in gross revenue last year, making it the 27th wealthiest firm in the country, according to the American Lawyer, a trade publication.

Pillsbury, with 609 lawyers and $561 million in gross revenue last year, was ranked 56th, according to American Lawyer.

Peter Zeughauser, founder of the legal consulting firm the Zeughauser Group, said he wasn’t surprised that the firms decided not to merge.

“I think the firms are too disparate in performance for the merger to work out,” he said in an interview. “Financially, Orrick is stronger.”

Orrick has 25 offices in North America, Europe and Asia, with more extensive coverage in Europe and Asia than Pillsbury, according to the firm’s website. Pillsbury has 15 offices in the U.S., Europe, Asia and Abu Dhabi, according to its website.

“Pillsbury has long been known to us as a firm with high caliber legal talent and a client-focused culture much like ours,” Orrick Chairman Mitch Zuklie said in the joint statement. “Large law firm combinations are always complex, and both our firms are disappointed that we could not clear the way for a merger.”

In 1998, Donovan, Leisure, Newton & Irvine, a New York law firm founded in 1929, closed its doors after about 40 of the firm’s 60 lawyers –including 14 partners — were hired by Orrick. Donovan had previously been in talks to merge with Orrick, a plan that stalled over client conflicts, according to multiple news accounts at the time.

“Orrick is a firm with a longstanding and well-deserved reputation for legal excellence,” Pillsbury Chairman Jim Rishwain said in the statement. “Throughout these discussions, our admiration for Orrick’s attorneys has only deepened.”

With assistance from Sophia Pearson in federal court in Philadelphia and Dimitra Kessenides in New York.