100 Thacher Lawyers Don’t Satisfy Sonnenschein’s Growth Ambitions
Updated: The chairman of Sonnenschein Nath & Rosenthal hasn’t had much sleep in the last 10 days, but he’s not complaining.
About a month ago, Sonnenschein chairman Elliott Portnoy began negotiating to acquire groups of lawyers from Thacher Proffitt & Wood, sealing the deal to add some 100 Thacher lawyers to his firm in a hectic 10 days that ended last night.
“You don’t have many opportunities like this one that will become available,” he told the ABA Journal on the morning of the announcement. “Sleep will come. Adding great lawyers is always a priority.”
The move is a debilitating blow to Thacher, which is losing about half of its lawyers. The law firm announced Monday evening that it will dissolve after the end of the year. But it’s a coup for Portnoy, who sounded elated earlier in the day.
Portnoy says the firm’s strategic plan launched in 2006 called for increasing the scale of Sonnenschein and the scope of the services it provides. Four Thacher practice groups—structured finance, corporate and financial institutions, real estate, and litigation and dispute resolution—are making the move to Sonnenschein. The group includes the practice group chairs and about 40 partners, according to a press release.
The addition will bring Sonnenschein’s headcount to about 800 lawyers, still short of the 1,000 mark Portnoy had sought earlier. But the acquisition won’t be the last. He says he expects more lateral announcements in 2009 concerning multiple practice groups, some intersecting with the expertise of the new Thacher lawyers, and some entirely unrelated. He also says the additions will mean the need to hire additional administrative staff.
The lawyers will supplement Sonnenschein’s group of structured finance lawyers who practice in Charlotte and a few other locations. The Sonnenschein lawyers “will join together with these new lawyers to form a broader and stronger team,” Portnoy says. “It’s one of the nation’s very strongest teams and it dramatically enhances our capabilities.”
Sonnenschein is acquiring the lawyers at a time when structured finance practices are suffering, but Portnoy says the addition will not be a drag on firm revenues. “The lateral additions have been structured in a way that it will be additive to our net income in 2009,” he tells the ABA Journal. “We are not merging with Thacher or acquiring all of Thacher. Instead we’re adding a core group of its lawyers that we believe is correctly sized to meet projected client needs for next year.”
He points out that the new lawyers don’t focus only on structured finance. “They represent some of the most significant institutions in the country who continue to have needs with restructuring, needs with new government programs and initiatives,” he says.
A number of Thacher lawyers currently represent the U.S. Treasury Department in a $500,000 contract to advise on an aspect of the Wall Street bailout. They are also representing other government agencies on assistance programs, some of which is confidential, Portnoy says. He hopes the $500,000 contract will follow the Thacher lawyers to Sonnenschein.
“There are always risks associated with growth, but having added 65 new partners since 2008, we’ve seen how much stronger economically and culturally we are as a law firm,” he tells ABA Journal. He thinks the same will be true with the addition of the Thacher lawyers.
Portnoy also refers to Sonnenschein’s decision to lay off lawyers earlier this year in areas with soft client demand. Past reports put the number of layoffs at 37 in May and about 24 more in October. Portnoy says tough decisions on these layoffs have put the firm in a stronger position.
“We have a very broad practice mix and geographic platform, which helps us in challenging times such as these,” says. “We think the upside is substantially greater than any potential downside.”
Updated at 7:30 p.m. to include news of Thacher’s announced dissolution.
