The Firms

September 29, 2008 6:16 PM

Pillsbury Winthrop Scoops Up Thelen's China Practice

Posted by Brian Baxter

Pillsbury Winthrop Shaw Pittman announced on Monday that it had acquired Thelen's Shanghai-based China practice, which includes a group of approximately 20 lawyers spread throughout several Thelen offices. But the loss to Thelen might actually be more cosmetic than an actual blow to its bottom line.

Joining Pillsbury are corporate partners Thomas Shoesmith, Mary "Meg" Utterback, Joseph Tiano, Jr., and Louis Bevilacqua. Shoesmith and Utterback will join Pillsbury's three-lawyer Shanghai office with Tiano and Bevilacqua operating out of Washington, D.C. They will be joined at Pillsbury by three of counsel and 13 associates working out of offices in Shanghai, D.C., and San Francisco.

"About 36 percent of our revenue is derived from international relationships, so part of our strategy has been to be in the world's principal marketplaces," says Pillsbury chairman James Rishwain, Jr. "And this opportunity fits and supplements our overall strategy and corporate and securities practice quite nicely."

Pillsbury officially re-opened in Shanghai a year ago under private equity and capital markets partner Joseph Chan. The firm shuttered its initial Shanghai foray in 2002 when private equity and M&A partner Li Li defected to open Debevoise & Plimpton's first Shanghai office. Thelen's newly-acquired China operations happen to be conveniently located one floor below Pillsbury's offices in Shanghai's Bund Center. Rishwain says that the firm is in discussions on how best to combine operations, adding that no decision had yet been made on whether or not to pick up Thelen's lease.

Chan will now become the head of Pillsbury's China corporate and securities practice with Shoesmith, whose practice focuses on private equity and venture capital clients, assuming the Shanghai managing partner mantle.

It's a role with which Shoesmith should be familiar, having pushed for Baker & McKenzie to enter the burgeoning Vietnamese market in the 1990s while a partner at the firm, later leaving to found the international practice group at Cooley Godward. In 2001, Shoesmith left Cooley for Paul, Hastings, Janofsky & Walker, joining the firm's nascent Shanghai operation in September 2003. He left for Thelen in April 2005, opening the firm's first Shanghai office that August.

All that movement has some wondering whether Shoesmith is onboard for the long haul, especially for a firm like Pillsbury that has had its own problems with departing partners in recent years.

"Pillsbury has had a series of destabilizing events over the years," says one legal industry analyst, citing the firm's rocky merger with Cushman Darby & Cushman in 1996, "so it's interesting that they're going after someone from Thelen who's coming out of their own destabilizing situation."

But one legal recruiter familiar with the Chinese lateral market says Shoesmith "has a great reputation in the region" and that Thelen might not have invested as much in China as its former lawyers would have liked.

"We're absolutely delighted to have Tom Shoesmith join us, he's a talented attorney with a remarkable record," says Pillsbury's Rishwain, adding that there were other suitors for Shoesmith's services so the firm moved forward with "diligence and alacrity."

Rishwain says the addition of Thelen's China group will bring over 80 clients to the firm, including 25 publicly-listed companies. The focus of Thelen's former China practice, says Rishwain, was a "two-pronged" effort that represented U.S. and European companies doing business in China and advised small- to medium-sized Chinese companies going public in Western markets through PIPE financings, reverse mergers, and other public offerings. (Avis Caravello, a San Francisco-based recruiter who helped broker the deal for the Thelen team, did not return a request for comment. Pillsbury did not use a recruiter.)

One thing that isn't clear is what the latest defection will mean for Thelen. The firm shortened its name in September to reflect the departures of several former name partners and over the summer it publicly announced that it was looking for a merger partner.

"While I don't think [the Pillsbury departures] are material, nobody wants to lose lawyers at a time like this, especially Thelen," says one legal strategist. "I don't think anybody is going to make a decision to merge with them based on whether they have a China practice with only a few partners, but these losses still create the mentality that 'people are leaving.' It's like the drip torture that Heller [Ehrman] suffered from."

Thelen chairman Stephen O'Neal did not respond to a request for comment. The firm ranked 76th in this year's Am Law 100 rankings with gross revenues of $345 million and profits per equity partner of $810,000, compared with $590 million in gross revenues and profits per equity partner of $985,000 for 46th ranked Pillsbury.

Rishwain says he expects the integration of the Thelen lawyers to be formally completed sometime in the next few months, emphasizing that his focus is on a smooth and seamless transition for clients.

Additional reporting by Nate Raymond.

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