June 24, 2008 1:29 PM

Husch Blackwell: Has a New Am Law 100 Firm Been Born?

Posted by Claire Duffett

The newly merged Husch Blackwell Sanders has merged once again, this time with Chicago-based intellectual property litigation boutique Welsh & Katz, the firms announced yesterday. If ranked today, the combined firm, now called Husch Blackwell Sanders Welsh & Katz, would place eighty-eighth on our Am Law 100 list, according to their combined gross revenues.

Firm cochair David Fenley says the gross revenue will "be a smidgen beyond $300 million" in 2008, which, if ranked today, would place it above Pepper Hamilton's current $297 million, the firm with the eighty-eighth highest revenue in 2007, and below Littler Mendelson's $305 million, which placed eighty-seventh.

Prior to the Welsh merger, in February, Blackwell Sanders joined forces with Husch & Eppenberger. The combination of the two St. Louis-based firms, currently numbers 173 and 176 on The Am Law 200, respectively, initially gave the firm a projected $275 million in gross revenues this year, which, if ranked beside current Am Law 100 figures, would land it in ninety-ninth place. The additional $27 million from Welsh & Katz, according to managing partner A. Sidney Katz, will boost the firm past the $300 million mark.

Welsh has been looking to merge with a large multipractice firm for the past five years. Whereas large, generalist firms lacking IP practices once provide Welsh with most of its business, Katz says, these firms have since acquired similar IP boutiques and created their own in-house departments.

"Over the last decade, many of our referral sources have become our competitors," Katz explains. "Our business model was probably not appropriate for today's economy, and we realized we're better off as part of the pack."

However, Katz struggled to find a partner that didn't ask his firm to subsidize its debts. Further, he wanted to join another midwestern firm to keep pay scales lower and litigation costs down in order to remain competitive.

Mergers talks between Husch Blackwell and Welsh & Katz began in late March when Katz's friend and legal recruiter Mark Schulman of Chicago's Schulman Professional Search, Ltd., introduced the leaders of the two firms. Husch cochairs Fenley and Joseph Conran flew to Chicago to meet with Katz and partner Jerold Schnayer.

"We hit it off," Fenley says.

Both their personalities and the firm cultures meshed, adds Katz. For one, neither firm maintains any debt. And both firms focus on attorneys' quality of life above profitability, he explains. Further, profits per partner at both firms are in the $600,000-$700,000 range and Husch agreed to take on all of Welsh’s 14 equity principals (the firm is organized as a corporation) as equity partners.

When three Welsh partners participated in Husch's annual retreat in late April, both firms knew a merger was imminent. By mid-May, all the necessary contracts had been signed. Katz hopes the merger will help his firm, which he founded 25 years ago, retain top attorneys.

Now that Welsh is part of a 700-plus-attorney practice, talented associates will see more upward mobility and stick with the firm, Katz hopes. What is Husch Blackwell getting out of the deal? The firm, which also has a 40-plus attorney IP practice, can learn from Welsh lawyers about the hot area of high-tech patent litigation, Husch cochair Conran says. More than half of Welsh's attorneys also have degrees in science and technology.

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