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December 11, 2008 5:33 PM

Who's Getting the TARP Advisory Work, Part II

Posted by Zach Lowe

Last month, the Am Law Daily yawned after scouring SEC records only to find that the same old law firms (you know which ones) were advising most of the financial institutions seeking capital injections under the Treasury Department's Troubled Asset Relief Program (TARP).

But lawyers involved in many of those deals predicted that once the big banks got their money, the community banks would come calling--and that's when firms outside the Sullivan-Wachtell nexus would get some plum work.

Know what? Those lawyers were right. Since we last checked in, the Treasury Department has approved applications from 62 financial institutions (see the full list here). Of those, about half (28) listed their legal counsel in SEC filings linked to the TARP equity exchanges.

Of those, Sullivan & Cromwell advised just two of those firms--First Midwest Bancorp. in Illinois (which received $193 million in TARP funds) and Popular, Inc., a bank based in Puerto Rico (and better known an Banco Popular), which received $935 million.

Overall, though, the winners were smaller firms with local ties to the banks seeking money or boutique firms that specialize in financial services, especially those with Washington, D.C., connections. For instance, Silver, Freedman & Taff, a 13-lawyer D.C. firm that specializes in financial transactions and securities, advised three TARP recipients from across the U.S.: MB Financial, based in Chicago ($196 million); First PacTrust Bancorp of Chula Vista, Calif. ($19.3 million); and Southern Missouri Bancorp ($9.55 million).

The Florida boutique Smith MacKinnon represented two Florida-based financial institutions that received a combined $65 million.

Local connections were key elsewhere: Williams Mullen, a firm with deep roots in North Carolina, advised Winston-Salem, N.C.'s Southern Community Financial Corp. in receiving nearly $43 million in TARP money. Kennedy & Baris, which keeps one of its three offices in Bethesda, Md., advised Eagle Bancorp, Inc. (based in Bethesda) in successfully applying for $38 million. Columbia Banking System, Inc., based in Tacoma, Wash., turned to Seattle's Graham & Dunn (motto: "The Big Law Firm Experience Without the Big Law Firm Experience") in asking the Treasury for $77 million.

Larger Am Law 200-level firms also took advantage of their local ties to win major TARP roles. Manatt, Phelps & Phillips, a California mainstay, advised three Los Angeles-area institutions that reaped $400 million in Treasury investments between them. Vorys, Sater, Seymour & Pease, perhaps Ohio's best-known firm, advised First Defiance Financial Corp. (based, naturally, in Defiance, Ohio).

And don't forget: Treasury paid Hughes Hubbard & Reed and Squire, Sanders & Dempsey $5.5 million each to oversee the investments from the government's end.

So while the economy may be crumbling and M&A might be dead, TARP provided a nice chunk of work for firms of all sizes.

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