Patton Boggs to merge with Squire Sanders

May 23

Patton Boggs, the Washington legal powerhouse that helped pioneer modern-day lobbying, is merging with Squire Sanders, a large international law firm with roots in Cleveland, in a deal that marks the end of an era in the changing influence industry.

The merger, approved by partners at both firms this week and announced Friday, concludes Patton Boggs’s 52-year run as an independent law and lobby firm. It comes after a year-and-a-half of uncertainty and financial troubles at the firm, which were heightened by its involvement in an unusual and expensive legal battle with Chevron.

The new firm, which will combine Squire Sanders’s 1,300 lawyers with 330 from Patton Boggs, is expected to take effect by June 1 and will be called Squire Patton Boggs. The firms had been in merger talks since February.

The deal represents a defining moment in Washington, where many credit Thomas Hale Boggs Jr., the firm’s chairman and scion of a Louisiana politics family, with creating the lobbying trade as it is now practiced.

Patton Boggs “evolved into an industry game-changer,” the firm said in a statement. “Through our combination with Squire Sanders we are doing it again.”

The end of Patton Boggs as a standalone firm is also a tale of an industry in transition. The firm could once secure its clients’ interests by relying on its ability to influence a few key powerbrokers, but it has been forced by changes in American politics to look for ways to sway larger groups of lawmakers and the public as a whole.

Although Patton Boggs remains atop the list of Washington lobby shops by reported revenue, its advocacy business has struggled along with others in the face of a dysfunctional Congress that has been unable to make progress on most legislation. At the same time, many companies that used to be clients have increased their Washington lobbying staffs, while the ranks of the city’s trade associations, small specialty firms and other advocacy groups have also swelled, leaving less room for big firms such as Patton Boggs.

Patton Boggs also has been hit by difficulties that have afflicted the legal industry. Law firms are facing mounting pressure to increase profits, while their clients trimmed their legal budgets after the recession in 2008. Those problems were made worse by several elements of the firm’s culture, including a compensation scheme that discouraged collaboration and made it difficult to attract new talent.

In recent months, Patton Boggs’s erosion has been on full display. The firm had to lay off 40 lawyers and 70 staffers to deal with declining finances, high-
profile partners defected to other firms, and at least one previous merger attempt was called off. The clash with Chevron, which involved allegations that Patton Boggs had committed fraud in connection with an environmental case in Ecuador, was resolved after the firm agreed this month to pay a $15 million settlement to the oil giant. Patton Boggs did not acknowledge wrongdoing. This step, though embarassing, was seen as necessary before the firm could go forward with a merger.

Jim Maiwurm, chairman and global chief executive of Squire Sanders, said the merger would give the combined firm a leading position in the Middle East and several new locations in the United States. “Together we will be uniquely positioned to respond to the needs of business clients around the world,” he said.

Patton Boggs is not the only law firm to struggle in recent years. Howrey dissolved in 2010, Dewey & LeBoeuf famously imploded in 2012, and almost every major U.S. law firm is facing pressure to maintain revenue and profitability.

But Patton Boggs, and its marquee name in Washington, has drawn particular scrutiny.

Boggs is the son of former Louisiana congressman and House majority leader Thomas Hale Boggs Sr. and Lindy Boggs, who succeeded her husband after he died. After working in the Johnson administration, Boggs went to law school and joined James Patton Jr. as the sixth lawyer of the firm that became Patton Boggs.

At that time, in 1966, there were — by Boggs’s estimate — fewer than 100 people in Washington who called themselves lobbyists. In the early days, K Street firms were mostly small shops led by former heads of federal agencies. Boggs and Patton envisioned a different kind of lobbying operation, one that was integrated into a major law firm, staffed with attorneys well-versed in the areas of law that lobbyists were looking to change.

The formula served them well. Boggs helped to orchestrate the first Chrysler bailout in 1979, a success that cemented Patton Boggs’s reputation as one of the most influential lobby shops in Washington.

“Tommy Boggs was a trailblazer in the city of the law firm lobbying model,” said Mike House, director of Hogen Lovell’s legislative group. “He is a great strategist, and nobody in the city is cooler under fire than he is.”

Tony Podesta, founder and chairman of the Podesta Group, called Boggs a giant in the field. “He’s a brilliant guy who invented what a lot of us do.”

Patton Boggs enjoyed unprecedented success during the 1970s, ’80s and ’90s, when Washington’s lobbying industry was led by a cult of well-known personalities. Boggs — along with Gerald Cassidy of Cassidy & Associates, Stu Van Scoyoc of Van Scoyoc Associates, Bob Strauss of Akin Gump, J.D. Williams of Williams & Jensen and House of Hogan Lovells — put K Street on the map as the nation’s epicenter of advocacy.

“When I started this gig, there were about 15 people who ran the government,” Boggs said in a 2012 interview with the Post. “You didn’t need a lot of lobbyists, you only had to influence about 15 people.”

That is no longer the case.

“Now you’ve got at least 5,000 people who make government decisions that affect lots and lots of folks,” Boggs said in 2012. “As government has gotten more dispersed, you need more people to communicate with the people who now have policymaking power; that’s why the profession has grown so fast.”

As of 2013, there were about 12,341 federally registered lobbyists, according to the Center for Responsive Politics. And that figure doesn’t include the thousands of people in public affairs firms, advertising agencies, and grass-roots and Internet campaigns that contribute to the influence machine.

In the mid-1990s, Patton Boggs made a concerted effort to diversify, bulk up on staff and add new layers of management, going from a 150-lawyer firm to the 550-lawyer, 1,100-employee firm it was as of 2012.

But the firm has been grappling with structural problems for years. It relied for too long on Boggs himself and didn’t have a succession plan implemented soon enough, according to some former Patton Boggs attorneys.

The firm was also plagued by what’s known in the industry as an “eat what you kill” compensation system, under which lawyers’ pay is closely tied to the clients they bring into the firm. That approach reduced incentive to share work and contributed to a feeling among partners that those at the top of the firm were reaping most of the reward, leaving those lower in the ranks without their fare share.

Moreover, Patton Boggs for years allowed many partners to stay even though they did not generate significant revenue for the firm, according to some current and former Patton Boggs lawyers.

Patton Boggs remained strong until 2012, when it completed its representation of New York City against health-related claims over the Sept. 11, 2001, terrorist attacks — work that had been a major source of revenue for the firm. Overall, the firm’s annual revenue declined from $340 million in 2011 to $279 million last year.

On the advocacy front, Patton Boggs remains relatively strong. In 2013, the firm took in $40 million in publicly reported lobbying fees — $6 million more than the next firm, Akin Gump.

The firm’s involvement in the Chevron case dates to 2010, when Patton Boggs attorneys began representing a group of indigenous people from Ecuador who had sued Chevron over alleged health and environmental damage caused by toxins from oil drilling. The attorney representing the plaintiffs, New York lawyer Steven Donziger, won a $9.5 billion judgment from an Ecuadorian court, and Patton Boggs joined in the effort to help the plaintiffs collect the damages.

The case quickly became problematic. Chevron went after Donziger, alleging that the verdict was the result of improper evidence, including a key expert report. In March, a federal judge in New York sided with Chevron, ruling that the verdict in Ecuador was the product of fraud and racketeering and that the judgment should not be enforced. But the judge did not rule on whether Patton Boggs had also engaged in wrongdoing.

Shortly afterward, however, the judge allowed Chevron to pursue claims against Patton Boggs for allegedly committing fraud while trying to enforce the judgment. The matter was settled this month, when Patton Boggs agreed to pay Chevron $15 million in exchange for Chevron agreeing to release all claims against the law firm and its partners.

Catherine Ho covers law and lobbying for Capital Business, which she joined in 2011. She was previously a reporter at the Daily Journal in Los Angeles, covering LA civil courts and labor and employment law.
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