The investment-banking firm Lazard Freres & Co. said it will combine its three autonomous firms in New York, Paris and London into one global operation.
At the same time, one of the New York firm's stars, Steven Rattner, will step down as deputy chief executive of the New York operations, taking on the role of deputy chairman on Sept. 1. Rattner, who has been a key force in helping raise money for the presidential campaign of Vice President Gore, is widely seen as a possible member of a Gore administration in 2000.
"I am proud of what we have been able to accomplish," Rattner said in a statement. "At the same time, there are a number of other possibilities that I would like to explore."
But a source at the firm said Rattner did not make the move solely to go to work for Gore.
"In part, Washington is in the back of his mind," said the source, who asked not to be identified. But, he added, the commitment to consolidate the three firms into one global player could take as long as two years or more -- and Rattner was not willing to make that commitment.
"He wants to be a rainmaker, to do big client business rather than dotting the i's and crossing the t's," the source said. "And it will allow him the freedom to do other things -- it might be Washington, it might not."
Rattner, 46, in essence will take the role of Lazard's former senior rainmaker, Felix Rohatyn, who retired two years ago to become U.S. ambassador to France. William Loomis, a managing director of the firm, will succeed Rattner as the chief of the New York operations.
Some Wall Street officials say Lazard may have lost some its luster as one of the premier merger advisory firms. Lazard was ranked fourth for the value of the deals it advised in 1997 but dropped to 10th place in 1998. Profits for the New York office reached record levels in 1998, however, and in the first quarter of this year it ranked second for mergers and acquisitions. Among its star clients are Random House Inc., America Online Inc. and Media One.
Michel David-Weill, who controls or has major stakes in the three firms, has been trying to unite them for some time.
"We are creating the only true international partnership in our business," said David-Weill, 66, who is a descendant of the founding family that created Lazard 151 years ago.
A seven-person executive committee will be headed by David-Weill. Three of its members will be from New York and three from Europe. The firms will share profits -- which may be a contentious move among some partners, since the New York firm generally provides three to four times the profits of the other two.
In addition to worries about cutting up the pie, there are concerns about the cultural perspectives, with U.S. partners worried about becoming Europeanized and European partners afraid of being Americanized.
Lazard has always been a smaller, more elite version of Wall Street's dealmakers, but it has been hampered recently by its rather unwieldy structure. Another source at the firm said everyone agrees the unification is necessary because of the global nature of business. "But if you can't operate in a totally seamless way, it's just not effective," the source said.
Now that Goldman Sachs Group Inc. is a publicly traded firm, Lazard is one of Wall Street's few closely held investment-banking partnerships.
CAPTION: STEVEN RATTNER