CHICAGO - Partners at the struggling Chicago-based law firm Altheimer & Gray are poised today to vote to dissolve the nearly 90-year-old firm, following a failed attempt to merge with Philadelphia-based Duane Morris, the firm announced late Friday.
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The firm, whose politically-connected chairman Gery Chico is running for the U.S. Senate, confirmed the speculation that was widespread throughout the Chicago legal community late last week. The statement announced that the firm's executive committee recommended Friday to dissolve the partnership and that a partner vote was set for today.
"This is a sad day, and a hard decision, but we are confident that this is the best way to position our staff to explore new opportunities and continue to provide exceptional service to our clients," said managing partner Jeffrey Smith. The firm attributed the liquidation in part to a slowdown in corporate mergers.
Several Chicago-based investment bankers working with the firm on pending deals said they were uncertain as to the impact the firm's possible liquidation would have on their deals and on the status of pending opinions.
Altheimer & Gray had sought for several years to merge with another firm, and its quest became more urgent this year as it sought to recover from a sharp decline in revenues. The firm was close to an agreement with Duane Morris, but the two sides could not reach an accord in part because Duane, like other firms Altheimer talked to, was interested only in parts of Altheimer's business.
The British publication Legal Week reported on Friday that Altheimer was set to call it quits amid signs that its merger bid had stalled. The report said some Altheimer staffers would join Duane Morris after the breakup.
Altheimer employs 301 lawyers in 11 cities worldwide, including 132 in Chicago, with a handful in the public finance group led by Bruce Bonjour. The overall number had dropped sharply in recent months, as the firm cut dozens of staffers and a handful of partners fled the company, including Kim Barker Lee in its public finance group. Lee left recently, after about five years there, to return to the firm she previously worked for, Pugh, Jones & Johnson.
Altheimer's public finance fortunes have fluctuated over the last five years. It ranks eighth so far this year among Illinois bond counsel firms, although that ranking does not include a $1.5 billion Illinois note sale the firm served as bond counsel on earlier this month. It ranked 14th last year, 10th in 2001, 35th in 2000, and fourth in 1999, according to Thomson Financial. As underwriters' counsel, the firm ranked 23rd so far this year, but was the top-ranked firm last year and third in 2001.
Several sources have said that underwriters on deals from city-related issuers would often opt to work with the firm because of Chico's Democratic ties. During former Republican Gov. George Ryan's tenure, which ended early this year, underwriters on deals by state-related issuers turned to the firm, where former Ryan lawyer Jeremy Margolis is a partner.
The firm was restructured about four years ago, with the old guard retiring and Chico, a former chief of staff to Chicago Mayor Richard M. Daley and former president of the Chicago Board of Education, being elevated to chairman. The firm then adopted a two-tier partner structure and sought to expand its presence, hiring more attorneys and going after prominent corporate clients. Many lawyers were displeased with the new strategy.
"They wanted to be big and to be something different, but they wanted to do it faster than it was possible. They were overly optimistic," said one former Altheimer lawyer.
A handful of public finance attorneys left after the change, including Maria Saldana, Scott Bremer, John Cummins, and Ray Tillett. Saldana joined Samuel A. Ramirez & Co. as a banker, Bremer moved over to Pugh, and Cummins works in an of-counsel role with Sanchez & Daniels.
The firm received a boost in 2001 when William Corbin -- who works frequently with the state of Illinois -- left Gardner, Carton & Douglas, bringing Robert Capizzi and Robert Stephan with him to Altheimer. The three, according to sources, have talked to several firms in recent months about leaving Altheimer. The firm is also an alma mater of Martha Haines, director of the Securities and Exchange Commission's Office of Municipal Securities, who worked there from 1986 to 1997.
