Patton Boggs, the Washington legal pioneer that helped established the modern-day lobbying industry, is merging with Squire Sanders, a large international law firm with roots in Cleveland.
The newly combined firm, which will bring together Squire Sanders' 1,300 lawyers with Patton Boggs' 330 attorneys, is effective June 1 and will be called Squire Patton Boggs. The firms had been in merger talks since February and the deal is widely viewed within the legal industry as critical to Patton Boggs' survival.
Patton Boggs “evolved into an industry game-changer,” Thomas Hale Boggs Jr., chairman of Patton Boggs 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 a tale of a changing industry, where a firm’s ability to influence a few key powerbrokers is giving way to the need to sway larger groups of lawmakers and the public as a whole.
In recent months, Patton Boggs' erosion has been on full display. The firm had to lay off 40 attorneys 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. Patton's troubles were heightened by its involvement in an unusual and expensive legal battle with Chevron, which was resolved after Patton Boggs agreed earlier this month to pay a $15 million settlement to the oil giant.
Patton Boggs is not the only law firm in recent years to struggle — 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. This is largely a symptom of the economic downturn that began in 2008 and forced law firms' biggest clients — the legal departments of major corporations — to drastically scale back their legal budgets. But because Patton Boggs is a marquee lobbying brand in Washington, news of its troubles has been scrutinized more closely here.
Patton Boggs’s rise owes much to one of its namesakes, Boggs, the son of Louisiana congressman and House majority leader Thomas Hale Boggs Sr. and Lindy Boggs, who succeeded her husband after he died. After working in the Lyndon B. Johnson administration, Boggs went to law school and joined James Patton Jr. as the sixth lawyer of the firm that became Patton Boggs.
At the time, there were — by Boggs’s estimate — fewer than 100 people in Washington who called themselves lobbyists. His firm was a fledgling five-man operation trying to make its mark in what was at time considered an up-and-coming practice area.
“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. This is a legacy he can look back on with pride.”
In the early days, K Street firms were mostly small shops led by former heads of federal agencies who became lobbyists after leaving the government. 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. One of the firm’s early successes, the victory that cemented Patton Boggs as one of the most influential lobby shops in Washington, was when they helped orchestrate the first Chrysler bailout in 1979.
Patton Boggs enjoyed unprecedented success during the ’70s, ’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 and 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, grass-roots and Internet campaigns that contribute to the influence machine.
As lobbying became more institutionalized as a mechanism of achieving change in the government, the firm added more manpower and structure. In the mid-1990s, Patton Boggs made a concerted effort to diversify its practices, 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 size made the firm susceptible to more nimble competitors, and Patton Boggs found itself enmeshed in another problem—a case involving Chevron.
In 2010, 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, had 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 law firm's involvement quickly became problematic. Chevron went after Donziger, alleging the verdict was the result of improper evidence, including a key expert report. In March this year, 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 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 finally settled earlier 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.
With the settlement, talks with Squire Sanders quickly moved toward completion, culminating in a vote by partners at both firms this week.
Apart from the Chevron matter, however, Patton Boggs had been grappling with structural problems for years. The firm relied for too long on Boggs himself and didn’t have a succession plan implemented soon enough, according to some former Patton Boggs attorneys. Long plaguing the firm was what legal industry analysts call an “eat what you kill” compensation system — lawyers’ take-home pay is closely tied to the clients they bring into the firm, known as “origination,” so they have little incentive to share work with other partners. That leads to a fragmented atmosphere where small groups of lawyers working for that client have little financial incentive to share that work with other groups. That makes it easier for groups to leave when partners are unhappy and looking for to jump ship, because legal business is portable and they take the client with them to their new firm.
Moreover, for years, Patton Boggs 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. Keeping unproductive partners was doable when business was booming, but became unsustainable when times got tough.
Though Patton Boggs has taken its hits, it is still an incredibly valued brand because of its reputation on K Street. Patton Boggs remains the top lobby shop in Washington in terms of revenue. In 2013, the firm earned $40 million in publicly reported lobbying fees — $6 million more than the next firm, Akin Gump. The fact that the Patton Boggs name will remain intact in the newly combined firm is a testament to that brand recognition. Squire Sanders is a full-service law firm, but has never been known for federal lobbying work. Bringing in Patton Boggs fills that function.
At a reception this month to welcome three new lobbyists to the firm, John Burlingame, managing partner of Squire Sanders’ Washington office, said the firm hoped to continue to grow its advocacy practice.
“Patton Boggs is the premier public policy firm in the world, and this combination establishes us as the go-to firm for public policy work,” Squire Sanders chairman Jim Maiwurm said in a statement.
