Gallop in merger talks with Armstrong Teasdale

By Rick Desloge

St. Louis Business Journal — August 26, 1999

Gallop, Johnson & Neuman has had preliminary talks with Armstrong Teasdale on a possible combination of the two firms, according to those close to the law firms.

Gallop, Johnson and Armstrong Teasdale walked down that same path in 1991 but called off their discussion after three months. Since then, Alan Johnson, a chief rainmaker at Gallop Johnson, has departed the firm. Johnson, One of the founding partners of Gallop, Johnson & Neuman, took over as chairman and chief executive of Pauli Johnson Capital & Research Inc. About four months ago.

Armstrong Teasdale is the third-largest law firm in St. Louis, with 147 lawyers. It has a total of 201 lawyers, including those in offices in Kansas City, Jefferson City and Washington, D.C.

The St. Louis Business Journal ranked Armstrong Teasdale the region’s 148th largest private business based on its 1998 estimated revenue of $47 million.

Gallop Johnson is the ninth-largest law firm in the region, with 75 lawyers, all in its Clayton office.

Both firms represent a range of corporate clients throughout the Midwest. Armstrong Teasdale, the older of the two firms, dating from 1901, represents some of St. Louis’ larger corporations, including Ameren Corp. And Anheuser Busch Cos. Inc. Gallop Johnson started in 1976 and has built a stable of smaller entrepreneurial clients, including Falcon Products Inc. and Data Research Associates Inc., as well as Anheuser-Busch spin-off, The Earthgrains Co.

The Combination of the law firms would create a 276-lawyer firm and bring a Clayton office to Armstrong Teasdale and a downtown office to Gallop Johnson.

Individuals close to the firm, who spoke on the condition that they not be identified, said it was the Gallop firm that initiated the discussions. It was unclear whether the two firms were continuing their conversations.

Neither Gallop Johnson’s chairman, Don Gallop, nor Armstrong Teasdale’s chairman, Ken Teasdale, would discuss the matter.

"We never comment on any proposed discussions with other law firms or on any internal matters of pending lateral (attorney) movement as a matter of policy," Teasdale said.

Gallop Johnson always referred questions about the talks to Don Gallop, who said, "We don’t respond to rumors."

When Gallop Johnson and Armstrong Teasdale were in discussions in 1991, Armstrong Teasdale was still digesting its 1989 merger with a Kansas City law firm. At the time, managers of both law firms acknowledged their cultural differences and openly wondered whether a larger firm would serve clients better.

Since then, more law firms are merging. Some have strong business reasons to combine, some follow the theory that law firms have to be big to attract the big clients, said Tom Clay, a law firm consultant with Altman Weil Inc. in Newtown, Pa. "It’s as hot and vigorous a merger climate as it was in the 1980’s," he said.

The last big merger of two St. Louis firms came in 1996 --- the former Thompson & Mitchell merged with Coburn & Croft to create the 276-lawyer Thompson Coburn firm. Last year, Peper, Martin, Jensen Maichel and Hetlage merged with Blackwell Sanders Matheny Weary & Lombardi of Kansas City to create a 308-lawyer firm, Blackwell Sanders Peper Martin.

One thing law firms learned from the Thompson Coburn merger was local mergers produce a number of client conflicts, said Aaron Williams, president of Aaron Consulting Inc., a nationwide attorney recruiting firm that worked with the Blackwell and Peper firms on their merger.

"Many firms of Gallop’s size are entertaining, if not persuing, offers to merge. To remain competitive at the top level of the St. Louis market requires a constant investment in technology and efficiencies that come with hiring the highest caliber attorneys. These things cost a lot of money," he said.

Williams said a Gallop Johnson-Armstrong Teasdale merger makes more sense now than it did in 1991 because there has been a sufficient amount of turnover of partners at both firms in the last eight years to create less resistance to change.

In addition to the departure of Johnson, Gallop Johnson also lost another key rainmaker, Tom Newmark. Newmark, 46, left Gallop Johnson March 15 to become president of New Chapter Inc., a Brattleboro, Vt., company that makes vitamin supplements. New Chapter is a Gallop Client.