Peper Martin, KC firm to merge

by Rick Desloge

St. Louis Business Journal — April 20-26, 1998

Aaron Consulting, Inc. acted as the principal recruiting and management consultant to both law firms in this transaction.

In what is the largest law firm merger in Missouri and one of the largest recent law firm mergers in the country, Peper Martin Jensen Maichel and Hetlage of St. Louis is combining with Blackwell Sanders Matheny Weary & Lombardi of Kansas City.

The new firm will be known as Blackwell Sanders Peper Martin when the merger is effective

June 1. Five members of a seven-person management committee will be based in Kansas City.

Partners at both firms voted on the merger Tuesday. After the ballots came back, a lawyer at Peper Martin played the Fats Domino version of "Kansas City, Here I Come" over the intercom at Peper Martin's offices in the Laclede Gas Building downtown, lawyers at the firm said.

The combination of Peper, St. Louis' eighth-largest firm with 82 attorneys, and Blackwell Sanders, No. 2 in Kansas City with 230 attorneys, is creating a law firm with 312 attorneys - the third-largest in Missouri after Bryan Cave in St. Louis and Shook Hardy & Bacon in Kansas City.

The cross-state merger is surpassing the 1996 merger that created Thomson Coburn, a 272-attorney firm.

The combination will make Blackwell Sanders Peper Martin among the 80 largest law firms in the United States, according to rankings last year by the National Law Journal and The Corporate Legal Times.

Both Blackwell Sanders and Peper Martin represent blue-chip clients. Blackwell has a staff of 494, of which 86 are partners. Peper has a staff of 187, of which 36 are partners.

The two firms acknowledged last year they had been in discussions. Those talks eventually ran for more than a year. While people outside of the law firms speculated the deal had died, Ron Schowalter, the managing partner at Peper Martin, and John Phillips, a member of the Blackwell Sanders executive committee, said the discussions were put on hold at the end of 1997, but resumed earlier this year. "The whole thing was client-driven," Schowalter said.

"We both have clients with interests on both sides of the state. And that resurfaced again this year," Phillips said. "We saw clients with more regional needs, and we decided to move."

Peper Martin's clients include Solutia Inc., Monsanto Co., The Boeing Co., A.G. Edwards & Sons, several St. Louis area school districts and the Saint Louis Art Museum.

Last year, the firm merged Kalish & Gilster's intellectual law practice with its own and continues to market that patent, trademark and copyright practice under the Kalish name. Phillips said the intellectual law practice would fill a void at Blackwell Sanders.

Blackwell Sanders represents the Kansas City School District and counts well-known Kansas City public companies among its clients, including Utilicorp United Inc. and Payless Cashways Inc. Blackwell also represents Hallmark Cards Inc., Black and Veatch, Mutual of Omaha, and Kansas City institutions such as the Nelson-Atkins Museum of Art.

Both law firms have done work for Commerce Bank.

The firms estimated that together they have handled $4 billion and $5 billion annually in corporate financings and acquisitions for the past several years.

Blackwell lawyers will dominate the partnership's management.

The new firm will be governed by a seven-member executive committee, the five members of Blackwell Sanders' governing body with two members from Peper Martin - Schowalter and Ralph Kalish Jr. the five Blackwell members are Phillips, Ralph Wrobley, Dave Fenley, Jim Warden and Jim Borthwick.

The combined firm will operate without a managing partner - similar to the way Blackwell has operated during much of its 82-year history. "The firm reachs decisions by concensus." Phillips said.

Talks with Blackwell Sanders were indirectly responsible for Peper Martin cutting loose its three Florida offices last year, Schowalter said. "We wanted to take the time to do it right," he said in an interview Wednesday.

The two firms said that in addition to complementary client bases, both approach clients as a legal team instead o fas individual lawyers. Both firms have approached clients to consider alternatives to billing by hourly rates.

"We've suggested fixed contracts for regular clients and premiums for successful service," Phillips said. "One-third of our revenue is not charged by billable hours."

Schowalter said Peter Martin has expanded that segment as well, but he did not have figure immediately available.

Blackwell is the older of the two firms. It dates to 1916, when it specialized in insurance defense work - a specialty still practiced at the firm. Peper was founded in 1941 by Christian Peper and Malcolm Martin, who still practice law.

In addition to its Kansas City base, Blackwell Sanders also has offices in Omaha, Neb., and London, where Blackwell works with one of the largest firms in Great Britain - Davies, Arnold and Cooper.

Dan Margolies of the Kansas City Business Journal contributed information for this story.