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Dentons Mum on Sudden CEO Ouster While Defending His ‘Success’

Sept. 17, 2021, 10:01 AM

In 10 years as managing partner and then U.S. CEO of Dentons, Mike McNamara helped stitch together the self-described “world’s largest law firm” by clinching a merger after it was initially rejected and championing an expansion audaciously named “Project Golden Spike.”

Along the way, he gained enough power to pick members of his board—making it stunning when that board ousted him on a Friday afternoon before the July 4 holiday weekend without a permanent successor lined up.

While McNamara remains a partner, he has virtually no clients and hasn’t been a practicing lawyer in years, five current or former Dentons members said. McNamara wasn’t in the room when the board made the decision and didn’t see it coming, according to people familiar with the situation.

Removing a CEO in the middle of a term is highly unusual in Big Law. Dentons has offered little to explain it, even internally. After ousting him, Dentons praised McNamara’s strategy for expanding its U.S. business, and in a joint video interview, Dentons global Chair Joe Andrew called McNamara “one of the finest lawyers” he’d ever met.

The firm has stayed silent about the events of July 2 because allegations about McNamara are at the heart of ongoing litigation with a former partner, Andrew and McNamara said in the interview — while also insisting the lawsuit had nothing to do with his removal.

“Part of the reason there is a story here to the extent there is one, is that the law firm that’s so transparent hasn’t been able to explain itself because of the pending litigation,” Andrew said. “That is the conflict. And if there is a story, that’s it.”

In the absence of an official explanation for McNamara’s removal, interviews with former partners and current Dentons sources portrayed a leader whose reputation was closely tied to the firm’s main objective: grow at all costs.

Apart from the lawsuit, McNamara’s removal followed years of missed revenue targets and festering dissatisfaction among some U.S. lawyers, according to the knowledgeable people. For all of the appearances of power, they said, McNamara was stuck between U.S. partners, who wanted the firm to focus growth efforts in big domestic markets and global CEO Elliott Portnoy and Andrew, who prized scale and international growth.

Still, most of the complaints lawyers had about the McNamara regime weren’t new. Two current sources at Dentons say he helped turn around the firm’s finances in the past 18 months by cutting costs and pushing lawyers to be more diligent about billing and collecting their fees—the type of micromanagement that can draw the ire of working lawyers.

McNamara defended his tenure as successful, saying it led to Dentons’ highest-ever profits last year. Andrew agreed, signaling his support for McNamara to have a long post-CEO career at the firm.

“We are a for-profit enterprise, and nobody knows better how we can increase the profitability of this place than Mike McNamara,” Andrew said in the interview.

Building Global Behemoth

McNamara’s rise spans the history of Dentons, beginning at a 600-lawyer firm based in Chicago, Sonnenschein, Nath & Rosenthal. There, the Harvard Law grad worked with Portnoy and Andrew, the duo that built modern-day Dentons through a series of mergers beginning in 2010 with law firms in France, Canada, and China.

Portnoy and Andrew—a former head of the Democratic National Committee—now oversee an organization that counts more than 12,000 lawyers under its purple banner.

A U.S. government economist early in his career before switching to law, McNamara was viewed inside the firm as a protégé of Portnoy, who became the youngest chairman in Sonnenschein’s history in 2006, at age 40. He then ceded to McNamara leadership of the firm’s public policy and lobbying group, the first in a series of occasions when McNamara stepped in to lead a firm initiative after Portnoy or Andrew turned to new objectives.

After Sonnenschein’s first major merger, its 2010 pairing with U.K. firm Denton Wilde, McNamara was tapped to lead the integration effort. Three years later, the bulked-up Dentons agreed to merge with Atlanta-based McKenna Long & Aldridge—only to have McKenna Long’s partners vote against the deal.

McNamara wasn’t dissuaded, keeping communication open with McKenna Long partners who’d been receptive. His persistence paid off in 2015, when Dentons went back to McKenna Long with a critical sweetener: Dentons would allow McKenna Long partners to “try out” the firm for a set time. If partners left before the time expired, they would receive their capital payouts under friendlier terms.

The outline of the deal was laid out in a complaint filed by a former McKenna Long partner who left Dentons after the merger and alleged the firm failed to pay her almost $400,000.

“What you ended up with was an approved deal but a lot of people leaving from the McKenna side,” a former Dentons partner said. “That’s the deal that broke the place for a lot of people.”

Portnoy and Andrew publicly commended McNamara for leading the firm through the merger, which closed in July 2015. McNamara was announced as the U.S. CEO just over a year later.

Bigger U.S. Footprint

The firm missed its revenue target, referred to as its annual “budget,” for multiple years following the McKenna Long merger, which resulted in partners receiving less compensation than they expected and led to some departures, former and current members said.

Jessica Abrahams, the former partner who sued Dentons over $400,000, said in her 2019 lawsuit the firm missed budget in 2015, 2016, and 2017. She didn’t respond to messages seeking comment for this story. A source currently at Dentons said the firm either missed its budget or barely made it from 2017 to 2020.

In 2015, the American Lawyer calculated that Dentons’ profits per partner were near the bottom of the 100 biggest law firms, prompting the firm to launch a PR campaign discrediting the publication. Even after the publication capitulated and boosted the number by more than 30%, to $680,000, that was still 89th on the list.

“When I was joining Dentons, I was told the firm had always made budget. And it never made budget when I was there,” one former partner said of a tenure that spanned more than five years. “They were missing by a good amount sometimes.”

Andrew pushed back against those characterizations, saying the firm set “aggressive” revenue targets but that partners had earned more money every year except once since the merger.

McNamara attempted to quell dissatisfaction by offering high-performing partners positions on the U.S. board, two former partners and a source currently at Dentons said. Partners were asked to vote, but had little insight into how the new nominees were selected, the sources said.

The firm accumulated, through its various mergers, a cadre of lawyers in management positions who no longer brought in business. McNamara, who’d largely stopped practicing law in his leadership position, was a target of that criticism. Still, if the board continued to support him, he was largely insulated from those criticisms.

“He was picking people who would keep him in that position,” one former partner said of McNamara.

McNamara said his focus when selecting nominees in recent years had been on diversity, noting there are more women on the board today than any other point during his tenure.

“That’s not the way it happens or the way it works,” McNamara said, in response to the claims that board positions were used as negotiating chips.

U.S. Growth

Project Golden Spike, a reference to the completion of the Transcontinental Railroad, took a page out of Dentons’ international expansion strategy by focusing on adding groups of lawyers in markets overlooked by other major firms.

In January 2020 the firm announced its initial combinations—the 175-lawyer Bingham Greenebaum, based in Louisville, Kentucky, and the 140-lawyer Cohen & Grigsby out of Pittsburgh. McNamara heralded the tie-ups as “an exceptional moment for our firm and the business and profession of law.” Dentons went on in 2020 to add firms in Salt Lake City, Des Moines, Iowa; and Birmingham, Alabama.

The strategy allowed clients of those firms to tap Dentons lawyers around the world for business that would traditionally go to larger firms. But two former partners in major markets doubted their clients would ever need the services of lawyers in those places. They wanted management to rebuild practices hit by departures, like government contracts, international arbitration, and white-collar criminal defense.

“That was a way to increase the number of lawyers overall without taking head on the problem of not being able to attract premier practices in leading markets,” a former partner said. “There were a lot of us who felt like we really wanted to see those resources and that effort put into building up the offices in the big legal markets in the U.S.”

Andrew said the firm would continue its Golden Spike strategy.

He pointed to recent moves by competitors, such as Kirkland & Ellis opening a Salt Lake City office, as evidence that other firms were coming around to a strategy Dentons pioneered. He also said Dentons isn’t singularly focused on Golden Spike tie-ups, and is also hiring partners in New York.

“These are not small markets,” he said of places like Birmingham. “It’s parochialism [to call them that].”

Zhang v. McNamara

The firm has denied that the ouster was influenced by threats from Jinshu “John” Zhang, a former partner and litigator based in Los Angeles.

The battle emerged after Zhang helped a client secure an arbitration victory leading to a $35 million contingency fee, according to court records. He attempted to negotiate with McNamara a bigger share of the fee for himself, as well as a seat on the board, but the two sides failed to reach an agreement.

Zhang said in an interview that he was trying to negotiate in a way he’d seen done by other partners at the firm.

“Quite frankly, the board seat was not important at all. I was using it sarcastically in a way to say: ‘I know how you guys play this game,’” Zhang said.

Zhang’s ire with McNamara stems from a letter he said he found on Dentons’ internal server that, he said, was drafted on his client’s letterhead without the client’s knowledge. It directed another party in a lawsuit involving the client to release the $35 million, in the form of a stock award, directly to Dentons.

Although the letter was drafted by another Dentons lawyer, Zhang says it must have been written at McNamara’s request because McNamara was the point person at the firm working to collect the fee. The identities of the client and other party haven’t been revealed in court.

Zhang says McNamara denied knowledge of the letter. So Zhang sent an email, a redacted version of which was reviewed by Bloomberg Law, to the U.S. board on April 30. He ended it by saying if McNamara wasn’t fired, “each of you will be held personally liable for complicity in this horrendous fraud and the destruction of the Dentons brand.”

McNamara has denied Zhang’s allegations.

Patrick Collins, a King & Spalding attorney who has represented Dentons in the case, called Zhang’s allegations “reckless.” The firm says the contingency fee was owed to Dentons, and that Zhang engaged in “self-dealing” by getting his client to agree with his proposed compensation plan. They say he asked for 90% of the fee.

Zhang says he never heard back from the board after his email. He was fired on May 5, the same day an arbitration proceeding commenced between Zhang and the firm. He filed a lawsuit May 23—40 days before McNamara was removed as CEO.

The two sides have fought ever since over where and under what law the dispute will be heard.

In an interview, Zhang said U.S. board member Keith Moskowitz on July 5—the first work day after McNamara was removed—offered through the firm’s lawyer to meet him in an attempt to resolve their dispute. The meeting failed to materialize, Zhang said, after he asked Dentons to first provide its communications with the other party that was instructed to release the stock award directly to the law firm. Dentons didn’t respond to questions about the July 5 offer.

Richard Doren, a Gibson Dunn lawyer advising Dentons, said in a statement: “Some litigants make inaccurate statements about their opponents in the press to create misinformation, which is quite frustrating for those targeted by those inaccurate statements, especially when they are unable to defend against them because of pending litigation. The best place to address misstatements is before the tribunal charged with hearing the actual evidence and determining the truth, which is where empty accusations are disproven.”

‘Board Decision’

Moskowitz and Mary Wilson, two of Dentons’ U.S. new leaders after McNamara was removed, said in an interview that it was a “board decision” to make a “structural change” in the firm’s U.S. leadership, which led to McNamara’s removal.

The firm’s new U.S. leadership is viewed as more collaborative since four of its leaders now share management responsibilities, they said. It is more diverse, with two women in those positions, and it’s run by practicing lawyers bringing in revenue.

As for McNamara’s future at the firm, Wilson said he had been participating in client meetings and “driving” a new diversity and inclusion initiative. She said McNamara and the new leaders were “very supportive” of each other.

McNamara “will have one of the largest practices in our firm,” Andrew said.

McNamara, meanwhile, said he was looking forward to helping the firm continue to grow even if he was no longer CEO.

“When I look back at what I’m most proud of it is not that we had the highest profitability we’ve ever enjoyed or expanded our presence to 44 markets,” he said. “What I’m most proud of is we have always kept our primary focus on our people.”

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com; Chris Opfer at copfer@bloomberglaw.com

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