Appetite for Expansion
To save his law firm, Jay Zimmerman bet big on a wild growth spurt that turned Bingham McCutchen into one of the world’s elite, and turned him into a new kind of Boston empire-builder.
Jay Zimmerman’s office, a spacious corner number high above the Financial District, is an odd one for a hotshot lawyer: no shelves crammed with casebooks, no stacks of deposition files. Instead, the head of Bingham McCutchen has decorated the room with only a few family photos and a pair of modernist paintings. Zimmerman gave up the traditional accoutrements of legal practice back in 1994, when he began running the Boston-based firm. When he signed up for days like this one.
Right now, at 3:50, in the middle of another long afternoon, Zimmerman is sitting at his desk, desperate to get off the phone. G. Eric Brunstad, Bingham’s Supreme Court ace, has just been hired to handle a case bound for the high court—a fairly technical suit concerning the tax status of some bonds in Kentucky—and he’s called to bring the firm’s managing partner up to speed. The high-profile case will put Bingham McCutchen front and center, a prospect that excited Zimmerman when he first considered it. “This is one that every single major financial institution will watch,” he said slowly, as if marveling at Tutankhamen’s just-unearthed wallet. But that was five minutes ago. The call should be over. There’s a reporter across his desk and a group of summer associates tossing back Heinekens downstairs, waiting to meet him. As the chat drifts toward the finer details, a pair of impossibly small reading glasses begins to twirl in his hand.
An e-mail dings. Zimmerman glares at the screen. His assistant appears at the door with Catherine Curtin, who heads the firm’s community initiatives, and who was on his calendar for a quick review of Bingham’s philanthropic projects. The glasses—the lenses a half-inch big, at most—are spinning faster, and Zimmerman has moved into a series of desultory “Yep!”s. After hovering for a minute, Curtin walks away. Community involvement update? Out the window. The assistant smiles and follows Curtin to set up a new meeting.
Still on the call, Zimmerman polishes off his second Gatorade of the day (to fight low blood pressure, he says), and considers a question: For efficiency’s sake, maybe the firm ought to open a Kentucky office.
Kentucky? Why not? There’s already London, Tokyo, Hong Kong, Hartford, as well as New York, DC, San Francisco, and L.A. After a decade in which the firm grew from four offices to 13 and jumped from 200 to nearly 1,100 lawyers by gobbling up eight firms, Bingham McCutchen (as it’s been known since its 2002 acquisition of San Francisco’s McCutchen, Doyle, Brown & Enersen) has shown it could probably open an office on the moon, were somebody there to need the sort of high-stakes litigation, corporate finance, or financial restructuring expertise that’s become the firm’s bailiwick.
Through all that growth, Zimmerman has turned what was once a mopey, middle-of-the-downtown-pack operation (then known by the name Bingham, Dana & Gould) into not just one of Boston’s elite firms, but one of the nation’s. During his tenure, Bingham’s revenues have increased from $80 million to $686 million, and its profits are now among the biggest in the country. It’s made lists like Fortune’s “100 Best Companies to Work For” and the American Lawyer’s top 100 law firms. Most remarkably, it’s done so while some other esteemed Boston law firms have flamed out (venerable litigation shop Hill & Barlow and new-economy high-flier Testa Hurwitz, for example) and while plenty of other local institutions, from banks to manufacturers, have been bought up and shipped out of the Hub.
“When Jay took over, if you’d have told them that Bingham, Dana & Gould was going to be one of the top 10 firms in the country, people would have laughed at you,” says David Wilkins, a professor at Harvard Law School who studies corporate law firms. “The thing that Jay has done is he’s been extremely entrepreneurial about building through merger. That’s something that many firms, particularly Boston firms, have traditionally been wary about.” Which is another way of saying that Zimmerman, an altogether new type of Boston legal titan, has gotten there with a very un-Bostonlike approach—one that’s also encountered a few hiccups along the way.
Bred in a preppy, upper-class suburb of St. Louis, Zimmerman is tall, with a booming voice and a confident demeanor. He went to college at Harvard and got his J.D. from Harvard Law, and he has intellectual curiosity enough to both devour melancholy Russian literature and profess a lifelong admiration for Bob Dylan (his appreciation for Green Day is more recent). He’s also tough enough to have worn, until recently, a Phil Bronstein–style mustache, and to have pulled it off. There’s a lawyerly precision in his speech, and also a good deal of enthusiasm—when you ask if he hates bouncing from office to office spreading the Bingham gospel, he’ll tell you that he’s gotten used to it, that it’s his responsibility, and that, heck, he sort of likes the travel.
Zimmerman began at the firm in 1982, and later spent seven years running the London office before taking the helm as a replacement for Joe Hunt, who’d abruptly left the post. When he stepped into the job, he was a relatively tender 40 years old, and Bingham was facing a grim outlook: Though it represented several well-known local stalwarts, including the Red Sox and the Boston Globe, its cornerstone client was Bank of Boston, and Bank of Boston was struggling—its stock price had dipped below $5 a share. Four years earlier, the FDIC had taken over its chief competitor, Bank of New England, and several others had collapsed, prompting a wave of consolidation. Suddenly, relying on a local bank seemed like a shaky business plan. “The view of the firm was that all we had to do was keep Bank of Boston happy, and we’d be fine,” says Zimmerman. “There was a strong likelihood that it wouldn’t survive independently, and so that leads to great uncertainty about what will happen to you.”
To counter that uncertainty, Zimmerman plotted a course for growth, adding clients and lawyers in a bid to diversify. Predicting that a rush of new partnerships was coming not just to commercial and investment banking, but law firms as well, he put Bingham ahead of the curve; though other Boston firms have since expanded through acquisition (Hale & Dorr conducted a “merger of equals” a few years ago with DC’s Wilmer, Cutler & Pickering, and in 2005 Brahmin stalwart Ropes & Gray grabbed intellectual-property shop Fish & Neave), none moved to reinvent themselves as early, or as dramatically. The first step for Zimmerman was building confidence among his ranks that expansion was the answer to Bingham’s problems. “Where I think I’ve made a difference in a key way,” he says, “is by wanting this firm to be more than it was, by having the ambition to do this, and by getting people excited
and bought into the notion that it’s something they wanted to do, too.”
Where Zimmerman once pushed Bingham to grow out of necessity, the firm now does so to gain a competitive advantage. His zeal for increasing revenues has led to the creation of sideline businesses like Bingham’s mergers and acquisitions advisory squad and its sports consulting group, headed by former Red Sox CEO John Harrington. There’s also Bingham Consulting, which provides help with public policy and government regulation. That unit is something of an all-star team: Stephen Merrill, the former New Hampshire governor, and Pete Wilson, the former California governor, both work there. But Merrill notes that there’s no doubt who runs the show, titles notwithstanding. Says the ex-gov, “Jay’s the governor here.”
In Binghamspeak, the addition of a firm is a “combination,” a clear sop to the egos of the lawyers at the entities being snapped up. (Only the McCutchen merger resulted in any kind of name change, and in that case Zimmerman made it clear from the start that he’d be top dog after everything was said and done.) Along with moving on heavyweights—like DC-based Swidler Berlin—that had suspected they needed to merge but rejected deals until the convincing Zimmerman swooped in, Bingham has been particularly good at targeting much smaller firms that have top-name assets, such as Alschuler Grossman and its ace litigator, Marshall Grossman, whose clients have included Blockbuster and Apple. When Bingham adds one of those smaller firms, it often makes little effort to keep less profitable units on board. In 2003, for instance, after Bingham landed the much ballyhooed boutique of Riordan & McKinzie (founded by former Los Angeles Mayor Richard Riordan), it gave a warmer welcome to its newly acquired private-equity experts than to the affordable-housing specialists who were also part of Riordan & McKinzie’s legal staff.
“We always offer a chance for the other people to succeed on our platform, but the other thing we make very clear is that it is our platform,” Zimmerman says. “In most cases when we’ve done combinations, a number of people haven’t stayed.”
That’s become increasingly true in California, where departures are growing discouraging. Last year a poll by the American Lawyer ranked Bingham’s Los Angeles office last in the city in associate satisfaction. And while Zimmerman’s nickname, Jay-Z, is used as a cutesy moniker at the firm’s Federal Street headquarters, in San Francisco it’s spoken in mocking reference to his cocksure attitude. Such discontent isn’t new: Following the McCutchen merger, there were gripes about an “iron hand,” according to a former associate of the subsumed firm. “Instead of a culture combination, it went from a firm run by consensus to one run by one person’s whim,” she says. Shortly after the deal went through, while the partners were away on their yearly retreat, some of the junior attorneys staged a comedy show. The associate recalls one routine as particularly memorable. “One of the parodies was that McCutchen had sold its soul to the devil,” she says. “The devil was Jay-Z.”
That his nickname has different meanings depending on what time zone it’s being uttered in is proof of the difficulties inherent in keeping a growing empire unified. Zimmerman isn’t blind to those challenges. “You’ve got disparate groups, 13 different offices, a lot of different time zones, a lot of people who really don’t have any interaction with each other,” he says. “It’s about having one person who is thinking about all of these things that are going on.” That requires him to be less a lawyer than a diplomat, a reality that’s turned his job into what he calls a “nonstop political campaign.”
As Zimmerman distributes face time to his growing cadre of attorneys and an ever demanding client list that includes Oracle, Morgan Stanley, Deutsche Bank, and Intel, he spends only about a week every month in the home office. Many of his meals are eaten on long-distance flights; during extended stays, toiletry kits with up-to-date prescriptions are overnighted to him by his assistant, and Zimmerman will often commandeer a conference room as a temporary office in whatever Bingham outpost he’s visiting.
Chats with Zimmerman drift toward small talk about airport security lines the way conversations between some guys slide into sports. Geography has become an obsession. (Take that Kentucky case: Right after discussing it with Brunstad, Zimmerman ran it by Bob Dombroff, the head of Bingham’s New York operation. They made plans to discuss it in person later that week. They’d grab a cup of coffee. In Los Angeles.) “It’s a strange life,” Zimmerman says. “I’ve got to admit, as we were growing, I didn’t think about what it would mean for me. Every night I wake up and I don’t know where I am.”
I first met Zimmerman back in 1998, while accompanying my fiancée to his Weston home for a lavish party for Bingham’s summer associates. (Big tent. Crab cakes. Little Joe Cook—a nice touch—singing “Peanuts.”) But that was a different era for both Zimmerman and the firm. The Weston house is gone, and he’s divorced from the wife he shared it with—the job, he says, exacerbated things. He now has a place on Marlborough Street (and another on the Vineyard) with his second wife, Margaret “Mars” Child, a former Bingham marketing director and daughter of the patrician financier Josiah Child. And while Zimmerman once sat on the boards of local charities such as the Make-a-Wish Foundation, today, because he’s in town so rarely, the guy who so accurately read the tea leaves about growing or dying, who has steered the Bingham ship so surely that he’s become a celebrity in legal circles internationally, is hardly even known in Boston.
Considering the pace and far-flung nature of Bingham’s acquisitions, and the importance of the firm’s New York office (where some of the biggest deals are done), an unavoidable question arises: How much of a Boston firm does Bingham even remain? Zimmerman’s answer doesn’t settle the issue. “What I like to joke about is that if you ask everybody in this firm outside of Boston where the firm’s headquartered, they say, ‘Boston,’” he says. “You ask in the Boston office, they say, ‘I don’t know.’” One thing that does point to the firm’s continued presence as a major player in the city is its new lease, which next year will move it two blocks into a 300,000-square-foot space at One Federal Street. Even if Bingham’s center someday shifts out of town, that’s room for a whole lot of lawyers.
Bingham’s success has also helped to energize competitors like WilmerHale, Goodwin Procter, and Ropes & Gray, all of which now aspire to be major international players. According to Harvard’s David Wilkins, that expansion will continue to be vital, both in serving businesses here and in buttressi
ng law as a booming local industry of its own. “Legal services have been very profitable in fueling the economic growth of the area,” Wilkins says. “Boston now has a way to attract top talent, and we can build a more interesting, diverse city as a result.”
For Boston’s legal titans of yore—those who relied on things like local banks for their livelihood—civic connections were easier to maintain. Getting involved was also good for business, and it elevated those most prominent lawyers to perches of considerable influence. Thanks to the growing clout afforded by world-renowned firms like Bingham, leaders like Zimmerman are poised to carry on that tradition of engagement and flex considerable muscle. If they want to. “I’d hope they see themselves as investing in the city of Boston,” Wilkins says. “But they may need to be in Boston more than one day a week.”
A nice goal, perhaps, but you can expect to see plenty of Zimmerman at the airport for the foreseeable future. There are more firms to acquire and more clients to win, and as the megafirm movement continues, the incremental gains are starting to decrease. Last year, after picking up the DC-based regulatory power-player Swidler Berlin, he says, Bingham’s revenue grew by an additional 16 percent. That’s not bad, but, he says, “we moved up a grand total of one place in the American Lawyer 100. We’re looking at a tough business right now. We’ve got to keep running.”
Source URL: http://www.bostonmagazine.com/2007/09/appetite-for-expansion/