When Les Baledge and Rick Massey led the nine-lawyer defection from the Rose Law Firm to the Little Rock office of Kutak Rock, it gave Kutak Rock an instant presence in the local corporate securities business.
Baledge and Massey — both well-respected, high-profile corporate attorneys — immediately brought new business to the national firm, proving the old adage that clients do business with attorneys, not law firms.
But less than two and half years later, things are shifting again at Kutak Rock. Baledge and Massey have left the firm, each taking a position with one of the firm’s biggest clients. Kutak Rock has brought in yet another longtime Little Rock corporate lawyer: H. Watt Gregory III, who himself worked at the Rose firm before splitting off in 1988 with Joe Giroir to start a new firm.
“Rick and Les are tough to replace,” said Jeff Gearhart, who, along with Gordon Wilbourn, has taken over the management responsibility that was left in the wake of Massey’s departure. “They’re irreplaceable, really.”
Baledge and Massey were mentors to many of the younger Rose attorneys who made the move to Kutak Rock in April 1998, Gearhart said. But more importantly, they were the so-called “rainmakers,” attorneys who had developed the relationships and reputations to bring in profitable corporate securities business.
While Kutak Rock is disappointed to see first Baledge and then Massey leave, said Wooten Epes, managing partner at Kutak Rock’s Little Rock office, the firm expects to maintain its client base. Kutak Rock still has plenty of experienced corporate attorneys who themselves have relationships with the firm’s clients.
And since Massey and Baledge aren’t going to a competing law firm, that business is still Kutak Rock’s for the taking.
“We really believe we have the greatest number of securities specialists of any other firm in the state, and we have the depth of Kutak Rock behind us,” Epes said. “So we can still be extremely competitive in the securities business.”
The Rose Connection
Kutak Rock is a national firm based on Omaha, Neb., with more than 290 lawyers in 13 cities. The firm focuses on corporate law, public and corporate finance, and litigation.
The Little Rock office was formed in 1988 by Epes, who still serves as managing partner and handles public finance for the firm.
In 1998, Kutak Rock wooed Massey, Baledge and seven other Rose firm attorneys, four of whom were senior partners. The coup gave Kutak Rock’s Little Rock office 13 lawyers with specialties ranging from securities law to corporate law to tax law. It also brought millions of dollars of new business the firm’s way.
Tyson Foods Inc., Bank of the Ozarks and Fairfield Communities switched almost immediately to Kutak Rock for some or all of their securities work. TCBY, American Freightways Inc. and Alltel Corp. soon followed.
All those clients were served by the former Rose attorneys.
Massey and Baledge were also named as managing partners of the Little Rock office, with Epes working on the public finance side and Massey and Baledge taking care of the corporate side. But the marriage was short-lived.
Baledge, Then Massey
Baledge was the first to leave. In February 1999 — less than a year after he went to Kutak Rock — Baledge took a position as general counsel for Tyson Foods, replacing the company’s longtime in-house attorney Jim Blair.
Although he couldn’t be reached for this article, Baledge said at the time the opportunity to work for an international company like Tyson was too good to pass up.
Massey, who officially left Kutak Rock on Aug. 1, said essentially the same thing in moving to Stephens Inc., where he
took over the company’s Internet investment banking team on Aug. 1.
“It was a once-in-a-lifetime opportunity,” Massey said of the chance to become an investment banker.
The move had nothing to do with Kutak Rock and the firm’s future, he said. The firm was thriving when he left and will continue to do so with the attorneys who are still there, Massey said.
While Epes said he was caught off-guard by Massey’s decision to leave the firm, Gearhart said he wasn’t too surprised.
“You kind of know when you have two people with that much talent, it won’t be long before clients come and take them up,” Gearhart said. “Ultimately, we knew they would move on to other things.”
The moves made sense for both men, Gearhart said, providing them with opportunities unavailable to the attorney in the “tough” business of working in private practice. With the economy as strong as it is and so many initial public offerings and mergers and acquisitions, a lot of attorneys are finding lucrative in-house positions with companies, he said.
Lemons to Lemonade
Losing the management skills of Massey and Baledge won’t much affect Kutak Rock’s local office since most its administrative functions, like accounting, are done in Omaha, said Epes
“Lawyers don’t really take well to management anyway,” Epes said. “We’re going to miss Rick [Massey] more so because of his energy and skills as a lawyer. He’s somebody that you can’t ever really replace.”
Whether the firm’s clients take their business elsewhere has yet to be seen, admit both Epes and Gearhart. However, Baledge’s and Massey’s departures are a different situation than when the Rose lawyers left for Kutak Rock.
In this instance, they aren’t going to another firm. Instead, they are going to work in-house at some of Kutak Rock’s more lucrative clients. Not only does that mean the pair won’t be taking clients with them, but Kutak Rock hopes to pick up more business from both Tyson and Stephens through its new found relationships.
“We look at it as turning lemons into lemonade,” said Epes.
Gearhart said both Baledge and Epes worked hard to smooth out the transition, calling clients and making sure they were still comfortable with the firm.
Massey said that both he and Baledge made it a habit to expose clients to as many lawyers in the firm as possible as a way to cultivate the practice.
“I made sure the clients I worked with had relationships with other Kutak lawyers,” Massey said. “I didn’t want them to have to work with a stranger.”
With the addition of Gregory — who also brings a substantial client base with him, much of which dates back to his years at the Rose firm — Kutak Rock should remain in the hunt for a lot of local securities business, Epes said.
Gregory, who was still a partner at Rose when many of his new associates were just starting out there, is no stranger to moving between firms. He and former partner Joe Giroir left the Rose firm in 1988 in what was then a highly publicized split in one of the state’s largest and well-known firms.
The pair formed what eventually became Giroir Gregory Holmes & Hoover.
While the partners of Giroir Gregory all liked each other, the firm itself was divided into fairly independent areas of law ranging from estate planning to securities work, Gregory said.
Giroir has been of counsel at the firm for some time, meaning he wasn’t a full-time partner. At least part of his time has been spent working with an Indonesian cable company owned by former Arkansas Gov. Jim Guy Tucker and Indonesian businessman James Riady.
Gregory said his own practice had grown to the point that he needed help. At one point, the firm’s partners even discussed the idea of merging with another firm. But after Gregory started talking with Kutak Rock last April, he decided Kutak Rock’s resources made it the place for him to go.
The six-attorney Giroir Gregory firm officially disbanded July 31. Many of the partners have yet to say where they will go. Joe Mowery has become a vice president at Stephens in the corporate finance group.
Gregory said that the breakup of Giroir Gregory was remarkably “amicable and free of acrimony” compared to others he has seen personally and professionally.
“I had the greatest partners in the world over there,” he said.
Despite his considerable experience, Gregory speaks of his new partners deferentially, saying “I’ll learn from them probably more than they’ll ever learn from me.”
All of his new colleagues at Kutak Rock have been “tested by fire” and work well together, which is an asset in the complex area of mergers and acquisitions, he said. And it’s one of the main reasons he joined the firm.
“What I needed to have was some additional capacity to help service my clients,” Gregory said. “And this is just an opportunity to take my practice to a level that has a national support base. That’s something extraordinary in Arkansas.”