Troutman Group Sets Up Own Shop
By Meredith Hobbs, Fulton County Daily Report Article
Troutman Sanders’ power industry finance group has broken away to form a six-lawyer boutique, Mercer Thompson. John T.W. Mercer, the former head of Troutman's project development and finance group, leads the new firm with Richard E. "Chip" Thompson II, a younger partner from the group. Both had spent their careers at Troutman. "Troutman is like an aircraft carrier. We've decided to climb in a PT boat and go buzzing around," said Mercer. Mercer Thompson, like Troutman, handles financing, M&A and development deals for both big electric and gas utilities and renewable power developers. Mercer, 60, said the new firm is a return to the more intimate culture of Troutman when he joined 31 years ago. "I started practicing at Troutman when it was a relatively small firm in one city. There was more collegiality and personal relationships. We missed that."
"This is not an indictment of Troutman," Mercer hastened to add. "Of the big, multicity firms, they've done a better job of preserving some of the old law firm values than many other firms. It's inevitable that when you get to a certain size you lose some of the personal values and camaraderie." Former Troutman partners Jason B. Yost and John Lamberski are partners in the new boutique. Tracey H. Thompson and Lori Jones join as of counsel, and Anne Robotham is the firm's "super paralegal." Robotham has a U.K. law degree and is not yet licensed to practice law in the United States.
Mercer said Mercer Thompson can offer clients more innovative billing arrangements than is possible at a big firm. But the boutique is charging the same hourly rates as its lawyers did at Troutman, he said. "We're doing best-of-class legal services." Clients will benefit from increased efficiency instead of lower hourly rates, Mercer said, since only experienced lawyers will handle their matters. Mercer added that the firm's competition is in New York. "So comparatively our rates are probably 33 percent lower than the competition," he said.
The majority of the firm's lawyers have 10 to 15 years of legal experience, he said, giving the boutique a diamond-shaped organizational structure, with a couple of highly experienced lawyers: Mercer and Lamberski at the upper tip, and a few associates -- to be added -- at the bottom. That compares to the pyramidal structure of a large firm, where a broad base of associates make up the largest group of attorneys, with a smaller number of partners at the top.
Mercer said project finance work is not highly leveraged, with lots of associates on a matter. "It's the kind of thing that requires enough original thinking on each transaction that lawyers really have to be senior. There is not a whole lot of need for junior associates."
Mercer Thompson launched quietly in mid-June, securing space at 191 Peachtree St., and still is adding personnel. "There is still work to be done by people with lower billing rates," said Mercer, adding that a third-year associate will join the firm after Labor Day.
Mercer and Thompson do not plan to expand the firm's capabilities beyond project finance. "We do not intend to have regulatory lawyers, litigators or environmental lawyers," said Mercer. Instead the boutique will partner with other firms offering those capabilities, including Troutman. For example, Mercer said one large power client will continue to use Troutman for its regulatory work. "In-house counsel have become very selective in hiring different lawyers from different firms to fulfill different roles in different projects. We have been running into that an awful lot," Mercer said. "We certainly intend to work with Troutman but we also intend to work with others."
Mercer Thompson's clients are a mix of big utilities and independent power producers, but Mercer declined to name them. At Troutman, some of the clients he worked with were Southern Co. and its subsidiaries, Georgia Power and Mirant Corp., as well as PNM Resources, an electric power supplier in New Mexico.
He said there is still activity around power plant construction, even though the credit crunch of mid-2008 shut down the project finance markets. For example, one longtime client, Wisconsin Electric Power Co., which owns a wind farm, is seeking approval to build another from the Wisconsin Public Service Commission. Mercer pointed out that 22 states now mandate that renewable power must be part of the state's power mix. "Even though the project finance markets are closed, they still have to build the plants," he said. The federal government is becoming an important source of financing assistance for renewable projects, Mercer said. The Department of Energy is authorized to issue hundreds of billions of dollars in loan guarantees for such projects, he said, but that backing has been held up by legal issues over how the financing will work -- for example, how the DOE will partner with private lenders.
Mercer added that he's been working with the DOE to resolve the legal impediments.
Some renewable clients are forming joint ventures with big companies that still have access to capital markets, said Mercer, and traditional utility clients require the firm's services for projects under construction.
Mercer expects Mercer Thompson to have 10 or 15 lawyers by early fall, but he and Thompson do not have a target size. "When things are less congenial and personal than they are now, that's when Chip and I will want to put the brakes on," he said.
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