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Orrick Herrington & Sutcliffe chairman Ralph Baxter demanded a guaranteed $25m (£12.92m) payout over five years had the proposed merger with Dewey Ballantine gone through, The Lawyer can reveal.
Orrick's management drafted an employment agreement for Baxter and Dewey chairman Mort Pierce to sign, which would have committed both partners to the newly merged firm for five years.
Pierce is understood to have refused to sign, prompted by the dissatisfaction of a number of Dewey partners with the terms of the agreement.
The significant remuneration for a non-fee-earning chairman is thought to have contributed to Dewey's decision to walk away from the merger with Orrick.
Pierce is known to be the highest earner at Dewey, earning an extra $3m (£1.54m) in one year in bonuses alone. But he is also the highest biller, averaging more than 3,000 chargeable hours a year.
For Dewey, the combination of Baxter's personal demands, which also included unlimited first-class air travel for himself and at least one family member, and the perceived imbalance in terms of post-merger management were the final straw in scuppering a deal that could have produced a $1bn (£514.5m)-turnover firm, which could have been in the global top 10.
The Lawyer can also reveal that Baxter's stipulations as to post-merger governance were also a major contributor to the discussions eventually collapsing.
Initially both firms had agreed to a management committee consisting of five representatives each. Orrick then demanded six, and when Dewey was unwilling to renegotiate Orrick suggested Baxter, set to be co-chair and presiding partner, should have two votes.
Publicly both firms claimed on 4 January that they had "jointly decided" to end the merger discussions. In private the two firms are equally adamant it was their decision to call a halt to the talks.
Orrick sources say the firm's decision to end the talks stemmed from "an accumulation of factors over time", including the significant number of partner departures from Dewey during the negotiations.