Interesting article in this week’s Legal Times: McKee Nelson: The Richest Guys in Town, by Nathan Carlile:
After almost a decade of exponential growth, McKee Nelson is the orange in Washington’s legal apple crate: an upstart, small-size, high-end tax and capital markets outfit, targeted directly at Wall Street, that thrives in a town dominated by gray-suited appellate and regulatory behemoths. …
[I]n the all-important category of profits per partner, McKee Nelson delivers a roundhouse to the Washington market with an average of $1.7 million — in the Legal Times D.C. 20, only Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom are higher, and neither of them are native fauna. …
Competitors say McKee Nelson’s current success is largely the result of the talents of two men. William Nelson and William McKee don’t lack for confidence — at least when the conversation pertains to their firm or field of law. Both have their defined roles. Nelson, 60, is the effervescent manager of personalities, McKee, 63, the matter-of-fact businessman. The duo met at the University of Virginia School of Law in 1969 before working in government. McKee was tax legislative counsel at the Department of the Treasury from 1981 to 1983. Nelson served as chief counsel at the IRS from 1986 to 1988. Then, as partners at King & Spalding, the two constructed a high-end tax practice. It was in 1999 that William Lipton, the vice chairman for tax services at Ernst & Young, came calling, asking if the two would start their own firm with ties to the accounting giant. "We thought being a beachhead for Ernst & Young would be great leverage," says McKee. "But that work never materialized." ..
With Ernst & Young’s financial backing, McKee Nelson Ernst & Young was launched in 1999. Immediately, the firm attracted blue-chip tax lawyers, including David Curtain, a partner at King & Spalding, and Magee, from Miller & Chevalier. But McKee Nelson’s connection with Ernst & Young was crumbling. The firm dropped the Ernst & Young name in May 2001, partly as a pretext to moving into New York, where state bar rules prohibited a law firm’s relationship with an accounting firm. Later that year came the Enron bankruptcy and — more significantly to McKee Nelson — the resulting Sarbanes-Oxley Act, legislation designed to rein in accounting firms’ conflicts of interest and compensation practices. By 2004, only 10% of McKee Nelson’s revenue came through referrals from Ernst & Young, and the firms decided to completely part ways. The experiment was over. "We’ve had some very interesting times at this firm," says Nelson. "That was one of them." But McKee and Nelson were already making moves to outflank the original scheme. With a strong stable of tax lawyers, the firm saw securities work as a natural extension.
