TALK ABOUT MIXED MARRIAGES: LEGG MASON AND A LAW FIRM

Baltimore brokerage Legg Mason Inc.’s joint venture with a Boston law firm is a test of a union between the legal and the securities professions that many see as inevitable, but risky.

To capture more wealthy clients for its money management business, Legg Mason formed a joint venture last week with Bingham Dana LLP, creating Bingham Legg Advisers LLC. It’s the first time a U.S. law firm has joined in this way with a securities house, according to officials at Bingham.

Legg Mason is buying half of Bingham Dana’s trust department, which oversees $1.3 billion in client assets. Peter Simmons, who ran the 23-person department at Bingham, will be president of the new operation, which he’ll run out of Boston.

Terms of the purchase were not disclosed.

Law firms that offer estate planning are itching to add investment services for their rich clients as brokerages and others enter their businesses. And money managers and brokers like Legg Mason want to use these law firms to get access to the rich.

The Legg Mason move comes months after the American Bar Association said it’s OK for lawyers to enter revenue-sharing agreements with firms outside the legal profession.

The problem for lawyers is that they must be careful to avoid conflicts of interest. For that reason, most keep their relationships with money managers at a greater distance than Bingham has with Legg Mason.

“A law firm has to be objective in its advice,” says Robert Glovsky, president of Mintz Levin Financial Advisors, a unit of Mintz Levin Cohen Ferris Glovsky & Popeo. “You have to wonder whether a firm that is also managing money is really going to fire itself.”

Bingham Legg’s Mr. Simmons replies that he’s not worried about conflicts of interest. “We are not compelled to use any services that Bingham or Legg provide,” he says. “Everything will be handled on a case-by-case basis.”

As part of the venture, Bingham Legg will oversee $800 million in client assets. The rest will be parcelled out to 15 outside money managers, including Boston companies Standish Ayer & Wood Inc., Essex Investment Management and Westfield Capital Management.

isn’t it rich?

Just last month, the company bought Berkshire Asset Management, another company that focuses on the rich.

“This is a business we are trying to build,” says Raymond “Chip” Mason, the chairman and chief executive of Legg Mason. “We don’t know exactly where this private client business is going, but it certainly is a distribution channel.”

Legg Mason, which oversees $93 billion, expects to increase its affluent-services business to 15% of its total under supervision over the next two years, up from about 6% today, Mr. Mason says.

Money managers aren’t the only ones angling for a piece of the pie. With accounting and asset management firms nibbling away at their trust practices, many law firms are reevaluating their positions in the market.

“This has been a successful business for us for the past 20 years,” says Jay Zimmerman, Bingham Dana’s managing partner, of the trust operation. “But when we look at the growing sophistication of the market, we have to ask ourselves one thing: “Do we — as lawyers — have the skills to do what is necessary in this increasingly complex market.’ The answer is probably not.”

Consequently, a growing number of law firms are registering as investment advisers to stave off competitors. For example, Mintz Levin formed its adviser unit a year ago.