Among the AmLaw 200, mergers are in the air. Like it or not, this
seems to be the reality we are facing: Consolidation.
I’ve addressed the "fact" of this trend before (I
think it’s safe to say at this point that it’s a fact—Hildebrandt certainly
thinks so). This is what economists call the "positive" aspect. What
I have so far left unaddressed, at least explicitly, is the "normative"
aspect. [Jargon digression: "Positive" in this usage has
nothing whatsoever to do with "not negative;" all it means is descriptive,
factual, "what is." "Normative" has a more judgmental
implication, and implies "what should be."]
To help frame this discussion, here are two pieces taking, essentially,
opposite views of whether BigLaw will rule the earth (or the market for
F500 legal services, anyway). Greg Jordan, Managing Partner of
Reed Smith (AmLaw 100 #31) has this to say in an interview:
Although some legal observers think the law firm merger mania is about
to cool off because many of the most attractive medium-sized firms
have been snatched up, Jordan doesn’t agree. He believes law
firms are “fairly early in the trend of consolidation, and
while we won’t end up like the accounting world with just three or four
major firms, I do think over the next several years there will be 30
or 40 or 50 major law firms who are in the position to get most of
the major international projects and have significant operations in
key markets throughout the U.S. and Europe and Asia.”
Need I add that he intends for Reed Smith to be one of them?
Contrarily, we have Brenda Sandburg of the SF Recorder reporting that
"The Fortune 500 Think Small," and citing among others Chevron,
Cisco, and GE picking firms that are anywhere but in the AmLaw 200. Although
a variety of reasons are cited, this encapsulates them:
“It’s really the attorney you’re hiring, not the firm,” said Gary Loeb, Genentech Inc.’s director of litigation.
He said the greater responsiveness of smaller shops and the difficulty in finding big firms that aren’t conflicted out of a case are also factors in looking beyond mega firms.
At a large firm “an attorney brings you in and may not work with you again,” Loeb said. Smaller firms “may be more responsive and have younger partners and associates eager to be full service.”
A consultant friend of mine, himself an alum of an AmLaw 100 firm,
anticipated when he went out on his own that clients would naturally
gravitate to BigLaw for its perceived quality, safety, and full service. But
to his surprise he has found that small and midsize firms can hold
their own, for these reasons:
- The "known quantity" factor: As Loeb’s observation
implies, at a small or midsize firm, the lawyer you hire is the lawyer
who works on your matter. "People don’t see the names of total
strangers appearing on the month-end bill."
- "Top quality" lawyering: Again confirming Loeb’s thoughts, the
professionalism, judgement, and experience of the individual you
hire is what really matters, and people of high caliber can be found
outside the AmLaw 100.
- And finally, of course, good old value: For a variety of
reasons, smaller firms’ billing rates tend to be lower—and
they don’t overstaff matters, to boot.
In the ecosystem that is the supply side of the market for legal services,
there may be more than one survival strategy.