"You ain’t seen nothing yet?" That’s our instinctive
reaction to the news over
the weekend that Boston’s Ropes & Gray may be about to acquire
the venerable New York IP shop, Fish & Neave. Fish &
Neave would be only the most recent of a string of IP-specialist
shops (Pennie & Edmonds, Lyon & Lyon, Skjerven-Morrill) to fold.
I would resist the temptation to generalize about the viability
of IP firms, however: Fish & Neave’s difficulties—shedding
partners, rumored office closings, etc.—are its alone, albeit
compounded by a self-inflicted bastard cash/accrual accounting system
that recorded expenses when incurred but only recognized income
when received. Fish & Neave was on the verge of facing a run-on-the-bank
syndrome of cascading partner defections, so this merger looks less
strategic than opportunistic.
This
rumored deal pales, of course, next to the Baker & McKenzie/Clifford-Chance
size whopper that would be created if
Piper-Rudnick mergers with Gray-Cary and if Piper’s simultaneous
merger talks with London-based DLA achieve fruition. The
rationale for this?
Scratching our heads for the time being, we’ll take Piper’s statement
at face value, that they want to get bigger on the West Coast and
internationally. Does this sound to you like, "We want to
get bigger because we want to get bigger?" Yeah, me
too. At least in corporate-land (think the notorious HP/Compaq
deal, or Bank of America/Fleet, or JP Morgan/Chase), CEO’s say
it’s all about synergies and cost-savings. And sometimes,
as in the Wilmer-Cutler/Hale & Dorr deal, law firm managing partners
and executive directors make similar noises with at least a passing
acquaintance with plausibility. But what could be driving
Piper’s remarkable two-front-war ambitions?
- Clients clamoring for it? None that have been mentioned.
- Profits-per-partner needing a boost? Not admitted,
not claimed. - Cultural similarities causing them to fall in love? Only
if you believe the melting pot is at full rolling boil.
So I’ll tell you my pet theory: Merging is popular because
it’s popular. According to Hildebrandt, there were 30 notable
law firm mergers in all of 2003, and so far in 2004 36 have been
announced.
"The train is leaving the station," however, begs the question
whether it’s headed for a destination you’ve selected with more
than a moment’s thought.
