Mergers and Dispositions
August 1, 2007 | Filed Under Law Firm Trends, Technology, In the News
It’s been awhile since we’ve looked at law firm mergers.
One reason to revisit this topic is the publication of BlawgWorld 2007. Yours truly has an entry on the “Urge to Merge” by certain law firms; the entire issue can be downloaded here (Three clicks to find my contribution, starting with the “Blawgs” tab on top). It’s a rather large file, but quite innovative in design and packed with a lot of interesting articles, tech answers and solution providers. (See if you can find this weblog on the cover; and even this writer on page two, the “Preface,” after refreshments were served at the pre-launch party eons ago…)
Bringing this subject up to date, the most recent example may be the report that K&L Gates and Hughes & Luce are planning to hook up:
In a company press release, Edward Coultas, Hughes & Luce’s managing partner, said, “We are eager to explore this strategic opportunity for our clients and our respective firms. A true global platform created by the proposed merger would heighten the combined firm’s ability to serve clients in Texas, throughout the United States and around the world.”
There it is again, that word platform. Sound familiar?
The New York Times also had a recent report (Select content) about goings on with US law firms in Europe, focusing on Americans in Paris:
Perhaps the most aggressive hunter has been Latham & Watkins, of San Francisco, which devised an international expansion strategy with McKinsey in the late 1990s, then began talks in 2002 with Ashurst of Britain about a merger, which failed. Hardly had the dust settled on those talks when Latham hired away Ashurst’s entire private equity team in Paris, then it proceeded the following year to raid Ashurst’s Munich office. Last year, Latham snatched up Gaby Eickstädt of Ashurst, one of Germany’s leading antitrust experts. Earlier, the firm pulled off perhaps its biggest coup, hiring 95 lawyers from the Paris office of Stibbe, a law firm based in Amsterdam.
The cherry-pick sometimes appears to be a quicker and more direct way to grow than merging outright.
Recently, mid-sized firms in Chicago and Washington are deciding whether to go-a-courting or go-it-alone.
In an era of the primacy of profits-per-partner and the euphemistically termed “de-equitizing,” law firm mergers seem a bit old-fashioned. We’ll await an intrepid law or business professor to report on what percentage of such mergers add value. That’s a reality check that may be instructive to all involved.
This is News?
May 17, 2007 | Filed Under Litigation, Law Firm Trends
There’s a lot out there on the web, and not all of it is as it seems.
Take, for example, this “article” which appears to report on issues that major medical device company is facing over a prominent division.
What looks at first blush like news is actually an invitation to contact a plaintiffs’ attorney if you look at the link at the bottom of the page. Other signs include the fact that the “About” page has no identified editors or staff (but a fetching picture of a very earthy group in the wild), and the site’s FAQs are all about class actions.
It’s probably advisable to Google your company from time to time and see what you get. All the news that fits may not be news at all.
Profits For You; Fees for Me
May 2, 2007 | Filed Under Law Firm Trends, Legal Resources
Earlier this week the American Lawyer trumpeted the mother lode that certain Am Law 100 firms struck in 2006:
In 2006, for the first time since The American Lawyer started measuring the financial performance of law firms 22 years ago, a majority of America’s 100 top-grossing firms had profits per equity partner of $1 million or more.
Going even higher up the food chain, 15 firms had PPP of over $2 million and 3 firms topped $3 million. Good for them, I hope they are taking some time to enjoy it.
When a GC sees this (or CFOs, for that matter) there’s a bit of shock and awe that gives way to a realization as to who is picking up the tab.
So while some firms celebrate, what are the clients doing? Today’s Wall Street Journal today (temp link) tells part of the tale:
General counsels, in charge of their companies’ legal matters and budgets, are perpetually under pressure to trim and better manage expenses. But it hasn’t been easy to move away from the familiar billable-hour system, in part because neither companies nor law firms typically have a good sense of what a piece of legal work will end up costing. Now, new tools are helping both sides estimate costs up front, giving general counsels more confidence to move ahead with arrangements like fixed fees and “value-based billing,” in which the payment a firm gets depends in part on the results it achieves.
The WSJ goes on to describe what companies like Cisco, FMC, Chevron Phillips Chemical, and Pitney Bowes are doing to slow the clock down a bit.
Profits per equity partner are an important metric for law firms to track. When it starts to appear like the metric, clients take notice. Who is tracking VPHB: value per hour billed?
Any engaged GC is rightly focused on making law firm expenditures more prudent as they are incurred and defensible when they are reviewed.
The Am Law 100 should go ahead and party like it’s 2006; just remember it’s already 2Q07 and your favorite GC may be going into a budget forecast meeting as we speak.
Legal Hiring: Half-and-Half
April 30, 2007 | Filed Under Law Firm Trends, Legal Resources, In the News
Robert Half Legal reports that nearly 50% of “law offices” will add staff; and the other half will “stay the same.” The survey came from 300 attorneys among the 1,000 largest law firms and corporations. Only 2% reported staff reductions.
The leading areas of hiring gains according to the survey:
- Litigation 30%
- Ethics and corporate governance 22%
- Intellectual property 18%
- Real estate 11%
Since litigation is the biggest growth area, it tells me that the survey is skewed towards a law firm sample. Most corporations don’t staff litigation in-house. The executive director of Robert Half Legal, Charles Volkert, seems to acknowledge this:
“Litigation occurs in every industry and is a practice area that continually produces a significant volume of work. Because case demands vary, however, law firms often supplement their full-time staff with project professionals to meet peak workloads.”
This is why combining law firms and corporate legal departments in the same survey sample renders the results less informative for me. In many law firms, for example, the better question is whether you will see a net gain in staff (we know a high percentage of associates eventully leave).
Adding to ethics and corporate governance resources are more a bit more plausible, especially in financial companies with public reporting obligations.
One good bit of news for law firms with a global footprint from Mr. Volkert:
“As companies expand into overseas markets and enter into partnerships on a global scale, they’ll look to outside counsel for advice on operating within a foreign locale’s regulatory framework as well as for guidance on how to minimize risk while making the most of new business opportunities.”
Recent examples of this include Tyco/Eversheds and DLA Piper/Linde. These arrangements are examples of law firms and corporate legal departments working together to deliver services for companies that want to remain competitive globally.
From this perspective, “adding staff” is an attribute of the old economy; “partnering” and “risk-sharing” are tactics of the new economy.
Those are issues a bit harder to survey; this one’s not half bad…
Hedge Funds and In-House Counsel
April 20, 2007 | Filed Under Private Equity, Law Firm Trends
The New York Times profiles an increase in deal flow for law firms related to private equity.
Also noted is the need for GCs and corporate counsel with these new and growing companies:
The “demand for general counsel is multiples higher than it was only three or four years ago,” said Alan D. Hilliker, a partner with the executive search firm Egon Zander in New York. Brian Davis, a recruiter with Major, Lindsey & Africa in New York, said, “Until three years ago, we never did a hedge fund search, and now we have had dozens and dozens.”
The draw is both the work and the compensation, which, for senior associates, typically ranges from $400,000 to $600,000 at hedge funds with $2 billion to $3 billion under management, according to Laurie Becker, the president of E. P. Dine, an executive search firm in New York. Partners, she added, can command even more.
Mr. Davis said: “The hedge fund business is diversifying, and they feel like they need lawyers for all the businesses they’re getting into. Funds are looking for transactional lawyers to help to do the deals, and there’s also a big demand for compliance lawyers.”
The liquidity in these markets is touching a lot of people right now. It is one thing to buy businesses; it is another to build them and run them right.
Search
| ||||
 | ||||
| ||||
| ||||
