The strategy of merging large law firms in pursuit of even bigger clients and profits is again being put to a test.
This part of that statement caught my eye:
We explore the combination based on its potential for enhancing the value that can be provided to our clients. We are impressed by each other’s commitment to quality, financial stability, caliber of professionals and our remarkably similar culture and values.
About as generic as you can make it in the early stages, although hardly something to rally the troops behind a proud Baker-Faegre banner. AmLaw Daily did pry something more out of Faegre business development director Adam Severson:
We consider this a great way to be aligned in the way in which we serve our clients, and it provides a lot of opportunities to our clients from both firms’ perspectives…
I had to read that a few times; I guess a merger would hopefully require some alignment. The firms say they do not expect a vote of the partnerships on a combination until fall, if at all.
Anyway, looking beyond the fact that law firms seem unable to keep these sorts of talks confidential, we can look at a potential Baker-Faegre combination as a real-time proxy on the trajectory of the BigLaw model itself.
Large law firm mergers inside the United States have been rare the last few years. One reason: it’s not clear the result really makes the combined firm stronger. Bigger, yes. Stronger or differentiated, not so much, typically.
When you look at what major corporate clients are doing right now to control costs (such as reverse auctions), it fair to point out what the GC community is not saying:
Please give us bigger law firms. And more of ’em.
The BigLaw model was driven by partner profits that leveraged billable hours: more time, more people, increasing rates. Large corporate clients do not want this. This is not news.
Because of the economy and tightened credit, we have seen a “quiet period” in law firm mergers. This has forced growth-minded firms to be active in other ways: grabbing a partner or two here or taking the key members of a growing practice group there. (Some firms may even be calling key Baker or Faegre partners right now.)
It could be a sign of optimism and initiative from Baker and Faegre that they are considering a merger. The challenge, of course, would be to do it, really do it, in a way that would involve “enhancing the value that can be provided to our clients…”
It is a bromide, and clients see it as such. Maybe a combined Baker-Faegre firm would be different.
Now that would be news…
(While the law firms are merging, the clients are revolting…)