Merger-Mania Continues

Once again a Canadian law firm is in merger discussions. The Blog of Legal Times said earlier this week that Dentons is in discussions with US-based McKenna Long & Aldridge to create a firm of 3,100 lawyers – assuming no one leaves.

John Grimley makes a good point on this potential merger – what’s really in it for McKenna?

George Beaton said on Twitter, “Pray, why is bigger better for clients?”

My thought is, “My God, what is with this obsession with size?”

The marketplace for large international firms is pretty small – enough for only a very few players. So it is utter madness to rush into what has already become a crowded marketplace.

Owning the supply-chain makes some sense for some international companies – it is sometimes seen as a defensive, as well as an offensive, strategy.

I’m not so sure that owning the supply-chain is a good strategy for law firms.

Having spent a decade at one of the largest international law firms, I can tell you, dear reader, that the amount of good client work that I received from other offices covered only a tiny fraction of my billable targets each year. Many of my colleagues had the same experience.

Despite the grand dreams of managing partners, only a small number of lawyers at any law firm directly benefit from the international dimensions of a mega-firm; and geography will play a huge role in determining how many lawyers that will be.

For a firm based in North America, perhaps a mining group or a securities group will get more international work. However, general litigation, real estate, general corporate, labour and employment, etc. will still have to make their money on their local clients – there will be little direct benefit for these groups in an international merger.

The massive increase in international overhead costs will, however, be shared by all lawyers – whether they directly benefit from international work or not.

Not to mention that most mergers don’t do a good job of integrating all the pieces of these merged firms – preferring that the lawyers and staff somehow magically, and “organically”, mesh together to create more work for all.

What is never considered, is that as you make the ship bigger, it becomes harder to steer; less nimble; less adaptable; and more rooted in the status quo. And in an age where, as Alvin Toffler says, “The illiterate of the 21st Century will be those who can’t learn, unlearn and relearn,” bigger may not be better at all.

Comments are closed.