Big Law Still Can't Resist the Risky Urge to MergePaul M. Barrett
Like lemmings to the cliff, large law firms continue their headlong charge toward mergers. The latest: Orrick Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman, both based in San Francisco, say they’re in serious flirtation mode. The combination would create a behemoth of some 1,600 attorneys in yet another move toward consolidation in Big Law.
“It seems like everyone is talking” about bulking up, Kent Zimmerman, a Chicago-based legal consultant with Zeughauser Group, told Bloomberg News. “There are more firms now that are interested in pursuing a combination. Some firms do deals out of necessity because they’re weakening, and other firms do it to double down and become the best in their core areas of focus.”
That sounds reasonable enough, but it raises the specter of Dewey & LeBoeuf. The product of a much-celebrated marriage of two once-prominent partnerships, New York-based Dewey & LeBoeuf collapsed spectacularly last year amid acrimony and high-profile defections. As I noted in a recent Bloomberg Businessweek cover story about the rise and fall of another acquisitive powerhouse, Washington-based Howrey, the desperation to boost revenue and per-partner profit in many instances reflects a poorly thought-out strategy of growth for growth’s sake. Increased debt, exacerbated office jealousies, and the departure of critical rainmakers have characterized law firm mergers that didn’t turn out to be as savvy as they appeared on a whiteboard in a conference room.
Orrick, with almost 1,000 lawyers, had $866 million in gross revenue last year, according to the American Lawyer. Pillsbury, itself the result of several earlier mergers, has more than 600 attorneys and last year took in $561 million in gross revenue. Those financial figures made Orrick the 27th highest-earning law firm in the country and Pillsbury the 56th. The leaders of these firms believe even bigger will be better.