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The Midwest, Indianapolis legal markets prime for opportunities

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Sommer Barnard. Locke Reynolds. Dann Pecar Newman & Kleiman. Those are just a few Indiana law firm names that are now only part of history.

While there have been mergers sprinkled through the past decade, the Indianapolis legal market has seen an upswing in firm mergers and acquisitions the past few years. Five out-of-state law firms have acquired firms or opened an office in Indianapolis since May 2008.

Cincinnati-based Taft Stettinius & Hollister merged with Sommer Barnard; Bloomfield Hills, Mich.-based Plunkett Cooney opened an office; Louisville-Cincinnati-based Frost Brown Todd merged with Lock Reynolds; Cleveland-based Hahn Loeser & Parks acquired Galbraith Associates in Fishers; and Cleveland-based Benesch Friedlander Coplan & Aronoff merged with Dann Pecar Newman & Kleiman.

This while Indianapolis-based firms Barnes & Thornburg and Krieg DeVault opened offices or acquired firms outside Indiana.

The current merger-and-acquisition market nationally is showing a lot more firms are implementing a regional strategy, said Ward Bower of Altman Weil, a management consulting firm that works exclusively with legal organizations.

This regionalization of law firms is also in response to corporate clients utilizing convergence programs - consolidating legal work with their outside law firms to help control costs, said Bower. Law firms, in order to better serve and keep clients, expand where their clients are.

Why is Indianapolis now a seemingly popular destination for out-of-state law firms?

"Most of the activity is coming out of Kentucky and Ohio in our area. It's not Indiana as a whole," said Joe Altonji of consulting firm Hildebrandt Baker Robbins' Chicago office.

Altonji said Indiana is considered an "add on" market for out-of-state firms that are trying to expand their own market brands. The Indianapolis legal market is reasonably stable economically, said Altonji, who added that the state's balanced budget is a draw over others states that are struggling fiscally.

It's hard for second-tier markets like Louisville or Cincinnati to make a play in a first-tier market, even Chicago, Altonji said. But these firms are looking to grow, and they can grow only so big in their own states.

He said Indianapolis also is attractive because it's a relatively short driving distance, and there are good lawyers there. "The cultures are reasonably compatible to Kentucky and Southern Ohio, but not as much with Northern Ohio," said Altonji.

He said there is a bit of an economic divide in Ohio, and Northern Ohio is dealing with a lot of issues as part of the Rust Belt, which has been hit hard because of the auto industry's problems. It's a tough market so a lot of firms are trying to expand out of that area. Western Pennsylvania and New York are not attractive markets right now, Altonji said.

It's easier to take the step of moving into a new market, he said, if the legal market cultures are similar.

"What we're seeing is firms from surrounding states looking at Indianapolis as a place where there are opportunities," said Altonji.

One reason Indiana hasn't been on the top of law firms' lists of where to expand is three big firms have dominated the market, said Bower, referring to Indianapolis' largest firms: Barnes & Thornburg, Baker & Daniels, and Ice Miller.

Cincinnati is a good example of this as well. Bower said that city was dominated by firms such as Frost Brown Todd, Taft Stettinius & Hollister, and Dinsmore & Shohl. Plus, the clients there were not accepting of outside firms, even firms from Cleveland and Columbus, he said. The clients wanted local firms, Bower said. That has changed in recent years.

One firm that does not have an Indianapolis office but nearly merged into the market in 2009 is Greenebaum Doll & McDonald, a Louisville-based law firm with four offices in Kentucky and Ohio. The firm was in merger talks with Ice Miller, but talks ended after several months.

"Indianapolis is a strong market, particularly in certain areas," said Phillip Scott, chairman of Greenebaum.

Agriculture and health-care practices in Indiana would work well with such practices in Kentucky, said Scott, who is based in the firm's Lexington, Ky., office.

"I think the cultural situation is similar to Kentucky. There's a very strong work ethic. You're very comfortable. ... At least we would be, although I can't say East Coast attorneys would feel that way," said Scott.

"I'm partial to Indiana," said Scott, who went to Hanover College and has family that lives in Southern Indiana. "I think Indiana has a lot of opportunities."

He declined to comment, however, about current opportunities the firm may be considering or if any are in Indiana.

The most recent to firm to move to Indianapolis is Benesch, which merged with Dann Pecar March 1.

However, it wasn't the Indianapolis market that first attracted Benesch, according to the firm's managing partner, Ira Kaplan. It was the people at Dann Pecar.

Kaplan said Benesch was looking throughout the Midwest and Eastern United States for opportunities. A consultant and trusted advisor who had helped with Benesch's strategic plan thought the two firms should meet. Once they did, they had another consultant do a market study of Indianapolis, which had a lot of positive feedback. The study showed Indianapolis is in pretty good shape economically, struggles with government are minimal compared with other states, and the state government has an attitude of wanting to help and grow businesses.

"You have a good market," said Kaplan, "not dissimilar from other cities in the Midwest."

Despite the merger activity Indiana attorneys have witnessed, there continues to be a certain degree of cautiousness because of the economy.

Altonji referred to one of his recent blog posts in which he paraphrased Sunil Chopra, interim dean of Northwestern University's Kellogg School of Management: It is incredibly difficult to improve your competitive and strategic position in good times. Market positions don't often change when times are good. It is times like these when companies can drastically improve their market positions.

That, Altonji said, also applies to law firms.

Bower also said a lot of law firms are wary right now, but it's because many wonder if there will be a W-shaped recession - a recession with a small period of growth in the middle. Yet, law firms with strong balance sheets are using the recession as an opportunity, he said.

Altonji said he applauds firms that are being bold and taking advantage of opportunities but also are cognizant in their decision-making.

"This is a time to be opportunistic and strategic," Altonji said. "This is not a time to ride out the recession ...."

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  1. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  2. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  3. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

  4. When I hear 'Juvenile Lawyer' I think of an attorney helping a high school aged kid through the court system for a poor decision; like smashing mailboxes. Thank you for opening up my eyes to the bigger picture of the need for juvenile attorneys. It made me sad, but also fascinated, when it was explained, in the sixth paragraph, that parents making poor decisions (such as drug abuse) can cause situations where children need legal representation and aid from a lawyer.

  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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