ILNews

Mergers: Are we done yet?

Michael W. Hoskins
December 10, 2008
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Economic Impact

The Indiana legal community is seeing its most significant change in years, with the law firm merger mania hitting the Hoosier market in full force in 2008.

Indiana-based Locke Reynolds announced the first week of December that it will merge and take the name of
Cincinnati-Louisville regional firm Frost Brown Todd. That came two days after news that one of the state’s largest firms, Ice Miller, was formalizing a merger with Louisville firm Greenebaum Doll & McDonald.

If both materialize
by early January as expected, they’d join the May merger of Sommer Barnard with Taft Stettinius & Hollister to make this one of the most notable years for the Hoosier legal community.

Dimos“Indiana is a key target, and there are a number of deals being looked at right now,” said Tom Clay, a principal at legal consulting firm Altman Weil that tracks legal mergers and acquisitions. “This year hasn’t slowed down from the prior two years (nationally), and we could even see a record number by
the end of the year. Indiana is consistent with what’s going on in the national market right now.”

Clay said Indiana’s corporate culture is attractive to regional firms, particularly those in the Midwest and similar markets such as in Kentucky and Ohio. Hoosier firms and the ones in those areas are more compatible than larger firms in big cities, such as Chicago, he said.

Until this year, the last significant union the state saw was when Bingham Summers Welsh & Spilman and McHale Cook & Welch merged to form Bingham McHale in 2002.

“These things happen all the time and are always being discussed,” said Jim Dimos, a partner and management committee member with Locke Reynolds. “Ours won’t cause anything to happen in town, but it wouldn’t surprise me for others to happen.”

Considered the eighth largest firm in Indianapolis, Locke Reynolds had been working on its merger with Frost Brown Todd for more than a year, Dimos said. At a retreat in 2007, partners created a three-prong approach that involved exploring a merger with a smaller local firm, a firm similar in size, and a larger regional player. They hired national legal consulting firm Hildebrandt International to investigate potential partners; Frost Brown Todd landed at the top of the list.

Talk got more serious early this year, culminating with more discussion and an affirmative partner vote from both firms Dec. 3.

“They saw not being in Indianapolis as a hole in their strategy,” Dimos said.“They see
this as a vibrant city, and they’re excited about being here.”

Locke Reynolds has been a part of the Indianapolis legal community since 1917. Traditionally, the litigation firm has been most widely recognized for its representation of Ford Motor Co.

Effective Jan. 5, Locke Reynolds will take the name Frost Brown Todd and the 79 attorneys at its Indianapolis and Fort Wayne offices will join the 370 attorneys at the regional firm’s other locations. It has 10 offices in five states â?? Indiana, Kentucky, Ohio, Tennessee, and West Virginia. Currently, it has three attorneys listed as working in the New Albany, Ind., location. Post-merger, about 90 to 100 attorneys will be in Indiana, with anticipated growth primarily in the Indianapolis office.

Nelson D. Alexander, who is currently managing partner at Locke Reynolds, will serve as member-in-charge of Frost Brown Todd’s office in Indianapolis once the merger is finalized.

A goal is to become more of a regional and national player, Dimos said. The firm already markets itself as one of the Midwest’s largest firms between Atlanta and Chicago, and it will stay at that level and is expected to see more than $175 million in revenue during its first full year in 2009.

“We expect to be as competitive in this marketplace as anyone in this country,” Dimos said.

Dimos said that by merging, the litigation-strong Locke Reynolds is able to strengthen the transactional, non-litigation practice areas that Frost Brown Todd thrives in, such as corporate and commercial law.

Neither firm has been struggling financially, and that wasn’t a factor in the merger,
Dimos said. Both firms expect a smooth transition because they share a similar culture and personality, and no staff or lawyer layoffs are expected, he said.

However, Dimos said the Locke Reynolds’ medical malpractice group is being eliminated because the strategic vision for the combined firm doesn’t include that defense area. The three attorneys and partners were asked about transitioning their practices to another area, but they instead chose to move their practices outside the firm, Dimos said.

This is the second Indiana firm this year to merge with an out-of-state firm and strip the established local name; Indianapolis-based Sommer Barnard became Taft Stettinius & Hollister in May. The Indianapolis Business Journal also reported Dec. 2 that Indianapolis-based Ice Miller is expected to finalize a merger by Jan. 1 with Greenebaum Doll & McDonald, though both firms have declined to publicly comment about a merger.

Ice Miller’s Chief Managing Partner Byron Myers did say the firm’s strategic plan calls for constant evaluation of markets and conditions to determine what opportunities might work to better serve clients.

“At this point, we are unable to publicly comment on specific opportunities as it would be premature to do so,” he wrote in a statement.

Greenebaum’s director of business development, Mary Hendrix, has denied any discussions are ongoing with Ice Miller.

“We just don’t have anything to say. Like all firms, we’ve been talking over the past year but we haven’t made any commitments,” she said. “I’m not sure where that came from, but if and when we get to that
point, we’ll say something.”

Outside of the Sommer Barnard and Taft merger in May, other firms have come together this year. At the beginning of 2008, Bingham merged with the smaller litigation boutique firm McTurnan & Turner and brought in 10 attorneys. That came after a merger with Keifer & McGoff in 2005, adding a white collar and criminal defense practice.

“This economy is causing law firms to focus on short-term and long-term strategies, so it is likely there will be more consolidation,” said Tobin McClamrock, managing partner with Bingham McHale, noting his firm isn’t seriously entertaining any merger options at this point.

If no others come about in 2008, the three mergers will have taken two Indiana-based firms off the list of top 10 largest Hoosier-created firms.

While the economic conditions aren’t being cited as reasons for the unions, those involved agree with merger-and-acquisition experts who say these uncertain times could lead to more corporate marriages. Experts say firms are exploring mergers to remain viable and competitive, particularly to expand services to clients that are in multiple locations.

Mergers slowed in the third quarter compared to last year at the same time, but overall for 2008 the number of mergers throughout the country is outpacing 2007 by 58 to 44. Last year, a total of 73 mergers were announced or completed, according to figures compiled by Altman Weil. With three weeks left in 2008, the total number so far is 69 for this year.

IBJ reporter Scott Olson contributed to this story.

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