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Mergers increase following dry spell

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Legal management consulting firm Altman Weil reports that through September 2011, law firm mergers nationwide are up 79 percent compared to last year.

According to the firm’s “MergerLine” statistics, among the 46 mergers announced by Oct. 3, 19 were cross-state partnerships. Ice Miller’s merger with Columbus, Ohio-based Schottenstein Zox & Dunn is one such union. One week before the Ice Miller announcement, rumors were confirmed that Baker & Daniels has been discussing a merger with Minneapolis-based Faegre & Benson. While some people may be wondering if Indianapolis has merger fever, it’s more likely that what’s happening locally, and nationally, has been in the works for a while.
 

altonji-joe-mug.jpg Altonji

Joseph B. Altonji, principal founder of the Chicago-based firm management company LawVision, explained that mergers – from the time conversations between two firms begin until the deal is complete – take time.

“When we had the initial skid in mergers – when everything went crazy at the end of 2008 – basically everything that was going on back then got put on hold,” Altonji said. During 2009, merger activity idled before picking back up in 2010.

“I think if you are sitting in the category of multiple years of weak performance, you start to have to think about: what’s our future? How are we going to change this course?” Altonji said. And the answer to that question, for some firms, is to expand their reach through a merger.

The urge to merge

Carole Silver, professor at Indiana University Maurer School of Law, said that sometimes the impetus for merger is when a firm realizes it has grown as much as it can in a geographic area, and it wants to reach other markets.

She said firms might try to expand their client base by sending a trusted lawyer from their office to another location, with instructions to find new clients and build the satellite office one lawyer at a time.


silver-carole-mug.jpg Silver

“But that’s slow, and it’s risky,” Silver said. “More often, a client will say: we have business in location X, would you please send a lawyer to location X?”

Without contacts and resources in “location X,” a firm may find that what makes more sense is to attempt to merge with a firm that already has connections and clients in the target geographic area. Firms may also be looking to expand their catalog of services, by courting small firms with specialty practices.

“We’re in a market today where the total volume of legal services needed really hasn’t been growing since the recession,” Altonji said. “The only way you can grow is by acquiring market share.”

Altonji said that firms may have trouble expanding their talent pool in one geographic area without running into conflicts, and that’s why firms may need to look across state lines for a suitable partnership.

Altonji said that in recent years, international mergers have become more popular.
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“Those kinds of mergers don’t happen every day, so there’s only so many possibilities,” he said. But in the past, international expansion was either not an option or was incredibly difficult.

Silver said that at one point, a U.S. firm – if it had an office in Japan – could staff that office only with American lawyers. Eventually, regulations became more relaxed.

“As soon as that regulatory barrier fell away, the firms started taking advantage and hiring local lawyers,” she said. Firms soon began setting up offices in the United Kingdom, hiring local lawyers with more connections to the community.

Now, firms with a U.K. presence may be poised to enter a new market.


wright-del-mug.jpg Wright

Del Wright Jr., assistant professor at Valparaiso University School of Law, said that India – despite performing many outsourced tasks for U.S. firms – has been a closed market for American lawyers.

“India just announced that they are considering opening their market … but they were initially going to open it more to U.K. firms,” Wright said. “But because the U.S. can merge with U.K. firms, there’s a chance that there could be a firm with a fairly strong India presence.”

While hiring local lawyers in other countries may help firms find the clients they need, it may have downfalls, too.

“What you lose is that relationship to the home office,” Silver said.

Making it work

“The question with mergers is how do you integrate?” Silver said. “Or can you continue to exist without thoroughly integrating? A general presumption is that a merger means you have to integrate … but I don’t know whether that’s true.”

Victor Indiano was an attorney for the former patent law firm of Jenkins Coffey Hyland Badger & Conard when it merged with Barnes & Thornburg in 1982. He stayed with Barnes & Thornburg for three years, then moved to Ice Miller, and later to Bose McKinney & Evans. “And then I finally decided I don’t play well with other children,” he said. He started the two-attorney Indiano Law Group in 2000.

Indiano equates an attorney’s relationship with his or her firm to a marriage.

“If you look at your friends and you look at your friends’ spouses, you’ll see that they’re married to very different people,” he said, adding that the traits one person values in a mate may be less important to another person.

He said that lawyers may expect reasonable income, the ability to have control over their own lives, job security and personal job satisfaction.

“Those factors balance differently at different firms,” he said. “After a merger, it is highly likely that the culture will change, which will cause some of the people in the merger to seek other situations.”

But as some lawyers leave large firms to start their own practices, some smaller and solo firms are hoping to unite with large offices that may have resources they lack.

“Up until 2008, we were in a world were everybody was growing … you didn’t have to think too hard to grow your firm, and now you do,” Altonji said. “Some mergers out there are alternatives to irrelevance.”•
 

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. 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)

  4. "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.

  5. 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.

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