Wolf Block chairman Mark Alderman
image: Carmen Natale/New Jersey Law Journal
It has been a year almost to the day since Wolf, Block, Schorr & Solis-Cohen and Cozen O'Connor ended their merger discussions.
Wolf Block hasn't given up on the idea of a merger, however. While its latest strategic plan would allow the firm to "go it alone," it also calls for Wolf Block to look for opportunities to grow substantially, Chairman Mark Alderman said.
The business of law is consolidating at a dramatic rate, and that trend only looks to accelerate, he said.
"There may be no place in the future for a 300-lawyer, regional firm," Alderman said.
The firm has been able to remain successful at that capacity, he said, but the industry might be looking past that model. Wolf Block's fiscal year just ended on Jan. 31. Alderman said it finished the year up from 2006 despite having an extra "bad month" of the economic downturn due to the endpoint of the firm's fiscal year.
He predicted a slowdown in merger activity for 2008 given the tightened economy but said the firm is still not at a loss for merger discussions. Wolf Block had three such talks last week alone, he said, with many firms calling him instead of the other way around.
Alderman confirmed that the firm has spoken with Florida-based Akerman Senterfitt, but he said talks with the 430-lawyer firm are no further along than are any other conversations Wolf Block is currently entertaining.
"It's a million miles from being anywhere," he said.
He pointed out several reasons why the merger would be a difficult one to accomplish, as most are.
Wolf Block is talking to firms that are smaller in size and ones that are comparable in size, with the latter being the more difficult. Alderman said he is not talking to anyone who would acquire the firm. Most of the discussions are with firms smaller in scale.
"We are not selling the firm," he said. "The firm is not for sale."
Alderman said he considers Akerman Senterfitt a comparably sized firm, but that could add another challenge to an already difficult process. He said, however, that Wolf Block is willing to entertain those discussions.
According to Alderman, part of the reason the Wolf Block-Cozen O'Connor discussions didn't work out was structural. Wolf Block is a limited liability partnership, and Cozen O'Connor is a corporation, he said.
Alderman said business structures, capital considerations and differing tax years make finalizing a merger a tough task.
Akerman Senterfitt is a corporation, which could throw a roadblock into any merger discussions between the two firms. Their financials, however, are comparable.
According to the 2007 Am Law 200, Akerman Senterfitt had $225 million in gross revenue, $520,000 in revenue per lawyer and $450,000 in profits per equity partner. For the same time period, Wolf Block had $157.5 million in gross revenue, $540,000 in RPL and $485,000 in PPP.
Regardless of who the ultimate merger partner, if any, may be, Alderman said conventional wisdom would dictate that "dramatic growth is necessary" to compete in the future. How far in the future that growth will come is difficult to tell.
He said Wolf Block has no illusions that it will compete with firms the size of DLA Piper anytime soon.
"You have to talk to 1,000 people to get these things done," Alderman said.
While he anticipates the overall trend of consolidation continuing, Alderman said the weakened economy might put mergers on hold for Wolf Block and other firms, at least in the beginning part of 2008.
The way firms generally get over the hurdles of mergers -- like the structural issues Alderman mentioned -- is with money, he said.
When the economy is bad, there is less money to be put toward those problems, he said.
Whether or not tougher times are ahead for the legal industry, the merger discussions continue. Alderman said Wolf Block has spoken with or is speaking to firms in the Northeast, Southeast and the West.
"There will come a time when one of these discussions will lead to something newsworthy," he said.
