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Midsized Chicago law firms are staking out plans for staying independent but are still open to mulling merger options, following moves during the past year by rivals to hook up with larger firms.

These midsized firms, which range from 180 to 500 attorneys firmwide, reject the notion that they don’t have the wherewithal to meet the global needs of big corporate clients – a prime motivating factor behind some the recent mergers.

Hinshaw & Culbertson, Chapman & Cutler, Schiff Hardin and Wildman Harrold Allen & Dixon are some of the midsized Chicago firms that say they can thrive on their own, whether that means expanding in certain practice areas or geographic zones or simply snapping up clients that become disenchanted with the international behemoths.

Jenner & Block, Bell Boyd & Lloyd, Vedder Price Kaufman & Kammholz and Clausen Miller declined to comment.

“We have some very strong firms here that fiercely want to remain independent,” said Dan Bishop, the director of Citibank’s law firm lending for the Midwest.

The challenge is that the city’s midsized firms are facing rising expenses, including higher associate salaries and technology costs, at a time when they’re seeing increased competition from larger national firms, Bishop said.

“Expenses are rising faster than revenue, so a lot of the midsized firms are being squeezed,” he said.

National firms’ interest in getting a foothold in the city has given some midsized firms a merger escape hatch. Chicago firms that have chosen to merge, including Lord Bissell & Brook, say that becoming bigger will make them a stronger competitor and help attract new attorneys.

Schiff Hardin, which has 400 attorneys, believes that the creation of megafirms works to its advantage as clients seek out the attention that only smaller firms can offer.

“The client understands that they are more important to us than that exact same client will be to a megafirm,” said Ron Safer, Schiff Hardin’s managing partner.

The firm is not in the market for a merger, he said. Not maintaining offices in places such as Hong Kong and Paris helps the firm keep its costs down, and its billing rates are 10 percent or more below those of larger firms, Safer said. Clients have told the firm that the lack of overseas offices doesn’t diminish their view of Schiff Hardin’s ability to do work overseas, he said.

“We just feel the need to have steady organic growth to meet the demands of our clients,” he said.

Chapman and Cutler, which has 220 attorneys, has tried to preserve its “small-firm feel” and buttress its business by focusing on the financial services industry, said Rick Cosgrove, the firm’s chief executive partner.

The firm wants to grow at a manageable rate of about 10 to 12 new attorneys per year and envisions 300-some lawyers as an ideal size. Creating a New York office during the next couple of years by merging with a smaller firm in that city is its main expansion goal.

“We want to remain independent,” Cosgrove said. “We want to grow, but on a managed basis.”

Hinshaw & Culbertson is staking its future on meeting the needs of midsized clients, such as ServiceMaster Co., said managing partner Bill Roberts, a criminal defense lawyer and former U.S. Attorney for the Central District of Illinois.

“Not every client is GM,” Roberts said. “There are lots and lots and lots of midlevel entities who really can’t afford, candidly, to have the top-of-the-line boutique firms doing their specialty work. Still, as the firm grapples with the new mergers and acquisitions reality, it’s keeping its options open.

“If the right fit becomes evident, then I think we would very seriously consider it,” Roberts said. “On the other hand, I think we feel pretty safe in saying that the partners are pretty happy with the firm the way we are now.”

Wildman Harrold, a firm with about 200 lawyers that considered a merger in 2005 and bypassed it because of client conflicts, expects to grow in the future, but isn’t in a hurry after posting its best financial results ever last year.

This article originally appeared in The National Law Journal, a publication of ALM.

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