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Last November, John Pritchard attended a meeting focusing on law firm mergers. The chairman of New York’s Winthrop, Stimson, Putnam & Roberts listened intently as the meeting’s facilitator asked the 25 law firm leaders present if any were interested in merging with another firm. A secret poll showed that “virtually all were interested in pursuing a merger,” Pritchard said. Presumably, Pritchard was among those who said “yes” in the poll. This week, his firm announced it would join forces with San Francisco’s Pillsbury Madison & Sutro to form the 861-lawyer Pillsbury Winthrop. It’s the latest — and largest — in a string of law firm mergers this year. But don’t expect it to be the last. “We’re handling 15 merger discussions now,” said Bradford Hildebrandt of Hildebrandt International. A guru of law firm mergers, Hildebrandt says that’s a record number for his firm. For years, law firm managers have been talking about consolidation, and a few firms have taken the plunge. But the pace appears to be quickening. In the last two months alone, three major California firms — Pillsbury; Graham & James; and Paul, Hastings, Janofsky & Walker — have announced their engagement to other firms: Pillsbury to Winthrop; Graham to Cleveland’s Squire, Sanders & Dempsey; and Paul, Hastings to New York’s Battle Fowler. And firm managers and consultants say the phenomenon isn’t limited to California; firms around the country are looking for a suitable partner. They feel compelled to marry as a way to establish a foothold in the increasingly global marketplace, bolster their practice areas, and keep clients. For many San Francisco Bay Area firms, it’s a question of expanding into key financial markets, like New York and London. And local firms have made attractive mates because of their proximity to Silicon Valley. While Hildebrandt won’t reveal his clientele, many firm managers acknowledge they have received marriage proposals and have considered taking the plunge. “We’re contacted frequently by firms interested in discussing mergers,” Barry Levin, chairman of Heller Ehrman White & McAuliffe, said. “It is something we think about.” However, he said that, to date, the firm has decided that it’s “not the right way for us to grow.” Earlier this year, Orrick, Herrington & Sutcliffe came close to tying the knot with London’s Bird & Bird. Orrick Chairman Ralph Baxter Jr. said negotiations broke down because of disagreements over how much investment should be made “in the interest of growth and expansion.” While Orrick is not presently in merger discussions, Baxter said he believes “merger is one of the tactical options” for the firm in its goal of becoming a global leader in finance and technology. Los Angeles’ Sheppard, Mullin, Richter & Hampton also is evaluating whether a merger would be appropriate. Firm Chairman Richard Brunette Jr. said Sheppard recently formed a committee on growth. “We’ve not made any decision” on what form growth may take, Brunette said, adding that possibilities include picking up a practice area and opening a new office, as well as merging with another firm. PUSH TO BE GLOBAL The surge in merger discussions began five years ago, Hildebrandt says, and has been accelerating. “The consolidation of businesses, the need [for firms] to be in more geographic areas and increasing competition” have contributed to the increasing pace of law firm mergers, Hildebrandt said. Firms have been able to obtain an instant national presence through mergers. Pillsbury and Paul, Hastings did so by seeking a New York mate that gave them an entree into the country’s chief financial center. But being national is no longer enough. Globalization has become the mantra for corporate firms. Pillsbury Chairwoman Mary Cranston said a New York presence is the first step toward becoming a global law firm. And Winthrop provides access to other key financial centers through its outposts in London, Tokyo, Hong Kong and Singapore. The hunger to be global is driving firms across the Atlantic to the altar as well. Last year Britain’s Clifford Chance completed a three-way merger with New York’s Rogers & Wells and Germany’s Punder, Volhard, Weber & Axster, forming the world’s largest law firm. And in January, London’s Freshfields merged with Germany’s Deringer Tessin Herrmann & Sedemund and is set to merge Aug. 1 with Bruckhaus Westrick Heller Lober, another German firm. Gerry Holt of Holt Consulting Services expects such mega-mergers will become widespread. “In 10 to 15 years, the AmLaw 100 will be more like AmLaw 50,” Holt said. “Firms with 300 to 900 lawyers are going to have to make a choice to either merge with an equal size or larger firm or downscale.” Firms with 300 to 500 attorneys “can’t compete on a global scale,” Holt said. As their regional clients are acquired by national and global companies, “firms lose that business.” As a result, he said, firms have to reduce their ranks. Holt added that the firms most vulnerable to losing their independence are old-economy firms that lack a technology practice. But not all firm managers believe consolidation will be so dramatic. “I don’t think there will be a narrow group of firms in the future,” said Lee Benton, firmwide managing partner at Cooley Godward. Mid-size firms and large firms with a slumping performance may subscribe to the formula that “size makes might,” he said. Citing the merger last November of Baltimore’s Piper Marbury with Chicago’s Rudnick & Wolfe, he said, “other than the theory that a bigger size will let them compete better, [the union] is hard to figure out.” However, Orrick’s Baxter said that while some mergers are a defensive strategy, increasingly firms are seeking combinations that are “tactically offensive,” such as the Clifford Chance merger. While merger discussions may have intensified, firm managers say law firm marriages are difficult to make work. “You have to combine two different cultures,” Benton said. “The bigger the firms, the harder it will be.” In the Pillsbury Winthrop merger, however, both firms say their cultures are a perfect match. “We’re like two peas in the same pod,” Winthrop’s Pritchard said. But even if firms are a good fit in culture and practice areas, there are challenges in integrating them. That’s what managers found after the merger of San Francisco’s Thelen, Marrin, Johnson & Bridges with New York’s Reid & Priest. Thelen Reid & Priest Chairman Richard Gary said that two years after his firm’s merger, the original entities are well-integrated, but he said it took more time than he anticipated. As to difficulties, he said, “looking back on our merger, I would have spent more time on people issues.” As people work with different practice groups and have different managers, “people’s toes will inevitably be stepped on, and insecurities will rise to the surface,” Gary said. Despite the arduous process of merging, consultants say consolidation is inevitable. “There’s too much competition, too many firms competing for a smaller pie of work,” Holt said. “National firms that can’t compete globally and mid-size firms are really at risk.”

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