Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In the 10 months since DLA Piper Rudnick Gray Cary was formed from a three-way merger, the firm has opened six new offices — stateside in Raleigh, N.C., and internationally in Frankfurt, Germany; Tbilisi, Georgia; Kiev, Ukraine; Beijing; and Tokyo. Its 56 offices worldwide now total more than 3,000 lawyers. Firm leaders concede the growth has come faster than planned. “Nobody knew that Coudert Brothers would blow up,” says Frank Burch Jr., co-chair of DLA Piper’s U.S. branch. That created opportunities in Asia and Europe “that aren’t going to be there in a month. You’ve got to seize the moment.” With the number of lawyers at DLA Piper now surpassing that of any firm on the Am Law 100, the firm is challenging industry notions about how fast a law firm can — or should — grow. Rapid expansion, whether via mergers or lateral acquisitions, can lead to problems in recruiting, in strategic focus and in integration, firm leaders say. But DLA has had lots of practice. “The lens through which people view law firm growth has been altered by that which DLA Piper Rudnick has achieved,” says Peter Kalis, chairman of the management committee at Kirkpatrick & Lockhart Nicholson Graham, itself a product of a trans-Atlantic merger. “They’ve conquered challenges that I haven’t.” “It’s a giant management puzzle how you fit three quite different U.S. firms with a U.K. firm,” says Ronald Lemieux, a partner with Paul, Hastings, Janofsky & Walker in Palo Alto. “The logistics and practicality of managing such an organization … are much more difficult.” Growth is in DLA’s DNA. The firm traces its origins to 1983, when 17 partners from a regional British firm met at a small inn in Yorkshire in the north of England in hopes of creating a national British law firm. Through a series of regional and then international mergers, DLA emerged some 20 years later as one of the top 10 firms in Great Britain, a competitor to London’s Magic Circle firms, with 430 partners and offices in 18 jurisdictions throughout Europe and Asia. Between 1996 and 2004, DLA more than tripled its revenues. Then it merged with the just-merged Piper Rudnick Gray Cary. That merger came two years before planned, said DLA’s Peter Wayte, senior partner for Europe and Asia. “The timing was slightly opportunistic. We came across Piper in 2003 and we had not expected to achieve what we achieved with Piper in a year or two.” Burch said Piper Rudnick’s merger with Gray Cary was also opportunistic. And as the firms looked to absorb their enormous growth, Coudert Brothers came undone, allowing DLA Piper to absorb lawyers from offices including Brussels, Frankfurt, Beijing, Bangkok, Singapore and Tokyo. Also this year, DLA acquired more than 80 lawyers in Russia and the Commonwealth of Independent States from Ernst & Young’s law practice. “Is that biting off a lot?” says Burch. “Yes. … In a perfect world, would it be nice to do it more deliberately? Yes. But we are not looking at all of this in a vacuum. We are looking at it in a rapidly changing world, a world that … is very, very hostile to reactive thinking.” Managers at other firms second that assessment. “We never said to ourselves, ‘This is too much to do in a short time,’” says Jay Zimmerman, chairman at Bingham McCutchen, of the mergers he has overseen over the years. “When we first started our discussion with McCutchen, we had just bought Richards & O’Neil in New York.” In a perfect world, he said, he would have waited a year or two. MATCHING STANDARDS Perhaps the biggest challenge that comes with rapid growth is quality control. Recruiting on so many fronts at once can be risky. “The more you try to do, the harder it is to find the people who do match your standards of quality and character,” says Ralph Baxter Jr., chairman of Orrick, Herrington & Sutcliffe, which competed with DLA for Coudert lawyers in Asia. “Most of them are already ensconced in highly successful firms.” Many of DLA’s senior management is involved in recruiting. J. Terence O’Malley, co-managing partner of the U.S. branch and the former chairman of Gray Cary, said he’s interviewed more than 100 prospective hires in 10 cities since January. O’Malley says money talks. “We expect our U.S. revenue to grow by $100 million this year. That kind of cash flow growth allows you to make investments in continued strategic expansion.” O’Malley said profits per equity partner at the combined firm for 2005 should be in the neighborhood of $950,000. In 2004, pre-merger Gray Cary Ware & Freidenrich posted $770,000 and Piper Rudnick, $900,000. “If you look at the people we’ve brought in, the quality is superb,” says Burch. But competitors say they can’t see why DLA is in quite so many markets. “I don’t think most law firms will aspire to build something that is in that many places,” says Baxter. “Most will believe that for their practices and to serve their clients, they don’t need to be in that many locations.” “They probably have sub-strategies that are not apparent yet in the market,” adds Mary Cranston, chairwoman at Pillsbury Winthrop Shaw Pittman. “They have good leadership, so I assume they have a strategy.” DLA Piper’s numerous offices, firm leaders say, are a consequence of its strategy to serve global companies in recurring important work in many markets. “We do have a strategy document,” says Wayte, senior partner for Europe and Asia. “It focuses on strengthening certain areas. We expect to build finance, corporate and capital markets in New York and London. But we intend to build a much stronger group of offices in Europe and Asia.” In some cases, Wayte says, there is reason to have several offices in a single country. For instance in Germany, DLA has offices in Frankfurt, Cologne and Hamburg, and might open one in Munich. Frankfurt is the financial capital, Cologne is a corporate center and Munich is home to the patent office. Ultimately, Wayte says the firm is of a different stripe than most national and international firms because it aspires to serve clients in local markets. Most closely, according to Wayte, DLA resembles Baker & McKenzie, White & Case and other firms that hire regional as well as U.S. lawyers. CHALLENGES AHEAD Some of the toughest tasks at DLA may lie ahead. “You have to work the integration game as much as you work the growth game,” says Kirkpatrick & Lockhart’s Kalis. You need to “pound away” at initiatives designed to make partners and associates feel good about where they’re going. “If you succeed at growth and fail at integration, you go the way of H&R Block,” adds Kalis. “You become a franchise outfit.” Burch says the firm is organized around integration, with practice group leaders taking an active role in building bridges toward other offices. “You have to have some organization where you can break the job into pieces,” says Burch. “You have to delegate.” Integrating its financials could be even trickier. The firm is currently governed by one global board, but made up of a number of sub-partnerships that have economic relationships, a system that Burch says is modeled on those of major accounting firms. A merging of the firm’s U.S. and U.K. compensation systems is a goal, but O’Malley says he doesn’t expect it to happen for another five years. By then, the firm may be far bigger. Already DLA Piper is preparing for its future acquisitions, developing tiers of relationships with far-away firms that it hopes to slowly fold into the firm. Asked about future growth, DLA leaders decline to talk about specific numbers. “A lot of people think that we are preoccupied with size, and that’s dead wrong,” says Burch. “Size is a consequence of the strategy; it’s not the strategy.” Ward Bower, an industry consultant with Altman Weil Inc. who advised DLA’s precursor firm, wouldn’t be surprised if the firm grew to 5,000 lawyers within the next five years. But others are skeptical that firms can grow as large as accounting and other professional services firms because of client-conflict issues. “I don’t foresee in my lifetime of working that we will see many firms get to that size,” says Bingham’s Zimmerman. “And you are not going to see the best firms get to that size.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.