When Leland Stanford drove a 17.6-karat gold spike into a railroad tie at Promontory Summit in Utah Territory in May 1869, he was marking the conclusion of a bold initiative, linking the United States via the First Continental Railroad.

Dentons' audacious plan to build the first "national" U.S. law firm, which it's dubbed Project Golden Spike, comes with its own physical artifact: a nearly 300-page book directed to lawyers who lead regional firms around the U.S.

It's an exhaustive, data-backed sales pitch that argues that too many markets across the country are underserved by not just international, but national law firms. Cities such as Milwaukee, Kansas City and Nashville⁠, each of which individually sees more money spent on legal services than all of Sweden⁠, lack a single firm that's among the top 10 in the U.S., Dentons says.

"It's astonishing when you look at it," said Indiana University Mauer School of Law professor Bill Henderson. "There's a lot of corporations that would be some of the bigger privately held or small publicly held ones distributed across the U.S., but there's no major law firm across their metropolitan area, or just one."

As these businesses expand, they stretch the capabilities of the regional law firms with which they have built relationships. Dentons, by offering these firms the ability to be partners within a larger unit while maintaining a significant degree of autonomy, is promising them a way to hold onto clients as they grow.

In its pitch, Dentons draws a comparison between law and other professional services, noting that the world's fourth-largest advertising firm, Interpublic, has more than 60 offices in the U.S. Meanwhile, even the Big Four firm with the smallest footprint in the U.S., PwC, has offices in 79 cities.

"It's a footprint strategy that's very similar to a Big Four accounting firm," Henderson said of Dentons' plan.

That's no accident. Discussing the Big Four's growing legal ambitions last year, Dentons global CEO Elliott Portnoy invoked the "myth of legal exceptionalism." He was referring to the notion that the work lawyers in large global firms handle is so specialized that an accounting firm could never compete. But it also applies to the profession's devotion to the idea of law firms as fully integrated hierarchical structures that adopt the same model everywhere. To approach the same footprint of the Big Four, something different is necessary.

"Let's say you're a single economic entity," said LawVision Group co-founding partner Joe Altonji. "If you wanted to set down to do what Dentons is trying to do, you're going to be dealing with radically different economic conditions, rate environments, and practices with different abilities to generate high revenues or low revenues.

"If you're a global firm with a more traditional approach to the business of law and your goal is earning a couple million dollars in profits per partner, and maintaining that number from a public relations perspective is important to you, it limits the practices and types of people you can bring into the organization," he added.

|

Weighing Risks

The message from Dentons' leadership is profoundly different: a vocal recognition that there are many different ways to build a successful law firm. The firm honed that pitch over the last six years as it grew in roughly 30 new countries, emphasizing a term seen more commonly in world history syllabi than in law firm marketing materials: "anti-colonial."

In the Project Golden Spike pitch book, the firm compares its "polycentric approach" to the majority of international and global law firms that "adhere to a colonial mindset" in which major decisions are made by a headquarters in Europe, the U.K. or the U.S., while offices elsewhere are treated as secondary outposts.

It's a diplomatic message that's fitting for Dentons' international reach, and also global chairman Joe Andrew's background in politics. Andrew formerly chaired both the Democratic National Committee as well as the Indiana Democratic Committee.

"I've heard Joe talk about this: trying to be respectful of lawyers in different countries, knowing that they know their markets," Henderson said. "The swagger of New York folks, that alienates a lot of people. Dentons does have a softer touch, a more respectful approach to lawyers that aren't in global cities."

The firm's pitch is enhanced by its own recent experiences of selling its vision around the world, and the changing dynamics of the wider legal market have likely primed potential partners as well. Increasing competition among law firms, combined with a growing number of alternatives and clients' heightened awareness of their own bargaining power, may suggest to many firms that the risks of joining in a wider unit outweigh the risks of staying still.

"It makes the firms that are opting into this effort far more resilient in the face of increasing competition for talent and clients," said Zeughauser Group consultant Kent Zimmermann. "The risk is as clients grow and their needs become more complex, you lose them."

Zimmermann, who offered guidance to Andrew and his team as they developed the Golden Spike strategy, noted that the firms facing the most pressure are often less scaled up in their areas of focus compared with their immediate competition. It's these firms, not those blue-chip firms that already have 15 or 20 U.S. offices, that should be most concerned.

"To the extent that this move by Dentons leaves firms that are competing for the same people and clients under scale on a relative basis to the competitive landscape and to the extent it exacerbates it for some firms, I think it's going to make the competitive landscape more complex," Zimmermann said.

Not every firm that fits in this basket will immediately be convinced, and there are other regional firms that will find ways to succeed and thrive while retaining full independence.

On Monday, hours before the news of Dentons' plan broke, Minneapolis litigation firm Soule & Stull, which focuses on defense-side product liability work, sent out a national press release announcing that it was not merging with any national firms.

Co-founding partner George Soule said in an interview that he and his colleagues were already trying cases around the country on behalf of the firm's clients.

"We have not had anyone express concerns to us that we don't have an office in one city or another," he said.

And while Dentons is making the case that efficiencies of scale will accrue to firms that join up, co-founding partner Melissa Stull said her firm's small size ensures low overhead.

"We're able to offer a level of client service and efficiency and great rates because of our size," she said.

Nevertheless, for many firms the benefits of scale will be too significant to dismiss. The 2019 Brand Finance Global 500 lists three of the Big Four in the top 100, behind leaders Amazon and Apple. There's not a single law firm on the list

"One day there will be a law firm on that list, and scale is going to be part of what gets that first law firm on the list," Zimmermann said.

|

Read More

Dentons Combines With Two US Firms in One Go, Launching New American Strategy