Just as remarkable as Dentons’ size is the speed at which the megafirm has grown. Dentons’ global CEO Elliott Portnoy manages nearly 7,500 lawyers today. That’s almost 10 times the 800 lawyers he led at Sonnenschein Nath & Rosenthal a mere seven years ago.
Dentons’ preferred growth vehicle? “Whole-firm combinations,” the firm says. As of early October, Portnoy says 7-year-old Dentons had completed more law firm combinations than any partnership in history: 31. That’s roughly one deal every three months dating back to the May 2010 formation of SNR Denton (a firm of a paltry 1,300 lawyers).
To be sure, Dentons’ verein structure allows it more flexibility when approaching deals. The firm is wary of the term “merger,” which the firm describes as an outside law firm “joining” a current region of its verein structure. True mergers, in that sense, are very rare at Dentons, with the last in the U.S. being its 2015 tie-up with McKenna Long & Aldridge. The firm often announces “alliances” that fall short of a merger, and lately it has announced more “combinations.” The firm declined to define the difference between a merger and combination in detail.
Whatever they’re called, Dentons is closing deals at an unprecedented pace.
In 2015 alone Dentons combined with eight firms, including its record tie-up with China’s Dacheng; 500-lawyer Australian firm Gadens; 300-lawyer U.S. firm McKenna Long; and 200-lawyer-Singapore firm, Rodyk.
Recently, Portnoy and Dentons global chairman Joseph Andrew have been outrunning even that breakneck pace. In a three-month span from July to September, the firm announced three major mergers on three continents: Africa, Asia and Europe.
Portnoy and Andrew are closing deals at a rate that would make private equity dealmakers blush. Forget strategy. What about tactics? How do they handle the logistics of all these mergers?
The first thing to know is almost all of the combinations are initiated by Dentons. Portnoy and Andrew, who work closely as a pair, are often dubious of firms that reach out to them. “Most of the firms that seek us out are firms that often have a problem they’re trying to solve,” Portnoy says.
In previous years, Portnoy and Andrew reached out directly to every firm they were interested in. While they still handle a lot of those introductions—offering an in-person meeting over lunch or coffee to “compare notes” on the local market—the sourcing of deals today is also supported by Dentons’ eight regional CEOs.
A good example is Jorge Alers, Dentons CEO in Latin America and the Caribbean. A former general counsel of the Inter-American Development Bank and Latin America practice group head at both Paul Hastings and Wilmer Cutler Pickering Hale and Dorr, Alers has been busy closing deals since joining Dentons in 2014. Since the start of last year, the firm has launched combinations in Brazil, Colombia, Costa Rica, Mexico and Peru.
Alers, like the other regional CEOs, works with a Dentons research team to build information on possible firms and regions to target. Portnoy and Andrew last year had calls with 250 clients to discuss where they would be interested in Dentons adding lawyers. There are also other, more basic factors that interest them too, like the more than 500 cities around the world with more than 1 million people. “Those big cities still have lots of talent and lots of opportunities,” Andrew says. “Until you start talking about having 500 offices, it seems to me you’ve got a long way to go before [a global law firm] could possibly say they’re finished.”
He adds, however: “It’s much easier to identify places we are unlikely to be than to find a place we would like to be as long as we could find truly talented lawyers in that location.”
In choosing firms to join with, Portnoy and Andrew are sometimes compelled by the potential marketing benefits a specific firm provides. For instance, once the firm focused on expanding in Africa, the duo say they searched for the largest firm in a given country that would be open to a deal. They say they found that local giant in Uganda’s 26-lawyer Kampala Associated Advocates (KAA). Portnoy says it was important to send the “messaging” to African firms that Dentons intends to be the first global firm with offices dotting the continent.
If a firm is receptive to Dentons’ outreach, Portnoy and Andrew will typically join the regional CEO in the first meetings with leaders from the combination candidate. Then, what the pair calls the firm’s “global chiefs”—its global chief financial officer, global legal counsel and the like—would meet with the firms to conduct due diligence. The same Dentons team has conducted due diligence on law firms ranging from China to Australia to Singapore, Amsterdam, Peru and Uganda, Portnoy and Andrew say.
The due diligence effort relies heavily on information sharing, a process Dentons has streamlined. The firm has a confidential website that includes audited financial information on the firm; info on its lawyers and clients; and other marketing-style materials such as how to talk with partners and potential clients about a tie-up. That information comes in tiers (each with its own password) that Dentons releases to other firms as they share that information in kind with Dentons.
“We can’t give you information about us that you’re not willing to give us about you,” Andrew says. “We have to have parallel information.”
But there can often be a long period of time between an initial conversation and a deal being secured. Tie-ups at Dentons have closed in as little as three months and as long as three years.
Portnoy and Andrew say the firm is almost always in some sort of discussion about a deal. And those talks keep their travel schedules busy. In a two-week span between September and October, Portnoy and Andrew say they visited Peru, Uganda and Scotland, three countries where they have completed combinations since May.
As of early October, that deal was being presented for a vote to partners at both firms. The voting process at Dentons differs from that of some verein-structured firms in that Dentons asks all of its partners around the globe to vote on its deals. Since the verein structure to some degree limits the impact of adding a group of lawyers to a certain branch of the firm, some verein firms limit the voting to that branch, an industry consultant says.
Portnoy says asking all partners to vote on deals is a way to educate partners on the “talent and opportunity” the firm is adding.
While leaders of the firm and practice groups will meet and greet with partners at the target firm, it’s virtually impossible for members of the new firm to meet personally with each of Dentons’ 1,000-plus partners.
So, all Dentons partners are privy to a series of conference calls in which Portnoy, Andrew and leaders from the due diligence and Africa-based team that worked on the Uganda deal will answer any questions. Partners also have access to an internal website that includes the information the Ugandan firm shared with Dentons as well as material on how the leaders propose the deal will help the firm.
At some point, the firm will have a vote, which takes place over two days. To date, no management-backed tie-up has been voted down.
“I think our partners feel like they have complete transparency about all of our opportunities and we’ve been very direct about our strategy, vision and goal,” Portnoy says. “And that makes each transaction easier to understand.”
Clarification, 11/4/2017, 7 pm EDT: An earlier version of this story in multiple instances referred to Dentons’ “combinations” as “mergers”; the firm says the two transactions are different, but declined to define what it considers a “combination” in greater detail. This article has been revised to reflect the firm’s distinction between the terms.