Indianapolis has long been dominated by three homegrown law firms: Baker & Daniels, Barnes & Thornburg and Ice Miller. Now newcomers to the city are making plays to knock them from the podium.
During the past two years, a flurry of mergers have changed legal business in the city. As the dust settles, regional firms such as Benesch, Friedlander, Coplan & Aronoff; Frost Brown Todd; and Taft, Stettinius & Hollister are forcing Indianapolis’ Big Three to get creative. The interlopers areOhio-based firms that gained footholds in Indianapolis by acquiring smaller firms — Benesch, the 30-lawyer real estate firm Dann Pecar Newman & Kleiman; Frost, the 79-lawyer litigation boutique Locke Reynolds; and Taft, the 100-lawyer full-service firm Sommer Barnard.
“We knew we were missing out by not being in Indianapolis, so we made a strong move to get into the city. Now, we consider Barnes & Thornburg, Ice Miller and Baker & Daniels our competition,” said John Crockett III, chairman of Frost Brown Todd.
Taft is making plays of its own. In March, the firm brought on three intellectual property lawyers, including two partners, from Bose McKinney & Evans’ Indianapolis home office.
The competition is taking place in a market that was hit hard by the recession. Indiana, whose economy has always heavily leaned on the manufacturing, agribusiness and automotive industries, is running an unemployment rate of 10.1%, according to the Department of Labor.
Litigation, especially in the life sciences and energy sectors, has remained strong while transactional and real estate work has dropped off, according to Indianapolis-based managing partners. As elsewhere in the country, clients are pressuring firms to cut costs.
Byron Myers, managing partner of 245-lawyer Ice Miller, said that his firm has had to “get creative” to meet the needs of clients such as Eli Lilly and Co., Biomet Inc. and Johnson & Johnson. Ice Miller has been offering alternate billing arrangements and sending associates to serve secondments in client general counsels’ offices. “We’ve had to be flexible to provide value for our clients,” Myers said.
For Ice Miller, that flexibility didn’t go quite far enough last year. According to The National Law Journal affiliate The American Lawyer, the firm’s revenue dropped by 3.6% in 2009. The NLJ’s own data show that it lost 16 lawyers.
Meanwhile, its fellow homegrown firms managed to post some impressive gains. Baker & Daniels, with 286 lawyers, increased its revenues by 8.7% and profits per equity partner by 20.2%. The real performer in 2009 was Barnes & Thornburg. The 460-lawyer firm posted a revenue increase of 13.6% while profits per partner grew by 10.3%. Last year, the firm expanded, opening offices in Atlanta; Columbus, Ohio; and Minneapolis.
“We saw the recession as an opportunity to grow and have been aggressively pursuing that strategy,” said Alan Levin, Barnes & Thornburg’s managing partner.
The firm’s performance is due largely to successes in its litigation, intellectual property, labor and employment and corporate practices, according to Levin.
That said, the Big Three can expect more competition in the future. “The market is underserved at the top end, and other firms are going to notice that,” said Ward Bower, a consultant with Altman Weil.
Levin doesn’t sound worried. The Indiana economy is growing, but not quickly enough to support major expansion into the city, he said. Furthermore, the slow rate of expansion in Indiana was part of the reason that Barnes & Thornburg sought to expand into other markets.
“The pie in Indiana still isn’t getting much bigger. There’s just more people fighting over the pieces now,” Levin said.
Contact Jeff Jeffrey at firstname.lastname@example.org.