Words by Ron Knox | Research by Denise Nzeyimana
Like every other thriving business behemoth, the world’s largest law firms have discovered many ways to grow into towering legal titans.
The legal partnerships that comprise what we’ll call “Big Law” have expanded their practices organically, through hiring associates out of law school and winning over new clients through their past work and reputation. They have also expanded the same way so many corporate giants have: through a series of mergers and acquisitions that pulled smaller, independent firms into those big groups based in London, New York or Washington, DC.
Constructing a modern, global antitrust practice appears to take some of both, according to GCR’s research into the growth of Big Law around the antitrust bar. Some powerful practices such as New York’s Cravath Swaine & Moore have by-and-large stuck to organic, in-house growth; others have tied up with firms foreign and domestic in the quest to build a legal group able to offer comprehensive, global legal advice.
Over the past decade, the primary driver for growth has shifted. From expansion through major, headcount-heavy mergers before the global recession, the trend is now toward the smaller, geographically strategic acquisitions that have comprised most law firm combinations during the last five years, according to research by legal consultant Altman Weil. The decade starting in 2007 opened with LeBoeuf Lamb’s takeover of rival Dewey Valentine as the largest US law firm deal of the past decade, and closed with Arnold & Porter’s tie-up with Kaye Scholer - a deal with major implications for competition practice.
In between, law firms merged or bought their rivals 688 times, according to the Altman Weil research. More than three-fourths of those tie-ups saw the takeover of a firm with 20 or fewer lawyers, and the vast majority, 630, happened within the US. While most law firm combinations involve small firms, a few do not – and the latter often transform antitrust groups and shift power among the elite firms, through both talent consolidation and higher international profiles. The creation of Arnold & Porter Kaye Scholer stands out, as does Norton Rose’s 2012 takeover of Fulbright & Jaworski and Hogan & Hartson’s 2010 merger with Lovells.
The motivations for law firm tie-ups large and small can be multifold. Some buyouts are pure talent acquisitions – poaching one or two skilled lawyers by buying out their firm, which sometimes consists of just a couple of partners and their associates. An attractive client base can drive mergers so long as major conflicts can be avoided; some of the more promising options for Howrey lawyers after that antitrust, intellectual property and litigation firm dissolved were scuttled because of clashing client portfolios. But for the world’s largest antitrust firms, the prime impetus is geography. Law firm deals make sense because they give the acquiring firm a presence in places it often didn’t exist before, and in many cases add a robust practice with skilled attorneys and existing clients.
Janet McDavid, the former co-head of the antitrust practice at Hogan Lovells who helped to oversee the firms’ merger, recalls the frustrations that came with trying to expand the practice lawyer by lawyer. When the firm was still Hogan & Hartson, she sat on the executive committee as the firm pursued a London-based partner to try to expand the antitrust group across the Atlantic. After spending considerable amounts of time, energy and surely money to convince the lawyer to join the US firm, he decided to leave law altogether, and move to the countryside with his wife. “How were we going to build to the kind of scale and capability that was necessary if we had to do it through individual partner acquisitions?” McDavid says now. “I think everyone realised that there was a need for much bigger global capacity – but how to get there was the problem.” Hogan’s problem, of course, had a solution, in the form of the 1,400-lawyer firm Lovells, which included a robust UK competition group that included current managing partner Susan Bright.
The benefits of mergers for law firms, and the potential pitfalls of growing a practice organically, come into focus when looking at how firms’ international offices developed. Since GCR began ranking law firms in the “Global Elite,” the competition group at Freshfields Bruckhaus Deringer has topped the table every year except 2018. The three eponymous firms grew organically in their home countries of the UK and Germany, but only became a true continent-wide power when the three merged in 2000. “We had a good antitrust practice, but so did Deringer and Bruckhaus,” says John Davies, a Freshfields partner and former head of its competition group. “So our international practice benefitted particularly from that global merger.”
While that merger had positive knock-on effects for Freshfields – lawyers looking to change jobs are typically attracted to firms that offer the most robust international platforms on which to practice – it did not lead to immediate success in the US. The firm’s DC office grew gradually through partner hires. It launched in 2002, and it didn’t promote any of its own junior lawyers to partner until electing Thomas Ensign and Bruce McCulloch to the partnership in 2010. While the office has top-quality lawyers and a busy docket of work, it has never matched the firm’s soaring heights in Europe, built in large part through mergers.
Our research into the growth of Big Law is presented here as chronologies of five Global Elite practices that have grown in myriad ways - and one that has disappeared. The timelines capture major events, such as name-altering mergers and acquisitions, as well as the significant lateral hires and promotions that have helped to establish those groups as major hubs for international antitrust work. This first installment of our timeline project includes Freshfields, Hogan Lovells, Jones Day, Gibson Dunn & Crutcher and Arnold & Porter Kaye Scholer, plus Howrey – the former global competition law powerhouse that crumbled even faster than it grew. The timelines include snippets of original records of GCR’s interviews with current and former practice heads, and links to the GCR stories that documented the practices’ development over time.
We expect this project to continue over the course of 2018 and include a growing number of Global Elite firms.