Gobsmacked By Dacheng Dentons

What should we make of the latest mega-merger? Thoughts from in-house columnist Mark Herrmann.

If memory serves me (and I’m asking a lot of it here), then in 1979, the world’s largest law firm — Shearman & Sterling — hired its 312th lawyer. The few legal pundits at the time wondered where the firm could go from there: “Once you pass the 300-lawyer mark, conflict issues become insoluble. Since Shearman & Sterling can no longer grow, how will it move forward?”

On January 27, 2015, the merger of Dacheng and Dentons created a law firm with 6,600 lawyers.

I’m gobsmacked.

I know a smidge about Dentons and its predecessor firms. I worked with a guy from the predecessor firm in Canada; he did perfectly nice work. And I’ve read some of Scott Turow’s stuff. That’s about it.

I had never heard of Dacheng before late January, when I learned that it was — already, before the Dentons merger — the largest law firm in the world. Really? Where was it hiding?

I’m not entirely ignorant of the world of big law firms. I worked for two decades at Jones Day; for about the first decade I was there, Baker & McKenzie was the world’s largest firm every year, and Jones Day and Skadden swapped back and forth in the second and third slots. (Nobody much cared about that, but I suspect it’s like working in the Sears Willis Tower — you’re just generally aware of the other tall buildings in the world.)

After I went in-house, I continued to gently monitor events in the legal world, both because I have so many former classmates — and colleagues, and friends — working in that space and because I’m duty-bound to search for fodder to fuel this silly little column of mine.

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How could I never before have heard of a firm with 4,000 lawyers? Where were they? Why did Dacheng never appear in those lists telling me that DLA Piper and Baker were now the largest firms in the world? Has the American Lawyer been lying to me?

So that’s gobsmack one: Where was Dacheng hiding?

But gobsmack two is the merger itself.

I’ve attended partners’ meeting at which firms discussed the profitability of Asian offices. And I talk to a lot of folks with their ears to the ground of big firm management. (Some of those ears in fact constitute big firm management.) Generally, big firms publicly boast about their Asian presences and privately bemoan them: “Does anything resembling a capital market exist in China? Will any client pay for premier legal services in a country in which the rule of law doesn’t yet truly exist? When we work with a Chinese client, do we know who the client really is? How are we supposed to conduct due diligence for our underwriters in that environment? We don’t have ten percent of our lawyers in the Middle East and Asia; why do we spend 80 percent of our management time talking about those offices? Is there any way to make money in China?”

(I recently asked one management-friend about the Dacheng Dentons merger, and he scoffed: “Four thousand lawyers? Those are probably just the lawyers who attended a block party in some small neighborhood in Shanghai.”)

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So China is huge. It controls a growing chunk of the world’s wealth. It’s an untapped market. And Dentons has chosen to make one of the gutsiest moves in the history of BigLaw.

This is not like acquiring a 30-lawyer shop in Houston and figuring that you’ll sink a few bucks into it and see how it plays. This is more than doubling the size of your firm in a part of the world that has, to date, been notoriously difficult for big firms to navigate.

If it works, the folks who pulled off this deal will be hailed as geniuses, and all the other big global firms will find themselves behind the eight-ball, scrambling for Chinese merger partners to try to catch up.

If it doesn’t work, there will be plenty of people in management at other firms glad to puff out their chests and say, “I told you so!”

But you didn’t, really. You did raise an eyebrow in disbelief, but your heart skipped a beat when you considered that Dacheng Dentons may have beaten you to a critical punch.

If you were being honest with yourself — and if you were trying to work your vocabulary word-of-the-day into an online column — you’d admit that you were, in fact, gobsmacked.


Mark Herrmann is the Chief Counsel – Litigation and Global Chief Compliance Officer at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at inhouse@abovethelaw.com.