It was exactly a month ago that we first heard that Orrick was looking to join up with (read: bail out) Pillsbury. Today, the thrill is gone. Orrick and Pillsbury announced they were calling off the mega-merger saving us, our planned Very Special Episode of Legal Eagle Wedding Watch.
The potential merger between the California-based Orrick Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman in New York would have created the ninth-largest firm in the country. It was first reported by Reuters on October 25.
Orrick Chairman Mitch Zuklie and Pillsbury Chairman James Rishwain said a conflict of interest between clients in Orrick’s public finance practice and Pillsbury’s tax, environmental and real estate practices killed the merger.
That’s basically it. At least officially. There’s probably a lot about this beyond a few conflicts that we don’t know.
Often when a firm is hot for a merger partner, something’s not right. Pillsbury has a hefty number of partners relative to its size — almost a 1:1 ratio of partners to associates — so not much to offer their new partners in the way of leverage. And never underestimate the effect a merger can have on each partner’s bottom line, if the partners from one side or the other have to pitch in a bunch more out-of-pocket to reach the capital contribution of their new colleagues. If Orrick and Pillsbury had some significant gaps there, it could have complicated the deal.
Obviously conflicts can be deal-killers, but then again, neither side would tell the world if internal financial details contributed to today’s cancellation. But it seems like a couple really committed to making it work could have figured out a solution if a few conflicts were the only problem. We all remember how Dewey & LeBoeuf came to an end largely partly because the financials of the two firms never really meshed.
Would you rather be a great lawyer or be perceived as being a great lawyer?
For many people, I think the answer to that question varies over time: At age 30, you’d rather be a great lawyer. At age 60, you’d rather be perceived as being a great lawyer.
Because, over time, your reputation may come to track reality. If you’re perceived as great when you’re 30, but you’re actually no good, that truth may out over time. As you age, your reputation may catch up with you.
By the time you’re 60, your professional horizon will have shortened, and it’s less likely that the world will unearth your incompetence. If you’re perceived as being a great lawyer when you’re 60, you may well make it to retirement unscathed.
What of law firms? Would you rather that your firm be great or be perceived as being great?
The answer may be the same for institutions as it is for individuals, and the answer may again turn on your time horizon: If you’re actually great, you’re likely to prosper over time. If you’re (incorrectly) perceived as being great, you’re likely to prosper in the short-term and fail over time.
What does that tell you about law firm mergers that are meant to increase the “brand awareness” of a law firm? The firm will merge and improve its public profile (and image) in the short-term, without necessarily tending to quality. That may well improve short-term performance, but perhaps at the expense of long-term success.
Finley Kumble plainly followed that strategy. Steve Kumble is quoted as having said, “When we’re the biggest, people will think we’re the best.” I’m not sure that anyone ever viewed Finley Kumble as the pinnacle of quality, but the firm surely gained prominence by expanding rapidly and improving its brand awareness, until the firm exploded.
There’s plenty of pseudo-empirical evidence that suggests that the marketplace generally perceives bigger as better. From the late 1980s through roughly 2000, Baker & McKenzie, Jones Day, and Skadden were the three largest law firms in the world, with Baker & McKenzie the largest and Jones Day and Skadden running neck and neck for second place. Which U.S. law firms had the strongest brands this year? You guessed it.
Zoom out from the U.S. to the entire world, and big still matters. A recent analysis by Acritas says that the five law firms with the strongest brands globally are Baker & McKenzie, Clifford Chance, Freshfields, Linklaters, and DLA Piper. Those may not be precisely the five largest law firms in the world, but they’re all contenders. And I’ll wager that the recent moves by Norton Rose Fulbright and, if it closes, Orrick and Pillsbury Winthrop, will catapult those firms (even) higher in the brand awareness charts.
I recently dined with a senior administrative guy from one of those five best-known global firms, and he told me that he thought the trend to globalization favored his gargantuan firm. “If I were a great law firm with a presence in only one or two cities, the trend in these brand-awareness studies would worry me. To remain at the top of the heap in today’s world, you simply must get bigger.”
But that’s all reputation; what of quality?
Let me start with the obvious: All of the huge global firms appear near the top of the brand awareness charts, and no huge firm appears at the bottom (or falls off the charts entirely because no one has ever heard of it). Thus, in one sense, Kumble was right: Bigness alone adds value.
At that point, please lay out the eggshells for me to walk on. I work for the world’s leading insurance broker for law firms; I’m not about to criticize any particular law firm in public.
To the contrary: I think you’re all great! Lawyers are like the children in Lake Wobegon: They’re all above average! In fact, that’s understating it: You’re all the very best in the world! It’s a zillion-way tie for first place! (By the way, do you need a good broker? Send me a note through the e-mail link at the end of this column.)
I’ll say only that there must be some large firm whose quality has become spottier over time as the firm pursued growth as an end in itself. And there are surely some small- and medium-sized firms that consist entirely of top-notch lawyers; those firms are overlooked in the marketplace only because fewer clients have had personal contact with lawyers at the firm.
But perhaps that’s irrelevant. Reputations are odd things and are often very sticky. Maybe reputations do conform themselves to reality over time, or maybe that’s true only in an abstract world in which information is perfect and time unbounded.
Or, as yet a third possibility, maybe the meaning of “quality” is so amorphous in the field of professional services that reputation is what matters and reality doesn’t exist.
Ed. note: This is the latest installment in a series of posts on lateral partner moves from Lateral Link’s team of expert contributors. Today’s post is written by Michael Allen, the Managing Principal of Lateral Link, who focuses exclusively on partner placements with Am Law 200 clients.
Merger season has arrived, yielding a fruitful harvest of potentially enormous mergers between Patton Boggs and Locke Lord and between Pillsbury and Orrick. Perhaps the most interesting aspect of these mergers is the potentially “super” practice groups these mergers will make.
Patton Boggs has recently undergone a period of mild strife, as we detailed several months ago. Though they lost a significant number of energy and environmental attorneys after the fallout of the Chevron litigation, this merger with Locke Lord could be effective not only as a stopgap, but could also vastly strengthen each firm’s energy department….
The fallout from the Chevron litigation could have a tangible effect on the lateral moves to and from Patton Boggs. This merger could appease potential laterals who are weary of the significant movement at the firm, but most likely it will take some time and some closure in the Chevron case for Patton to see an increase in their lateral movement. With every merger there is a substantial number of partners and associates who leave — though not always because of the merger. Patton could lose a greater than average number if the attorneys at Locke Lord are not optimistic about Patton’s future. With both Kenneth Betts and Gina Betts departing Locke Lord for Patton Boggs just a month ago, would the merger create tension for the dynamic duo? However, the acquisition of David Patton would be a coup for Patton Boggs. David Patton co-chairs Locke Lord’s energy practice and handles mostly matters concerning oil and gas. This should help bolster Patton’s energy practice, which was decimated by a slew of lateral moves just a few months ago.
The potential major merger between Orrick and Pillsbury was perhaps the most unexpected of the three. Based in New York, Pillsbury has strong Intellectual Property, Corporate and Finance Departments. Orrick is renowned for their work with high-technology companies, representing them in various practices from Intellectual Property to Capital Markets. The merger of Orrick and Pillsbury would create an intriguingly strong transcontinental Finance — especially restructuring — practice, boasting major players such as Michael Schumaecker, William Bowers and C. Payson Coleman from Pillsbury, and Dolph Hellman, Alan Benjamin and Zachary Finley from Orrick.
Disclosure: This series is sponsored by Lateral Link, which is an ATL advertiser.
Lateral Link LLP is one of the largest legal recruiting agencies in the world, with 13 offices in the United States and Asia. Lateral Link has been recognized by the Wall Street Journal, The American Lawyer, the ABA Journal, the Daily Journal, and the National Law Journal for its innovative approach to legal placement. Lateral Link recruiters are former practicing attorneys who have consistently succeeded in placing partners, associates, general and corporate counsel into some of the most reputable law firms and organizations in the world.
* Legal education needs to adapt to reflect the fact that 50 percent of law students don’t intend to use their law degrees to work in traditional legal fields. In other words, legal education needs to adapt to people too stupid to figure out the only jobs that require a law degree are those in traditional legal fields. [New York Law Journal]
* Harvard is hosting an event on the “business of college sports.” You can learn all about the business of college sports from this video right here. [Sports Agent Blog]
Potentially landscape-altering deals don’t come along every day, and a deal that would merge a 1,000-lawyer firm with a 700-lawyer firm would be exactly that. And it’s not just headcount — the marriage of these two firms would have placed the joint entity at No. 9 in revenue for 2012.
But just because two firms are talking merger doesn’t mean it’ll happen. We’ve been let down before.
Indeed, we’ve been let down by one of these firms before. Way back in February, we reported that Pillsbury Winthrop was talking with Fulbright & Jaworski about a merger. Nothing ever came of that, but members of the management at Pillsbury are still on the prowl for a big, strong firm to sweep them off their feet. It’s all very romantic.
And now they just might have found the partner they’ve been looking for….
Casey Sullivan from Reuters has an exclusive report that Pillsbury is in talks with Orrick Herrington & Sutcliffe to merge.
Pillsbury Chairman James Rishwain and Orrick Chairman Mitch Zuklie issued a joint statement to Reuters on Friday that said: “Our firms are in exploratory discussions about a possible combination. These talks are serving to confirm the great respect our firms have for each other.”
Orrick, with about 1,000 lawyers, is known for its intellectual property, litigation, emerging companies and corporate practices, while the 700-lawyer Pillsbury of New York has, among others, a well-known energy practice. Their joint revenue, based on figures reported by the legal trade publication American Lawyer for 2012, would have placed them at No. 9 in the United States.
Orrick boasts 25 offices worldwide, while Pillsbury lists 15 (including a Nashville office cryptically identified as “Operations,” which is either a mundane administrative clearinghouse or a super-secret spy bunker), and there’s a good deal of office overlap, especially in California. We certainly hope everyone lands on their feet, but the unfortunate side effect of a merger this big would probably be a number of layoffs as the offices merge and redundancies get weeded out.
When it comes to clients, the merger seems like a perfect match of complementary business:
Orrick is known for representing clients like Apple , Microsoft and PG&E Corp, according to its website. Pillsbury has represented, among others, Chevron Corp, BNY Mellon and Xerox, according to legal experts and the firm’s website.
In recent years, according to Reuters, Orrick has represented Oracle Corp in a patent lawsuit against Google, claiming its Android mobile operating technology infringed Oracle’s Java patents, and Microsoft in a patent lawsuit against Barnes & Noble over its Nook electronic book reader.
Pillsbury this year represented a number of companies and banks in mergers and acquisitions and initial public offerings like Deutsche Bank and Barclays Bank PLC on a $115 million IPO for Montage Tech Group and Synnex on a $505 million acquisition of IBM’s Customer Care Unit, according to the firm’s website.
According to Sullivan, Orrick is expected to sign the letter of intent next week.
Here’s to the romance of Orrick and Pillsbury being a fairytale, instead of the sadomasochistic, 50 Shades of Grey-style merger of Dewey and LeBouef.
Feel free to discuss in the comments. If you have any additional information, please send it to us directly via email or text (646-820-8477). Thanks.
The idea of “happiness” is the basis of an ever-growing body of research. In fact, while economists traditionally measure a nation’s prosperity by looking at GDP, there is a growing movement for them to consider a different measure, something akin to “Gross National Happiness.” One of the best-known efforts to move away from a reliance on GDP as a measure of national welfare is the UN’s Human Development Index, which amalgamates three metrics: lifespan, educational attainment, and adjusted real income. Then there are dozens of much more subjective surveys of national happiness, many of which find Costa Rica to be the happiest country in the world. Others say it’s Norway. (Then there is this preposterous “Happy Planet Index,” which ranks the U.S. at number 113, between Madagascar and Nigeria.)
Of course happiness research is performed in more narrowly targeted ways, such as examining specific professions. Earlier this year, Forbes reported on a “Career Bliss” survey of 65,000 employees that ranked “law firm associate” as the unhappiest job in America. (See Joe’s take on that survey here.)
First, there is a forthcoming academic paper, Buyers’ Remorse? An Empirical Assessment of the Desirability of a Lawyer Career, which analyzes data from NALP’s After the JD project, tracking about 4,500 lawyers from the class of 2000. The paper’s authors conclude that “evidence of buyer’s remorse [over getting a legal degree] is thin at best.” To cast doubt on this conclusion, Harper needs only to point out the study’s fundamental defect: it does not incorporate any data after the prelapsarian year of 2007. Aside from that, should anyone contemplating a legal career today draw any conclusions based on the experience of the class of 2000? Some questions answer themselves.
Next, Harper looks at the release of the 2013 Am Law Midlevel Associate Survey, which reported record high levels of associate satisfaction. Harper’s interpretation of this finding sounds about right: “Many members of the youngest generation of lawyers (and would-be lawyers) are so concerned about finding jobs that they are now equating satisfaction with getting and keeping one long enough to repay their staggering student loans.” Furthermore, we would direct readers to that survey’s methodology and let them judge for themselves. If you like what you see, you can buy the full results for the low, low price of $750.00.
Of course, we here at ATL do a fair amount of survey research ourselves, some of which could be categorized as “happiness research.” Among other things, the ATL Insider Survey asks respondents from law firms to rate their employers in terms of five categories: compensation, firm morale, culture and colleagues, training, and hours. What do our survey results have to say about current trends in Biglaw happiness?
For context, here are the overall mean ratings, on a scale of 1 to 10, by law firm associates for each of the five categories (the ratings from September 2012 are in parentheses):
So across every category except Culture and Colleagues, ratings are up compared to last year. It’s difficult to know whether the Biglaw environment is brightening or whether the simple fact of having a job these days acts as a set of rose-colored glasses. Two of these categories above are arguable near proxies for the concept of “happiness”: Morale and Culture. It is interesting to see the discrepancy between the two. Culture gets the highest marks, while morale is neck and neck with the Biglaw associate bête noire of “hours.” It’s as if associates are telling us that, while the climate is good, the weather’s not so great.
Our survey contains another “happiness” proxy. Law firm lawyers are asked a “time machine” hypothetical: “If you could go back and do it over again, would you still choose to work for your firm?” Despite all the angst of most online discussions about law firm life, a remarkable 84% of respondents said yes, they would make the same decision and re-join their current firm. This is up slightly from 12 months ago. Responses to this question were consistently positive across all practice areas:
If we look at the results of this question in terms of specific firms, we find that there are six firms (for which we have sufficient responses) with a remarkable 100% “Yes” rate. Not a single associate respondent tells us that she regrets the decision to go to work for these six firms (with a representative quote):
[A] strong work/life balance culture demonstrated by the fact that we all take our vacation each year, and parents, male and female, take their parental leave, can easily work from home, and having a life outside of work is valued by the firm.
Pro bono practice is at the heart and soul of the firm’s culture. The law is more than a business; it is also a noble profession where the priority should be to help clients–rich or poor–to achieve their goals.
Spectacular place to work. A hidden gem among law firms. The only place left where you can do top quality work while enjoying a decent life work balance.
It is still possible to build a practice and forge a career at a law firm. Pillsbury gives associates real opportunities to market to clients, develop expertise, and develop a sustainable practice. The firm is also extremely open about finances and decisions. Finally – the people at Pillsbury are fantastic.
We almost made it, but not quite. We almost experienced a week, albeit a shortened one, without layoff news. (Our last layoff story came out before the long holiday weekend.)
The latest cuts are significant, into the double digits. Let’s find out which firm is reducing headcount and by how much….
The dough will no longer rise for a few dozen staffers at Pillsbury. After hearing reports of support staff cuts, we reached out to the firm. Partner and COO Rick Donaldson issued this statement:
Aligning our overall resources with the firm’s current needs is a normal and continuing part of our business. Where possible, we make these adjustments through natural attrition and voluntary reductions, but despite these efforts, our staffing levels have remained elevated. As a result, effective September 4, the firm reduced the number of support staff and paraprofessional positions through a reduction in force.
The departures affect approximately 35 staff in various offices, departments and sections. We will be providing these individuals with severance pay, health benefits and career transition services. These decisions are never easy. Today’s actions are especially difficult because we know first-hand the many contributions our staff have made to Pillsbury in the time they have been with us and know them to be talented, diligent individuals. We wish them well in their future endeavors.
It’s a matter-of-fact and gracious statement. There’s really not much else to say. Good luck to the affected individuals.
Today’s employment report was on the weak side. Sadly enough, the legal sector isn’t doing much to change the overall picture.
* The Department of Justice won’t be harshing anyone’s mellow in Washington and Colorado just yet, because Eric Holder has more important things to do than to get involved in people’s pot. [CNN]
* The IRS will now treat all legal gay marriages the same as straight marriages for tax purposes, no matter where the couples live. That’s absolutely fabulous! [Federal Eye / Washington Post]
* Howrey going to deal with all of Allan Diamond’s unfinished business claims made as trustee on behalf of this failed firm? By claiming as a united front that “[c]lients are not property,” even if we secretly think they are. [Am Law Daily]
* In this wonderful post-Windsor world, the parents of a deceased Cozen O’Connor attorney are appealing a judge’s ruling as to the dispensation of their daughter’s death benefits to her wife. [Legal Intelligencer]
* Reduce, re-use, and recycle: environmentally friendly words used to reduce a Biglaw firm’s carbon footprint, not the number of its lawyers. Say hello to the Law Firm Sustainability Network. [Daily Report]
* Disability rights groups are coming forward to defend California’s LSAT anti-flagging law because the amount of extra testing time you receive should be between you and your doctor. [National Law Journal]
* If you thought Charleston School of Law was going to be sold to the InfiLaw System, then think again. The law school is up for grabs on Craigslist. Alas, the “[s]tudent body has been used.” [Red Alert Politics]
If you’re interested in purchasing Charleston School of Law, keep reading to see the ad (click to enlarge)…
Law firms adapt notoriously slowly to the advance of technology. Firm libraries remained years after Westlaw and Lexis usurped print. Fax machines continued to whir after the advent of the PDF. The pyramid scheme of career advancement rolls on.
So it’s refreshing when law firms take the bull by the horns and seize on new technology. A few Biglaw firms have created smartphone apps as a new avenue for putting their work product in front of clients.
Latham and Watkins is the most prolific Biglaw app developer, with an entire library of “The Book of Jargon” to explain those pesky legal terms clients might come across, and now an app that helps clients learn more about overseas anti-bribery laws.
I’m sure that earned the “explicit material” tag on iTunes.
* “Without the formation of character, the rest is futile.” An Article III judge’s take on the law school crisis. [Simple Justice]
* Because nobody likes sloppy seconds, the merger talks between Pillsbury Winthrop and Dickstein Shapiro are now off the table. [Thomson Reuters News & Insight]
* David Tresch, an ex-Biglaw CIO, was indicted last week on wire fraud charges. “Bitch better give me back my money,” said Mayer Brown. [ABA Journal]
* Does Jeffrey Toobin understand the Voting Rights Act? This law professor seems skeptical. [PrawfsBlog]
* Praise the Lord and pass the ammunition, because this Saturday is Gun Appreciation Day. Go celebrate your Second Amendment rights — but do it responsibly, please! [Volokh Conspiracy]
* Remember Ryan Chenevert, the young lawyer who took home the title of Cosmo’s Bachelor of the Year for 2012? Check out the very tongue-in-cheek interview this hottie did with 225 Magazine, after the jump….