Once upon a time an 800-lawyer firm was considered big, but not anymore.
Just talk to Tom Fitzgerald, managing partner of Winston & Strawn.
“We aren’t big enough in New York,” said Fitzgerald, 63, who has built the office from an 80-lawyer outpost to a 250-lawyer one during his 11-year tenure as managing partner.
“We have not grown in D.C. the way we want to,” Fitzgerald added.
Looking at the numbers there are 45 other law firms with more than 800 lawyers in the U.S. alone, according to the American Lawyer, whereas, in 2004, only 24 existed.
Part of what’s driving the trend is that clients — under pressure to reduce their legal spend — seek law firms that are either national or international in scope, said Bill Brennan, a consultant who advises law firms on mergers.
“It’s been very much peaks and valleys,” said Brennan, who expected consolidation to accelerate because of emerging technology that could make junior positions fungible.
“There was a lot of activity ten years ago, and fifteen years ago, and then in 2008, 2009, it slowed down because of the global recession, and everyone was scared to take a risk. Since then, it’s picked up, and I’d say it is accelerating,” he said.
There were 85 law firm mergers and acquisitions in 2016, according to Altman Weil, up from 60 recorded in 2011. This year, which has tallied 75 mergers and acquisitions so far, has included small acquisitions of lawyers and full mergers.
Some of the most notable have included Ballard Spahr’s September acquisition of the 25-lawyer First Amendment boutique, Levine Sullivan Koch & Schulz, DLA Piper’s July acquisition of 60 lawyers from Liner LLP, and Norton Rose Fulbright’s merger with Chadbourne & Parke in June.
In fact, firm growth has become so prevalent that it has created an entirely new industry: the business of tracking attorney moves.
Laura Leopard, who founded Leopard Solutions in 2002, said her company tracks more than 2,100 law firms of all sizes, with a focus on large law firms. She has a team of 17 employees and eight contractors, who support the business of scraping data from law firm websites to monitor when an attorney leaves or joins a firm. The firm then sells this data to clients — including recruiters, consultants and law firms — charging anywhere between $1,200 to $60,000 a year for access.
“Back in the olden days, they didn’t think a partner database would be useful because they just didn’t move that much,” said Leopard, who started the business to track associates. “Now, they move as much as associates. It’s a constant flow.”
Fitzgerald said he is taking a discerning approach to hiring talent, making sure that incoming partners meet with numerous firm lawyers before coming on board.
Even still, as Fitzgerald explained in an interview, his plans are broad: he would like to double if not triple its presence on the West Coast and make more of a mark in other important markets.
“The West Coast is still a little small, if you feel you need to be 400 or 500 lawyers strong in California to penetrate the market,” he said.
Asked why the firm feels the need to grow, Michael Elkin, vice chair of Winston and managing partner of its New York office, said: " Bigger isn’t necessarily better, but to be better while you’re bigger is better.”
He said the firm has a strategic plan to execute on 10 goals over a three- to five-year period. This includes goals on financial performance, diversity and inclusion, talent management and practice management, Elkin said, although he did not share specifics.
To guide the talent management portion of this process, the firm created a three-director team led by chief talent officer Sue Manch, who joined the firm in May.
One big priority is expanding the firm’s corporate transactions practice in New York, said Elkin. He said the firm currently has about 20 percent more corporate attorneys in New York than litigators, but would like the corporate practice to blossom even more.
“The business tends to be stickier,” said Elkin, explaining the firm’s laser-focus on corporate. “So, we know if you’re in the board room, you’re in a position to create opportunity more readily than if you’re an outside litigation counsel.”
At the same time, the firm would like to better manage the attorneys it currently staffs.
Fitzgerald said he is dealing with a delicate transition in his D.C. office as a group of partners approach retirement.
“When you have natural retirement, and they’ve been here 20 or 30 or 40 years, and we’ll miss them dearly, you have to make sure you have young partners to replace them,” said Fitzgerald. “And in many places, we do. But we need some additional firepower.”
He did not say how many partners, or specify who, but noted the retiring partners include some litigators.
The firm has tweaked firm policy to prevent partners from retiring too soon, said Fitzgerald. Traditionally, at age 68, a partner’s shares in firm profits begin to automatically reduce to provide equity shares for new partners. This year, the firm changed the age when partner shares are reduced from 68 to 70, he said.
“We had a number of people in their early to late fifties who were contributing a substantial amount to the firm and wanted to continue doing that,” said Fitzgerald. “And they continue to do the same at 70 as they did at 50. It’s a natural consequence of what partners want to do with their lives and when they want to retire.”
Fitzgerald said that while the firm is taking a considered approach to retiring partners, he is also looking to the lateral market for replacements.
His sales pitch is his firm’s lateral track record, pointing to the hire of star sports litigator Jeffrey Kessler, who joined in 2012 from the failing Dewey & LeBoeuf and after less than four years became Winston & Strawn’s co-executive chairman.
“We want to get [lateral partners] involved in major committees at the firm because it allows them to participate in decision making,” Fitzgerald said.
Brennan, the consultant, said that law firms traditionally have been uncomfortable placing an outside hire in a leadership post, but given the wave toward consolidation, he expects more firms will come around to it.
“Although there have been a few examples, those have been an exception rather than a rule,” said Brennan. “I think those will continue.”
Kessler handled a number of prominent matters that brought Winston widespread publicity, such as representing New England Patriots quarterback Tom Brady in his challenge of an NFL imposed four-game suspension over allegations of Brady’s involvement in a scheme to deflate footballs to gain a competitive advantage.
Overall, Winston has 16 offices in the U.S, Europe and Asia and specializes in a full spectrum of litigation, corporate and regulatory matters.
This year the firm seems to have performed well. One of the top cases it handled was representing Beef Products, Inc., the maker of a processed-meat product, in a defamation lawsuit against ABC News. The 2012 case against ABC News, anchor Diane Sawyer and reporter Jim Avila settled in June over a series of stories about its beef product, which critics called “pink slime.”
Disney — ABC’s parent company — reported in an August third quarter earnings report that company paid at least $177 million to settle the litigation.
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CORRECTED: This story has been updated to reflect the accurate settlement figure of the “pink slime” case. It was reported to be at least $177 million in a company filing.