Taft Stettinius & Hollister Looks West With Sherman & Howard (1)

Cincinnati-founded Taft Stettinius & Hollister is expanding its reach beyond its heavily-Midwest presence through a merger with Denver-based Sherman & Howard.

The combination, set to take effect Jan. 1, will create a firm of 1,050 lawyers and with revenue of about $810 million.

The merger will allow Taft to gain Sherman’s offices in Denver and Phoenix, where it currently has small offices for local client engagements, said firm chairman and managing partner Robert Hicks.

“Denver and the related areas and Phoenix have been on high on Taft’s list for a long time,” Hicks said. “This is our opening to become a very relevant and dominant firm in the Mountain West.”

This will be Taft’s seventh merger since 2008, in which time the firm has expanded its reach across several major Midwestern markets. Sherman & Howard also isn’t a stranger to mergers, having executed four in the last 17 years.

Taft and Sherman & Howard are the latest firms to announce a tie up in the last month, following on the heels of Troutman Pepper and Locke Lord, Ballard Spahr and Lane Powell, Womble Bond Dickinson and Lewis Roca, and Lathrop GPM and Hopkins Carley.

Taft, which has grown into new regions primarily through acquiring local firms, also has its eyes set on mergers with firms in Florida and in major Northeast markets, including New York, Hicks said. However, Florida and New York have proven to be challenging markets for the firm to break into, he said.

“Our model is to find a really good independent firm that does the high-end, middle-market work with rates that are similar to ours,” he said. “If they’ve been able to build up and stay alone in New York, it’s hard to give up that mindset.”

Sherman chief executive Stefan Stein said in Monday’s statement his firm was drawn to Taft’s success “achieved by merging with firms that have a strong, local presence like we do.”

“The alignment of our client-focused, people-first cultures, and the commitments to our respective communities, made this an easy decision,” Stein said.

Signs of Compatability

Leaders at Taft and Sherman & Howard said they decided to combine after finding similarities in their billing rates and formulas for compensating partners.

Partners at the firms last week “overwhelmingly” voted to merge, Stein and a spokesperson for Taft said.

Come Jan. 1, Stein said he will serve as partner-in-charge of the offices Taft will acquire from Sherman & Howard in Denver and Arizona. Taft’s letterhead and branding in its new regions will feature Sherman & Howard’s name next to Taft’s for some time to avoid losing Sherman & Howard’s longstanding brand recognition in the Denver market.

Sherman & Howard has been seeking a means to meet client demands for more legal services in more geographic markets for the last two years—the firm even considered acquiring a smaller firm or a lateral group, said Denver-based consultant Roxanne Jensen, who has served as an outside adviser for Sherman & Howard for a year and a half.

“They looked at a variety of options to grow in the way that clients wanted them to grow,” Jensen said, adding Sherman & Howard is financially strong and isn’t merging to obtain financial stability.

Stein said merging with a larger firm allows Sherman & Howard to deepen its bench of tax and intellectual property lawyers to aid clients in corporate transactions.

“At end of the day, we decided that to best compete and sustain the success we’ve had for 130 years, we needed to get bigger,” Stein said. “We needed to combine with a firm that had a much larger platform than we did and could provide greater depth in practice areas we had—and could expand our reach into sub-specialities and practice areas we’d like to develop and give us access to clients across the country.”

‘Get Big or Go Home’

The factors driving Sherman & Howard to merge are similar to the pressures driving other law firm mergers. “There’s this growing perception among law firm leadership, right or wrong, that you have to get big or go home,” said Bruce MacEwen, a law firm consultant with Adam Smith, Esq. “We may be looking at a future where we might have 50 or 75, not 200, law firms in the country that matter and that have name recognition.”

The merger is the latest in a series of tie-ups by firms seeking to establish themselves and expand into second and third-tier markets. Ballard’s tie-up with Lane Powell grants the former firm a footprint in the Pacific Northwest, while Womble Bond’s tie-up with Lewis Roca will see Womble expand its reach in the Southwest.

“First-tier markets have been picked over,” MacEwen said. “A lot of the first-tier firms in those markets have already merged or have put a stake in the ground that they are independent and want to stay that way.”