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Troutman Pepper Will Gain from New Size, Scope, Consultants Say

Jan. 10, 2020, 9:20 PM

The soon-to-be merged Troutman Pepper Hamilton Sanders stands to benefit from its added size, legal consultants say.

The partnerships of Troutman Sanders and Pepper Hamilton voted unanimously on Jan. 8 to create a 1,100-lawyer firm with offices in 23 cities. The new firm, going live on April 1, will be known less formally as “Troutman Pepper.”

Troutman Pepper should expect to see bolstered—and possibly even new—practice groups, said law firm management consultant Kent Zimmermann with the Zeughauser Group.

For example, firm leaders could decide to develop a new and potentially lucrative private equity real estate practice group, he said, by synthesizing Troutman Sanders’ real estate practice with Pepper Hamilton’s strong private equity team.

“More and more, firms are coming to appreciate the benefits of scale,” said Zimmermann, who noted that he’s advised Troutman Sanders for almost a decade but did not work on the merger.

“Obvious upsides are a footprint that is now truly national in scope, greater depth and expansion of practices, and the ability to scale resources,” said Dan Binstock, a partner with Garrison & Sisson, a legal recruiting firm, regarding the Troutman Pepper combination.

“An immediate downside is increased conflicts,” Binstock added. “In a merger of this size, there are almost always groups of partners who peel away because of newly imposed conflicts.”

At the same time, Zimmermann said the combined firm will need to be careful to effectively balance its larger scale with other key gauges of law firm success, including profitability, work quality, and a cohesive, inclusive firm culture.

Consultants are predicting that 2020 may be a banner year for law firm mergers and acquisitions. Last year boasted a record-setting number of such tie-ups, though most were on the smaller side.

With its new size, Troutman Pepper will be situated among a different set of law firm peers, including those with national, as opposed to mainly regional, footprints, law firm consultants say.

In terms of market and brand perception, Troutman Pepper is situated similarly with the likes of Greenberg Traurig and McGuireWoods, consultants say—as well as the upcoming Faegre Drinker Biddle & Reath. That’s the result of the merger of Faegre Baker Daniels and Drinker Biddle & Reath, which was announced in December.

Steve Lewis, the managing partner of Troutman, will take over as chair and CEO of the combined firm. Tom Gallagher, chair of Pepper Hamilton’s executive committee, will become vice chair.

Troutman, the larger of the two firms, earned nearly $525 million in gross revenues in 2018—68th highest among U.S. law firms, according to the latest AmLaw rankings.

Combined with Pepper Hamilton’s revenue of nearly $335 million, the new firm’s,revenues of almost $860 million, if they reach that figure, would bump it up into one of the top 50 firms.

The firms first confirmed they were in talks to combine in November.

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bloomberglaw.com

To contact the editors responsible for this story: Jessie Kokrda Kamens at jkamens@bloomberglaw.com; Rebekah Mintzer at rmintzer@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com

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