Law Firm Mergers
Columbus's legal landscape changed in 2012 when two prominent law firms merged with other legal practices. In a few more months, it will change yet again.
Schottenstein Zox & Dunn Company merged with Indianapolis-based Ice Miller effective Jan. 1, while Chester Willcox & Saxbe became part of Taft Stettinius & Hollister on Jan. 2. It was the fifth merger for Cincinnati-based Taft since 2000.
Another deal is on the horizon. Isaac, Brant, Ledman & Teetor and Wiles, Boyle, Burkholder & Bringardner announced in June they're joining forces effective Jan. 1, 2013. Nearly 60 attorneys at the combined firm will practice under the name of Isaac Wiles.
The Hildebrandt Institute, which tracks law firm mergers nationally, reported in July that 25 deals occurred in the first six months of 2012. That's up from 22 during the same period in 2011 and 14 in 2010.
"Firms are battling for market share, but I don't know if I'd call the mergers a trend right now," says Judge Patrick Fischer of the First District Court of Appeals in Cincinnati. Fischer is also president of the Ohio State Bar Association Board of Governors.
Law firms are cautiously approaching mergers in light of the current weak demand and billing rates-and growing expenses. Hildebrandt notes some firms are taking advantage of opportunities to strengthen their presence in local markets. In particular, large firms are making strategic acquisitions to solidify an existing footprint.
"It's an institutional phenomenon that goes in cycles. Today it seems that firms are looking for sensible and controlled growth. That's the case for us," says David Johnson of Taft. He's co-partner-in-charge of the Columbus office with Charles "Rocky" Saxbe; both led their respective offices pre-merger.
"There's a flurry, and then it slows down a little as firms settle in and digest what they've done," says Jim Davidson, deputy managing partner of Ice Miller's Columbus office.
Central Ohio's recent deals essentially reflect all three law firm growth strategies: merging into a larger firm, committing to a merger of equals or strategically hiring small clusters of attorneys. Here's a look at the mechanics of these local deals and the impact they've had on the firms and their clients.
The Decision to Merge
The economics of any deal are critical, as is due diligence to ensure that conflicts of interest don't disqualify a merged firm from representing certain clients.
"Isaac Brant and Wiles Boyle are both successful independent firms. We wondered if it would work. We talked through firm structure, locations and everything else that had to be decided. It took us about eight or nine months to put it together," says Mike Close, managing partner at Wiles Boyle. He and Isaac Brant's managing partner, Steve Teetor, will be co-managing partners of the combined firm.
The impact on geographic presence is another factor.
Chester Willcox & Saxbe operated solely in Columbus. The merger offered the firm greater reach with Taft's offices in Cincinnati, Dayton, Cleveland, Indianapolis, Northern Kentucky and Phoenix.
"For Taft, the merger gave us a much greater presence and a higher community profile in Columbus. Our [Columbus] office had 12 attorneys. We got 30 great attorneys who are great people and terrific colleagues. Now we have 40 lawyers, which is a good size firm for Columbus," Johnson says.
SZD and Ice Miller were strong Midwest firms in their respective markets. "We both had practices that meshed well and were nationally recognized. By putting them together, we could capitalize on the collective strengths and reputations to create a regional firm," says Davidson, who as SZD's president led the integration.
The ability to complement or expand the firms' professional expertise is a key consideration.
Wiles Boyle has grown from nine attorneys in 1998 to 28 now. "We've stayed lean, but realize any further economies of scale couldn't come in-house. A compatible firm could save overhead, yes, but we'd complement each other's practices," Close says.
"We do significant day-to-day legal work for a variety of municipal entities. They do significant litigation for municipal clients. Now we can offer these additional services to our respective clients," Close says of the firms. "In terms of depth, there's very little in the probate and trust area or litigation that we couldn't take on."
Taft's 330 firmwide attorneys are proficient in nearly 70 practice areas. "Besides synergy, Chester was looking for additional expertise. Taft gives Chester's clients a broader range of expertise," Johnson says.
SZD and Ice Miller saw similar benefits. "In Ohio, SZD had an exceptional first-tier labor and employment practice. We didn't have an immigration practice, but Ice Miller's immigration practice is nationally recognized," Davidson says. "Ice Miller in Indianapolis works with public pension funds, and we in Ohio have folks who do alternative investments. Now we can offer clients both services as the need arises."
Nuts and Bolts
One of an established law firm's most valuable assets is its name. Mergers, however, often require changing the moniker.
"A name change and becoming part of a new firm was monumental for us," Davidson says. "It was a complicated decision, and one we did not take lightly. I spoke with Harvey Dunn and Ben Zox, and they understood. Ice Miller is twice as old as our firm was, and it had more people and locations. In the end, you have to pick a name." Ice Miller was founded in 1910, while SZD started in 1966 as Schottenstein, Garel, Swedlow & Zox.
The Ice Miller name isn't completely foreign, though. "We did introduce a new name in Ohio, but it's familiar to many people who do business in the Midwest, because of Ice Miller's presence in Indianapolis and Illinois," Davidson says.
Notable national political names are part of the rich history of Chester, founded in 1884, and Taft, founded in 1885. "We're quick to take advantage of both names. At the top of letterhead is the Taft branding logo, but you'll find the Chester name at the bottom. Certainly in the Columbus market the Chester name has a lot of cachet. We know that and are properly taking advantage of it," Johnson says.
After the nameplate is agreed upon, leadership arrangements follow. At Ice Miller, the combined firm has one chief managing partner and three deputies, one of whom is Davidson. Taft's top leadership stayed in place, but the executive committee was expanded to include Saxbe.
Practical day-to-day issues must be ironed out, too. "We had some hiccups, but no big surprises. For the most part, when we came to work on the first day, the computers turned on and the phones worked," Davidson says. "The things we really cared about worked and worked well on day one."
Ice Miller didn't have an Ohio presence prior to the merger, so SZD's folks stayed put in the Arena District. "From that perspective, the only thing that changed was the sign and the stationery," Davidson says. The combined firm has more than 300 lawyers and offices in Columbus, Cleveland, Indianapolis, Chicago, Dupage County, Ill., and Washington, D.C.
Even though Taft was the larger firm overall, its 12 local attorneys moved into Chester's offices at 65 E. State St. in downtown Columbus. "They had room for us," Johnson says.
For now, Wiles Boyle and Isaac Brant are maintaining their current offices. In April, Wiles Boyle's 28 attorneys and Isaac Brant's 29 lawyers will move to 42,000 square feet spread over two floors at Miranova.
"Both of us do a fair amount of litigating, a lot of it regional. The space gives us maximum flexibility and access to the courthouse and the freeways," Close says.
Combining office space, computers and telephones is one thing. Meshing firm cultures and employee personalities is quite another.
SZD and Ice Miller's Midwestern roots eased the way. "We shared the way we look at the world, including client service and commitment to community," Davidson says.
"The people integration was outstanding. The willingness of new colleagues to meet each other has been great. Very elemental to our success is the attitude, commitment and timely response to each other," Davidson says. "We're working together to the get full appreciation of the combined firm's new capabilities. Our client service teams give additional skill sets to existing clients. We spend time in other offices to put faces to names, learn what we're working on together and find out how we can help and add value."
Johnson recognized years ago that Chester and Taft would be a good match. "When I opened Taft's Columbus office in 1983, Jack Chester was one of the few lawyers I knew. He couldn't have been nicer to this young lawyer. I'd pester him about merging. On our side, we've been thinking about this for 30 years, because we so admired the firm," Johnson says.
The topic came up again when Johnson and Saxbe ran into each other in 2011. The rest, as they say, is history.
"If you make sure you're joining a group who share your values, the important things will go swimmingly. We had differences in equipment, procedures and forms, but the merger showed we share the same values," Johnson says.
Wiles Boyle and Isaac Brant were determined to stay local in any deal. "We were founded in Columbus in 1940, and Isaac Brant was founded here in 1936. That's important to both of us, to keep those local roots intact," Close says.
In the past, bigger firms had courted both of them. "We wanted to maintain our own cultures by merging two firms that are a lot alike. We hope to create real value to our clients by keeping our fees as reasonable as we can," Close says.
A Different Strategy
In 2009, Barnes & Thornburg approached Bill Nolan about opening its Columbus office. As managing partner, he's expanded the office using the same recruiting tactic.
"We don't grow through mergers. Our growth model is to hire a lawyer or two at a time. We identify small clusters of people and then determine if a move makes sense for each of us. It has to make economic sense and do they fill a niche for us," says Nolan, formerly of Squire, Sanders & Dempsey. "Anyone who is here we want to be here, and they have chosen to be here."
This approach to growth avoids a natural phenomenon associated with law firm mergers. "For whatever reason, it's a known consequence that some people will shake out at some point," Nolan says.
Barnes & Thornburg also looks for entrepreneurial spirit when recruiting. "We want our attorneys to have a business model that's not usually thought of in a law firm," says Nolan.
The firm's Columbus office now has 11 attorneys and is housed in the Huntington Center. Practice areas include government services, intellectual property and labor and employment. "We're a full-service firm, even though we don't have all of the practice areas here in Columbus yet. We focus on areas that strengthen the larger firm and give us opportunities in this market," says Nolan, a labor and employment attorney.
Firmwide, Barnes & Thornburg has more than 550 attorneys. In addition to Ohio, it has offices in Atlanta, Illinois, Indiana, Los Angeles, Michigan, Minnesota and Washington, D.C.
In the aftermath of a merger, clients should assess if the relationship is still a good fit for their business.
"The legacy of SZD is that we have the same people. The same lawyers who assisted clients on Dec. 31 were assisting them on Jan. 2. We continue those relationships," Davidson says. "I'm not sure clients care about the firm name or the number of offices. I think they care more about the quality of their legal services. They want lawyers who understand their business, and for that business to be conducted in timely fashion and be fairly priced."
Chester and Taft delivered news of the merger to their clients. "It was very important that clients heard about this from us, not the media. We're all aware that we're in the service business. The merger has not gotten in the way of meeting their legal needs," Johnson says.
Close says Wiles Boyle and Isaac Brant haven't heard much yet from clients, but he surmises they may be in a wait-and-see mode. "They're probably wondering what it means to them, but the reality is they'll be using the same attorneys then as now," he says. "I believe that clients hire John Doe at a firm, not that they hire the firm and are assigned John Doe. Law is a people business."
Lisa Hooker is a freelance writer.
Reprinted from the October 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.