The merger between Morgan Lewis & Bockius and Bingham McCutchen has been placed Jami Wintz McKeon as a powerful lady in the law. Already chairing Morgan Lewis and acting as the woman heading the largest law firm in the US, she now rides shotgun on the merged firm which was described by Philly.com as a kind of ‘law firm Dawinism’.
Big Law has done it tough in recent years – certainly since the global financial crisis.
But with the announcement last week that Morgan Lewis & Bockius L.L.P. is to to acquire much of Boston-based Bingham McCutchen it also paints a new picture of some firms in the new age of tighter law budgets and higher competition
As Philly.com reports, when the deal closes at the end of the month, Morgan Lewis will vault into the very top ranks of global law firms, a first for a firm based in Philadelphia.
Morgan Lewis projects the combined firm will have revenues of about $2 billion a year and nearly 2,000 lawyers, putting it in the top five based on rankings compiled by the American Lawyer magazine. At the top is the global law firm DLA Piper at $2.5 billion, followed by Baker & McKenzie of Chicago at $2.4 billion.
“Big Law is not over for some firms,” said law-firm consultant Robert Denney of Wayne. “But there are some firms that are having more trouble than they would like to admit.”
Put Bingham McCutchen in that category. People familiar with the transaction say the firm’s trouble became apparent in 2012 when it sustained a 12.6 percent decline in revenue. Partner defections followed, and that, accompanied by debt, weakened the firm’s financial underpinnings. As a consequence, it considered filing for bankruptcy if the deal with Morgan Lewis did not go through.
A seemingly chaotic compensation system in which high-profile hires were given lucrative, multiyear contracts further undermined the Boston firm. After the pullback in the legal market, such contracts were a strategy employed by many firms. The idea is to recruit lawyers with large books of business to boost a firm’s finances. But the contracts caused dissension among partners who didn’t have them.
Morgan Lewis, which has about 300 lawyers in Center City and about 1,400 lawyers worldwide, was well-positioned to do the deal for the opposite reasons.
It traditionally has avoided debt and has been very careful about costs. It avoids lavish lease deals and special partner perks, and emphasizes a flat hierarchy. When the crash came, the firm decided not to recruit an incoming group of summer interns in 2010, a belt-tightening step that both caught the attention of the legal industry and shocked law schools that had counted on Morgan Lewis as an employment market for young graduates.
Because the deal has yet to close, the Morgan Lewis leadership has declined to comment on the combination of the two firms.
But people with knowledge of the deal say a key element was receiving commitments from 227 of Bingham’s 300-plus partners to join Morgan Lewis and remain there for several years. As an inducement to Bingham McCutchen partners with substantial books of business, Morgan Lewis has agreed to pick up some Bingham liabilities, such as office lease costs. But to make that work, Morgan Lewis insisted a critical mass of Bingham partners stay at Morgan Lewis for a minimum period to ensure adequate revenue to cover the cost of the transaction.
Read more at http://www.philly.com/philly/business/20141116_Morgan_Lewis_acquires_Boston_s_Bingham_McCutchen.html#fQoD7jEIXzT885XO.99
