San Diego-based law firm Gray Cary Ware & Freidenrich said yesterday it is negotiating a merger that could create one of the world’s largest law firms by the end of the year.
Baltimore-based Piper Rudnick, the nation’s 20th largest law firm, is seeking simultaneous mergers with Gray Cary and London-based DLA, deals that would combine firms with more than 3,100 lawyers.
“We are in serious talks with Piper Rudnick,” said Terry O’Malley, chairman and chief executive of the 380-attorney Gray Cary, San Diego’s largest locally based law firm.
Frank Burch Jr., Piper Rudnick’s managing partner, said his firm hopes to complete both mergers by Dec. 31.
“Although the mergers are separate, we have included Terry O’Malley and others from Gray Cary in our discussions with DLA,” Burch said. “We want to make sure everyone is comfortable with this.”
O’Malley said he is convinced that the evolution of the legal profession in the United States will result in about 20 megafirms over the next few years. Four years ago, only three U.S. law firms had more than 1,000 lawyers. By the end of 2003, that number totaled 13.
“We want to be one of those players,” O’Malley said. “We don’t want to get left behind.”
Gray Cary specializes in serving technology companies, such as Qualcomm and Invitrogen, but has clients as varied as Starbucks, Accredited Home Lenders and Jack in the Box.
Piper Rudnick has 975 lawyers, a strong East Coast operation and an office in Los Angeles with about 50 lawyers. Gray Cary doesn’t have a Los Angeles office, although O’Malley has made that a priority of his firm’s strategic plan.
DLA is the United Kingdom’s seventh-largest law firm, with 1,800 lawyers and offices in 24 countries.
If both mergers are completed, the resulting firm would include more than 3,100 lawyers, putting it with Baker & McKenzie and Clifford Chance as firms with more than 3,000 attorneys.
However, the leaders of two mid-sized law firms in San Diego say they are not eager to follow Gray Cary’s lead.
“A Citibank survey of American law firms noted an inverse relationship between profitability and size of law firms,” said Guy Halgren, managing partner of Sheppard, Mullin, Richter & Hampton, which has about 425 lawyers. “Just because you’re big doesn’t mean you will be more profitable.”
Halgren said mergers succeed when they meet the needs of clients.
“Anything you do in this business needs to be instigated by the clients,” he said. “So unless you’re inside Gray Cary and see that the clients need to have a law firm with offices around the country, it doesn’t make sense.”
Halgren said the Gray Cary/Piper Rudnick merger makes sense from a geographic perspective.
Luce, Forward, Hamilton & Scripps, San Diego’s second largest law firm, has been contacted by numerous merger suitors over the past year. Negotiations with one of those – the Seattle firm Preston Gates & Ellis – heated up, but Luce Forward managing partner Robert Bell said his 180-lawyer firm wants to continue to develop its California business.
