Dentons Interested in "Dozens" of Mergers
A year after SNR Denton combined with Salans and FMC in the largest three-way law firm merger in history, Dentons' global heads tell us to expect more: whole-firm combinations are key to the firm's strategy.
They've got the whole world in their hands—or they'd like to. Dentons global chair Joe Andrew and Global CEO Elliott Portnoy say the basic premise of Dentons is to be the first polycentric law firm. To them, that means making whole-firm combinations to create offices that are "in and of the community" in which they're located. Joe and Elliott see this as "the only way to build a high-quality law firm at this inflection point," where clients say they're better off hiring a bigger firm, with more talent and expertise. We're not shy about being "interested in dozens of law firms here in the United States," says Elliott. The highly-reported overtures to Patton Boggs and McKenna Long happened to be public, but there are significantly more private talks ongoing.
Dentons has 5,312 employees—about half are lawyers. But it wants to be much larger. Elliott and Joe say its presence in the US legal market, the world's largest, is competitively undersized. They add that the US market is still basically regional in nature, with even the largest firms not in all top markets (Dentons is in 16). "We want to be a national firm. We want to be in all of the big markets in the United States," says Elliott. The firm is very focused on growing in DC, with its intersection of regulation, politics, policy, and business, and in newer, fast-growing markets, such as Orlando, Tampa, Minneapolis, Cincinnati, and Indianapolis. It's also targeting Atlanta, Boston, Denver, Houston, NY, and key California markets where the firm's presence is smaller than partners prefer. Its latest office globally opened in Cape Town last month, its twentieth in Africa.
Firm leadership is taking a page from the books of other industries—architecture, consulting, accounting, banking, engineering—where many of the top players have a presence in all 50 US markets. They all had an inflection point where clients decided to hire larger entities, Joe says. That's what he feels is happening in the legal industry. Firms with 300-700 lawyers mostly based in the US will face enormous challenges and declining demand. To grow its global presence, Dentons prefers combining with groups that are already in those countries rather than sending folks from the UK or US abroad (which "would be colonizing"). We snapped this photo in Joe's office.
The galvanizing idea is that "the biggest risk is to do nothing." At a time when many firms are cautious about growth, what keeps Dentons forging ahead is its defined vision and strategy (of which Joe's been the architect), which has been transparently communicated. "Law firm leadership teams that are multiple steps ahead of their partners find themselves getting into a little bit of trouble," says Elliott, but being a half-step or step ahead, guiding with a strong strategy, is appropriate. That makes all the difference when it comes to these significant opportunities (and there's been dramatic growth: legacy firm Sonnenschein had 800 lawyers just four years ago; Dentons is more than three times that size). Back in '08, the US partnership voted unanimously to add 100 lawyers from collapsing Thacher Proffitt. Most recently, it picked up nearly 50 new lawyers in Canada in a single move. None of their votes on mergers have had less than 98 percent agreement.
How have mergers done so far? They're evaluated on four attributes: attracting new clients, new matters from existing clients, new talent, and making a positive difference in its communities that but for the combination wouldn't have been possible. For Dentons' first year, the answer is "resoundingly positive." To mitigate having the three firms conform to one of the existing firm cultures, Dentons chose a fourth path with an approach of best practices.
We caught Joe and Elliott at a rare moment when they're together in the DC office. (In 2012, while building up to the combination, Joe spent 270 days outside of the US. Even now, they spend every other week outside the country—the firm has 79 offices in 52 countries—and three to four days a week on the road.) Before they were in these positions, Elliott was the youngest chairman in Sonnenschein's history and Joe was one of the youngest to be DNC National Chairman. Since then, they and their families have become friends, and both happen to have homes in Telluride. This summer, Joe's getting away to northern Spain and the French Alps for a week of biking 35-70 miles a day (with stops at vineyards). His wife, Anne Slaughter Andrew, recently finished her tenure as US Ambassador to Costa Rica; Elliott's wife, Estee Portnoy, is Michael Jordan's longtime business manager. We snapped a poster in Elliott's office from KEEN, a sports nonprofit he founded for children with disabilities, where he volunteered with his 10-year-old daughter this weekend.
The legal career track used to be considered a ladder—now it's a matrix. Changes in the industry impact hiring dramatically, Elliott says, altering both the attributes of a successful lawyer (a premium now placed on technology, entrepreneurial focus, and experience) and whether firms even need people to do certain jobs and functions. The old leverage model has been inverted, requiring firms to take a different approach to recruiting, development, training, and career advancement. More people are coming from diverse backgrounds, and there are more nonlawyers at law firms. In the future, getting a first-year associate job at a big law firm will be tougher, but the job will be more interesting and exciting as technology takes over some of the work of due diligence and discovery.
There's no avoiding the impact of technology, Joe says. "A handmade car does not run as well as one that is designed by hand but is manufactured with the most sophisticated new technology you have. And that's going to be exactly what the practice of law is like." As the newest of the large law firms, and one trying to do things a little differently, they see themselves as the challenger brand, "as Apple is to Microsoft, as Tesla is to Cadillac." It's inevitable that big global firms will get bigger, Joe adds, and the ones that'll be the winners will be polycentric, and "in and of" all of these different cultures. And that's the firm they're committed to building.