In the latest instance of overseas expansion by an American law firm, Piper Rudnick LLP, one of Maryland's top firms, will form the third-largest legal group in the world as it merges with one of Britain's largest firms.
Piper, with about 1,000 lawyers and roots in Baltimore dating to the mid-19th century, is set to merge with DLA, the seventh-largest firm in Britain, on Jan. 1.
Principals from both firms voted to complete the merger yesterday, a Piper source said.
The resulting firm will be called DLA Piper Rudnick Gray Cary initially, with 2,462 lawyers, 49 offices in 18 countries and billings expected to reach $1.5 billion next year. It will become the third-largest in number of lawyers and fifth-largest in revenue.
It will rank behind Baker & McKenzie LLP of Chicago, the world's largest law firm with 3,053 lawyers in 2003, and Clifford Chance, a London-based law firm with 2,684 lawyers, according to The American Lawyer, an industry trade publication.
"I feel very confident about the future of the firm, and I am really excited about the potential," said Francis B. Burch Jr., co-chairman of Piper Rudnick, which has about 170 of its lawyers in Baltimore. "It is a little hard to comprehend, but the size of the revenue base and the number of lawyers are more of a consequence of the strategy than the end in themselves."
Burch said the transaction would not affect the Baltimore operation. The firm won't have a dominant headquarters, with administration split among Baltimore, Chicago, Washington and London.
U.S. law firms have been expanding overseas to follow their clients with global operations. But the trend has more typically been for U.S. firms to open satellite offices or form affiliations, and large-scale mergers between international firms have been few, industry experts said. Last summer, Piper Rudnick opened its first overseas office, in Paris, through an affiliation with Cariddi, Mee, RuM-i, a French firm.
Law firms "are growing because their clients are growing, not because they are so good," said Edward Poll, principal at LawBiz Management Co., a consultant in Venice, Calif. "In today's world, you have got a reason to grow, but the only reason to grow is because of your client base. The client needs you to be in other places."
Burch said Piper's expansion has been driven largely by its roster of clients who do business worldwide, which includes Citigroup, Lockheed Martin Corp., Hewlett-Packard Co., Kraft Foods Inc., Marriott International Inc. and McCormick & Co. Inc.
George J. Mitchell, the former U.S. senator from Maine who brokered Northern Ireland's Good Friday peace agreement in 1998 and is chairman of the board of the Walt Disney Co., will become chairman of the newly merged firm. Mitchell is a partner at Piper Rudnick in Washington.
Burch, who works out of Baltimore, will become co-chief executive along with Lee I. Miller, who currently is co-chairman in Chicago. Nigel Knowles, managing partner of DLA, will also become a co-chief executive. Burch and Miller will have responsibility for the United States and Western Hemisphere, and Knowles will oversee Europe and Asia.
Piper Rudnick began looking for an overseas merger partner about two years ago and has been in discussions with DLA about combining operations for the past year.
'No free lunch'
Fusing two distinct law firms, let alone legal cultures, won't be easy, experts said.
Coudert Brothers LLP, a firm founded in New York with offices around the world, has reportedly struggled after making two acquisitions in Germany in the late 1990s. In the past four years, nearly half of the firm's 75 lawyers have left, according to an article during the summer in The American Lawyer.
Other U.S. firms have opened offices overseas only to abandon them, said Thomas S. Clay, managing director of Altman Weil, Inc., a legal consulting firm outside of Philadelphia.
"They went into a market that they couldn't compete in, or they didn't understand it well," Clay said. "It is a very costly proposition. There are pitfalls in this."
Blending staffs even among U.S. firms is challenging, but bringing together different cultures makes it an even tougher proposition, Poll said.
"That is really difficult trying to take a European culture or an Asian culture and a firm culture and integrate that into the American law firm culture," Poll said. "It is not going to be easy, but they [law firms] are doing it, and some of them are doing it more successfully than others."
Burch said the firms have begun working to integrate operations. Lawyers from each firm have begun meeting clients together, he said. A chief administrative officer for the combined firm, who will work in Washington, has been selected and computer systems are being integrated, Burch said.
"There is no free lunch. In life, everything has its risks," Burch said. "We spent a lot of time thinking about this. This is not a snap decision, either the strategy or implementation."
Piper Rudnick itself is the product of a 1999 merger between Piper & Marbury of Baltimore and Rudnick & Wolfe of Chicago, which began in 1936. The first lawyer in what would become Piper & Marbury was Charles Marshall, who was admitted to the bar in Maryland in 1854 and was a great-nephew of U.S. Supreme Court Chief John Marshall.
Today's announcement comes about six weeks after Piper Rudnick said it would merge with Gray Cary Ware Freidenrich LLP, a California law firm with a large technology practice and 374 lawyers. That deal is also expected to close next month.
Clay, the consultant, said the merger should pay off if the enlarged firm can convince clients that it can provide new services and do it better than competitors. The firm will include global practices in litigation, real estate and government affairs.