Merger Mania?

Interesting story by Alana Roberts on the uptick in mergers, particularly at the midsize firm level:

As law firm merger activity has accelerated nationally, South Florida firms have gotten into the dealmaking.

Fort Lauderdale-based litigation firm Gordon Hargrove & James got together with San Francisco-based business law firm Sedgwick Detert Moran & Arnold after the latter firm targeted the Southeast for expansion.

Michael Tanenbaum, the Newark, N.J.-based chair of Sedgwick Detert, said its 12 offices provided it with coverage of the West, Southwest, Midwest and Northeast.

The South has become a major place of interest by law firms looking to merge.

The combination of Sedgwick and Gordon is one of 20 mergers around the country that are scheduled to close in the first quarter, and that number could grow to 25.

In recent South Florida activity, Coral Gables-based Adorno & Yoss grew by acquisition and recruiting to 300 attorneys, merging with Houston-based Monty Partners last September. In the same month, it acquired a seven-attorney group from Gordon Hargrove & James.

The 40-lawyer Katzman Garfinkel & Rosenbaum is the product of a June 2008 merger between Fort Lauderdale-based Katzman & Korr and Maitland-based Garfinkel Trial Group. The combined firm has since added an office in Las Vegas.

The Jan. 1 merger of the 400-lawyer Sedgwick firm with the 21-lawyer Gordon Hargrove & James firm offers the geographic presence the larger California firm was seeking.

“We believe and our clients have informed us, in order to provide comprehensive service to our clients, it was important we have an office in the Southeast,” Tanenbaum said. “We have been working with lawyers from Gordon Hargrove & James for a number of years for a number of different clients, so it was just one of those circumstances where there was a perfect match where we could provide benefit to them and they could provide benefit to us.”

A couple of observations -- South Florida is a notoriously bad place for larger national firms to establish offices, though there have been a few recent exceptions. It's uncertain whether the economic downturn will eventually force even those few exceptions to become closer to the rule. In the case of Gordon Hargrove, it seems to be more an issue of acquisition than merger, given the size dynamics.

Second, midsize mergers with firms from out of state present a different set of problems, including issues of personality, compensation, control and direction. There will also be a need to consolidate and streamline operations, which inevitably means some staffers, administrators and perhaps lawyers will have to be let go. I would expect a few lawyers to peel off at the initial stages, with more cuts after the consolidation becomes entrenched. We already saw some Gordon Hargrove lawyers bail out, no doubt aware of the acquisition talks and looking for a better fit or opportunity.

However it turns out, we wish them all well. Remember, in this economy one should be happy to have jobs, clients, and opportunities.

And cameras, diets, Gibsons, Bolero, windsurfing etc...

Oops -- sorry, I got ahead of myself.

It is Friday, you know.