With one audacious stroke a year ago, Philadelphia's Morgan Lewis vaulted into the top ranks of global law firms.
Its acquisition of 500 lawyers and 250 staff from Bingham McCutchen in Boston made it the largest law firm in the United States, with more lawyers based domestically than any other firm. Among firms with global reach, Morgan ranked fifth, with offices spanning Europe, the Middle East, and Asia.
Yet, apart from the stunning numbers - more than 1,900 lawyers and annual revenue of $2 billion a year - no one could say how well it would work.
One year in, the integration of these two large legal machines has been running smoothly. The chair of the combined firm, Jami Wintz McKeon, said there have been only a few partner defections, something to be expected in a transaction as complex as this. The debt Morgan Lewis took on to finance the acquisition has been retired, and despite those costs, profitability will match last year's.
One important metric, increased work flow, also suggests the acquisition has been a plus.
Many potential clients who had turned down the firm in the past are giving it the go-ahead, McKeon said. "Now, we are actually winning that work," she said.
A major hurdle in any law firm combination is the process of integration, and Morgan approached that delicate task in the same systematic way it evaluated the acquisition. Each new Bingham lawyer was assigned a Morgan lawyer who served as a "buddy" to better explain Morgan's customs and practices. McKeon said the firm set aside "millions and millions" to pay for the integration process, and much of that has been spent shuttling lawyers among the firm's many offices to build a team mentality. (The precise financial terms of the acquisition were not disclosed.)
Meantime, the firm set up a website called "Integration Central" with key facts about the combination, such as offices and practices that now are available to lawyers in the combined firm.
Ward Bower, a principal of the Altman Weil legal consulting firm in Newtown Square, said he expected that the integration of the two firms would go smoothly because Morgan acquired many quality lawyers in the Bingham deal.
"It sounds like a lot of good lawyers came to Morgan and that Morgan was very selective," he said.
When the deal closed on Nov. 24, 2014, there was speculation in the legal press that Morgan's flat hierarchy and conservative management style wouldn't mesh well with Bingham, which was known for a recruiting approach that emphasized special deals and carve-outs for star lawyers. That style created dissension, and likely added to the financial woes that drove the firm into Morgan's arms.
The lack of partner defections would seem to suggest that the Morgan culture is prevailing. That culture discourages prima donnas. Lawyers are encouraged not to turn up their noses at work that pays less and is deemed not so sophisticated.
Some of the nation's biggest law firms years ago began dropping practices seen as less profitable and intellectually less demanding. But Morgan has taken a different approach. A core practice, labor and employment, fell out of favor with some big firms because it became intensely competitive and the work failed to fetch the highest billing rates. But Morgan hung in and now has the nation's dominant labor and employment team. That has generated work in other areas, McKeon said.
"As a marquee labor and employment firm, we are a destination firm for people who need help on matters that are critical to their business," McKeon said. "Once they know us, they turn to us for their sophisticated [mergers and acquisitions] deals.
"We are never going to be the firm where people say our rates are higher than everyone else. The question is [whether] you prefer to be a firm that handles a small number of things for a client and then you don't see them for a long time, or whether you aspire to be a place where people say, 'We go to Morgan for a wide variety of things.' "
McKeon is known for an indefatigable work ethic, and that drive that caused Morgan partners to elevate her to chair 13 months ago. Even with the added burden of the acquisition, it is doubtful McKeon could work much harder. But she said the nature of the work has changed. The past year has been all about integrating the Bingham attorneys into the Morgan firm, and that has brought its own satisfactions.
"To see this come to fruition, I have seen so many examples of that," she said. "For me, that is the best part."