Minneapolis lawyers may look back on Jan. 4, 2016, as the tipping point for the legal profession — when it changed from one dominated by venerable local firms to one dominated by new names like Fox Rothschild or DLA Piper. History may show that the tipping point was earlier, but that’s how it felt when Oppenheimer Wolff & Donnelly, originally founded in 1886 in St. Paul, became Fox Rothschild.
The latest in a long series of national firms merging with local firms or setting up shop here and hiring local lawyers felt like the practice of law in Minneapolis was markedly different and like it was going to stay that way.
“People are going to be taking meetings,” said Brad Keil, who was Oppenheimer’s managing partner and now is a Fox partner. “I don’t know if law firms have a unique set of problems in this town but they seem more magnified, more acute,” he said. “The stakes are so much higher.”
Which is a sophisticated way of saying, “It’s the economy, stupid.”
Economy means not only the costs of practicing law but also the evolution of business’s national, international and global reach, attorneys say.
This is the future, said Mark Silow, managing partner at Fox Rothschild. The change in law firms will be a norm, not a trend, “and then you go on,” he said. Firms have to have a bigger platform for clients who increasingly want to hire expert lawyers instead of law firms, and technology has provided economies of scale that make national or international practices feasible, he said.
Last year saw a record 91 mergers in the United States, reported the Altman Weil MergerLine. Twenty-three percent of those were in the Midwest, mostly in Illinois.
Citi Private Bank and Hildebrandt Consulting issued a report in 2015 about the present “hypercompetitive” legal market that is forcing law firms to rethink how they deliver legal services.
“The firms that outperform the rest of the industry will likely be those that successfully pursue dual strategies of growth and operational efficiency, while at all times staying attuned to the changing needs of their clients and broader target market. Firms also recognize that they will need to adapt their culture to respond to client demands and to retain key talent,” it said.
But it also warned that “overall industry revenue and profitability growth rates in both 2015 and 2016 [likely will] be in line with the low single-digit growth rates of 2010-13, with continued dispersion and volatility.”
In other words, game on.
A merger, not an acquisition
Fox Rothschild and Oppenheimer got together on a kind of blind date, Silow said. It was no secret that Oppenheimer had been playing the field for a while. A merger with Lindquist & Vennum came close but collapsed in light of a client conflict. After that, Keil was chatting with Minneapolis attorney Joe Anthony, who has been friends with Fox Rothschild co-chair Abraham Reich for a long time. Anthony suggested to Reich that the two firms might make a good couple.
Keil said they started off as friends and took the relationship slowly to let it build. “They’ve done a lot of deals, they are good at it, they have good sense of when to push and when to back off,” he said.
But it only took about six months after talks started in June 2015 to close. “That’s about the right amount of time. It felt like the right pace,” Silow said.
Fox had a lot to offer, Keil said. Importantly, unlike other firms Oppenheimer considered, Fox offered the local offices autonomy for their own objectives, he said. That’s why the result was a merger and not an acquisition, he said.
Additionally, Oppenheimer was well-known for representing the medical device industry, and that was attractive to Fox, Keil said. It was critical to Oppenheimer that it keep its clients while attracting more, he said. It also did not want to have to significantly increase its hourly rates, he said.
At the same time, Fox is not coy about its plans to expand the Minneapolis office. Silow said they like the people at Oppenheimer, they like the Minneapolis market and they find the practice areas very compatible. “We are focused on growing that office,” he said.
Keil said the firm will be looking at the lateral partner market and invited all partners interested in making a move to dust off their resumes. “I’ll have coffee with anybody,” he said.
Many will find the firm fiscally attractive. It has a March 31 fiscal year, and last year did $334 million in revenue. “We’re pretty proud of that even by East Coast standards,” Silow said. And that growth wasn’t just about adding lawyers — revenue per lawyer also grew, he said. Generally speaking, partners bill between $400 and $700 per hour, he said.
But Silow and Keil both emphasized that the firm culture is also very important. Silow described the culture as democratic, transparent, operating by consensus and following a “no jerk” rule. Keil and Silow agreed that the firm is committed to diversity, and Fox already had in place a women’s initiative designed to foster the retention and advancement of women.
Keil said that the merger and how it came to life illustrates the importance of relationships in the profession. The challenge for the Minneapolis lawyers is that it is now part of an organization that wants that office to grow, he said.
“This is a blocking and tackling business. Everybody understands that this might position us for greater success but we’ve got to do the work now.”
There is one sad element to the story and that is that the Oppenheimer Wolff & Donnelly name is no more. “It’s no more. It tugged at our hearts. We’re sad about it but a lot of people put us in a position to seize this opportunity,” Keil said.
Lateral partner hiring must be strategic
Fox Rothschild, which just merged with Oppenheimer Wolff & Donnelly, has clearly stated that it plans to grown through lateral partner moves.
Jodi Standke, president of the talent management firm Talon Performance, said, “Most of the firms that come into town say the same thing, and it hasn’t worked, because they don’t go about it in a strategic way.”
It isn’t enough to have a well-known name or a lot of friends to recruit, she said. The firm has to have a plan that considers why it is opening a Minnesota office, what kind of business will support the firm as a whole, who practices in those areas, who might it want and what can it offer.
Firms that don’t want to lose their partners should have a plan as well, Standke said. Many Generation X lawyers feel that they are bumping into ceilings and their opportunities are limited, she said.
“The firms who are interested in retention should evaluate who and what the firm is, the compensation system and whether it is supporting and promoting the next generation of leaders. Those are the questions if they want to retain their top talent,” Standke said.