The Altman Weil consulting firm reported that there were 60 law-firm mergers and acquisitions announced in the U.S. in 2011, up 54 percent from 2010 and marking the highest level since 2008.
Three of the biggest deals were in the final quarter of the year, and Altman stated that "the pace of mergers could accelerate in 2012." Obviously, all the travail of the Great Recession did not convince firms that getting bigger at all costs was a bad idea.
Yet the question remains: Is bigger always better for clients? Often clients may not be better served if the expected economies of scale and enhanced collaboration of a merger do not materialize. And if they don't, where should clients turn?
Clients of smaller firms typically expect to receive more personal service as the attractive trade-off to a large firm's massive reach. But even in a small firm, that rapport does not happen automatically. To accentuate this most attractive positive, the small firm must:
- increasingly adopt technology to reduce the costs of its operations. A major undertaking at a large firm, these updates can be done at minimal expense at smaller firms and solos, while making the same positive impression on the client. Have no fear and take the technological initiative; adapt now or pay later.
- forget the big fish and focus on small to mid-size businesses and individual issues. What the 99 percent lack in financial girth, they make up for in perpetual numbers. They will always be there in droves, as long as people need the legal system to dispense justice.
Bigger firms may have the resources to handle more client business, but smaller firms can overcome that size disadvantage by a fundamental commitment to understand even the client's most minute needs and wants, and provide their services accordingly.
Big law firms are not inevitable. Look at another time of massive change, the 1960s, when companies like IT&T and Gulf & Western faltered because they became too large to operate. They had to break up; the survivors had to develop new customer bases in order to start growing again.
The same thing could happen in the future legal community. Big law firms could well falter (like many did in the Great Recession), as technology better enables sole practitioners and small firms to meet the needs of "the 99 percent," the consumer-oriented clients and small companies.
The work is there for those firms that have the cost flexibility and technology to be competitive.