Business of Law

Law Firm Mergers Help Push Unwanted Partners Out the Door, Recruiter Says

There’s a reason for the partner exodus as midsize or regional law firms merge with larger, more stable law firms, according to one observer.

Legal recruiter Larry Watanabe of Watanabe & Nason tells the Daily Journal (sub. req.) that the merger allows the smaller firms to pave the way for the ouster of partners without enough business.

The merger “allows the law firm itself to weed out people they didn’t want to weed out on their own,” Watanabe said. The smaller law firm maintains that everyone gets to stay on board after the merger, but unwanted partners are offered “lousy deals to come on over,” he said.

Several recent tie-ups were veiled acquisitions of the smaller firms rather than “classic mergers,” Watanabe told the Daily Journal. The larger firms want to acquire specific groups of partners, he maintained.

Sometimes the layoffs happen ahead of time, as midsize firms shore up their financial picture before looking for suitors, according to Altman Weil legal consultant Bill Brennan. He told the Daily Journal he’s getting more business from midsize firms hoping to merge with larger entities. “It’s because their clients are disappearing,” Brennan said. “More and more industries are consolidating.”

Related coverage: “In Buyer’s Market for Clients, More Law Firms Face Choice: Merge or Die”

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