We're Merging Because We Can

"You ain't seen nothing yet?"  That's our instinctive reaction to the news over the weekend that Boston's Ropes & Gray may be about to acquire the venerable New York IP shop, Fish & Neave.  Fish & Neave would be only the most recent of a string of IP-specialist shops (Pennie & Edmonds, Lyon & Lyon, Skjerven-Morrill) to fold.   I would resist the temptation to generalize about the viability of IP firms, however:  Fish & Neave's difficulties—shedding partners, rumored office closings, etc.—are its alone, albeit compounded by a self-inflicted bastard cash/accrual accounting system that recorded expenses when incurred but only recognized income when received.  Fish & Neave was on the verge of facing a run-on-the-bank syndrome of cascading partner defections, so this merger looks less strategic than opportunistic.

This rumored deal pales, of course, next to the Baker & McKenzie/Clifford-Chance size whopper that would be created if Piper-Rudnick mergers with Gray-Cary and if Piper's simultaneous merger talks with London-based DLA achieve fruition.  The rationale for this?

Scratching our heads for the time being, we'll take Piper's statement at face value, that they want to get bigger on the West Coast and internationally.  Does this sound to you like, "We want to get bigger because we want to get bigger?"  Yeah, me too.  At least in corporate-land (think the notorious HP/Compaq deal, or Bank of America/Fleet, or JP Morgan/Chase), CEO's say it's all about synergies and cost-savings.  And sometimes, as in the Wilmer-Cutler/Hale & Dorr deal, law firm managing partners and executive directors make similar noises with at least a passing acquaintance with plausibility.  But what could be driving Piper's remarkable two-front-war ambitions?

• Clients clamoring for it?  None that have been mentioned.
• Profits-per-partner needing a boost?  Not admitted, not claimed.
• Cultural similarities causing them to fall in love?  Only if you believe the melting pot is at full rolling boil.

So I'll tell you my pet theory:  Merging is popular because it's popular.  According to Hildebrandt, there were 30 notable law firm mergers in all of 2003, and so far in 2004 36 have been announced. 

"The train is leaving the station," however, begs the question whether it's headed for a destination you've selected with more than a moment's thought.