Pillsbury Merger at One Year In
Posted By Rob Millard - 0 Comments -
Thoughtful observers of large law firm mergers will be interested in Leigh Jones' article in Law.com's Large Law Firm about the Pillsbury Winthrop Shaw Pittman merger, one year in.
"One year after the merger, the firm is about 100 lawyers smaller, with an East Coast office shuttered and some strong players gone. Pillsbury's leader for the last eight years will step down at the end of this year, and profits per partner slumped in 2005, even though Pillsbury slashed its number of equity partners before the merger." (Although "slumped" is perhaps too strong a word for revenues down only $5000 per lawyer and profits per partner down from $780,000 to $760,000. Neither is overly surprising given the merger costs and disruption incurred in 2005.)
Mary Cranston, chairperson of the firm, says: "The marketplace is changing, and a lot of firms are unwilling to take a little discomfort." This is one of the quintessential challenges facing professional service firms in general and law firms in particular. Top fee earners are highly mobile and defections often do not take much, especially given the constant barrage of tempting headhunter calls that the good people get.
The result? Investment in the future tends only to be made where this is possible without reducing the magic "profits per partner" metric. This is a little bit like bourse-listed corporations only being measured on the basis of their quarterly earnings!
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