Carlton Fields, Tampa's largest law firm and a pillar of the area's legal establishment for more than a century, has embraced a popular paradigm of the legal business: size matters.
To that end, Carlton Fields and boutique law firm Jorden Burt announced in October they had struck a deal to merge. The firms completed the merger on New Year's Day and initially will operate under the name Carlton Fields Jorden Burt. Terms of the deal were not were not disclosed.
Although growth was the primary objective of the merger, it wasn't the only consideration in the carefully executed deal. A closer look shows the firms complement each other in size, style and expertise.
Founded in 1901, Carlton Fields is the larger partner with 300 attorneys and government consultants. Jorden Burt dates back only to the late '80s and brings 70 attorneys to the combined firm, in addition to new offices in Washington, D.C., and Hartford, Conn. Carlton Fields already has offices in New York, Atlanta and six metro business centers in Florida.
Moreover, the firms have few overlapping client groups. Carlton Fields, for example, has long represented many large institutional clients in Florida, including energy, manufacturing and telecommunications companies.
But in the lucrative specialty of defending companies in national class-action lawsuits, Jorden Burt holds a clear lead: more than 300 cases over the last 15 years, compared with more than 100 cases over five years for Carlton Fields.
The consolidated firm will benefit from the extra fire power. “There's more (class-action) business than the firms could handle individually,'' says Carlton Fields CEO Gary Sasso.
Sasso saw the opportunity five years ago, when he raised the idea of a merger with Jorden Burt Managing Partner Jim Jorden. At the time, Jorden wasn't ready to pair up his successful specialty firm with a bigger partner. But three years later, the landscape had changed.
To compete, firms large and small need to offer clients more services, and many have sought acquisitions to help meet this need quickly. Law firm consolidations have sparked the rise of “megafirms'' with 1,000 attorneys or more.
According to legal consulting firm Altman Weil, law firms announced 58 mergers during the first eight months of 2013, up 41% from the same period a year earlier. Many big firms are still struggling to make up for business lost during the 2008 economic downturn and are counting on consolidation to drive revenue growth.
“If you're going to grow, you need to understand why,” says Sasso. “There's a bit of a panic in the legal profession.''
Feeling the shift in the industry, Jorden reached back out to Sasso, and the two began two years of behind-the-scenes preparations. Both say they had recently turned down offers to link up with bigger firms, but this merger felt right.
“We need enough size to handle complicated matters — in strength, depth and quality,'' says Sasso, who will direct the merged firm as chief executive. “We're growth-minded, but the devil is in the details.” Carlton Fields reported gross revenue of $168 million in 2012, up 3.5% from a year earlier.
Sasso and Jorden don't forsee Carlton Fields continuing to grow into megafirm size. A failure to integrate the firms top to bottom posed the biggest risk to a successful combination, says Sasso. Getting the two firms' IT systems to work together took an entire year. Just as importantly, the firms share similar values and cultures. Both encourage attorneys to collaborate on work. Both also try to select new partners from within the firm. “Ninety percent (of partners) are home-grown,'' says Jorden. “It's important to have a stable environment.''
Both firms have practices in high-stakes national class-action lawsuit defense. Carlton Fields specializes in health care, white-collar defense, government investigations and representation of the banking and financial services industry.
“We want to be limber, flexible and lean,” says Sasso. “But we also can also enhance our depth in both firms.”
Stakeholders in Jorden Burt will receive financial packages at least comparable to what they had before the merger, said Sasso. Staffers in duplicated positions also shouldn't worry about their jobs, he said. “Going into this, the objective is not to reduce costs by cutting staff.''
The new firm also won't seek out more business by moving into smaller markets or opening overseas offices, he said. The firm's Latin American clients can be serviced from its Miami office.
“We are very excited about this combination and look forward to working together to grow our respective practices and client relationships,'' said Jorden. “ We feel quite confident that this is the right decision and the right time.''