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Law departments encounter issues with law firms that grow by merger

The larger the law firm, generally speaking, the more specialists it offers, the deeper its bench, the more it can invest in product and technology, the better the training and so forth – but all this capability comes at the cost of increased overhead and rates (See my post of Jan. 3, 2007 for data on this effect.).

Thomas Sager, DuPont’s chief litigation lawyer, reinforces this observation in Law Firm Inc., Vol. 5, March 2007 at 30. He notes that “surveys consistently show that larger law firms spend more on overhead on a per-lawyer basis than smaller firms. It’s a myth that [law firm] consolidation creates efficiencies.”

Sager goes further and criticizes law firm mergers because they erode firm culture. “At duPont, we have discovered that the larger the law firm becomes, the harder it is for the firm to service us as well as it has in the past.” Partners become strangers to each other, trust and connectedness decline, any individual client has less clout, and internal politics consume energy.

Worse, along with cost increases and culture loss, law firm mergers create conflicts. Sager again: “As more and more consolidations occur, the issue of conflicts becomes a virtual test of wills in the tug-of-war between our law department and the law firms seeking the waiver.”