The unabated growth, diversification, consolidation and geographical sprawl of law firms has reached the point where they might better be called “legal service delivery engines” — huge machines designed to capitalize on economies of scale, global footprints, cross-border referrals, myriad offices and specialized practice groups and client service teams.
Because this consolidation trend ostensibly inures to clients’ advantage, it is certainly appropriate to ask whether the clients are aware of — or even very much care about — the underlying business structure of their outside vendors. In the U.S. and globally, “merger mania” continues, but now we’re seeing more interesting organizational twists. As our partner Ed Wesemann puts it, “Traditional mergers involved firms of differing sizes where the larger firm effectively acquired the smaller — the assets of the two firms were merged and a single partnership was created.”
But for firms now operating on the ever-expanding global stage, Ed notes, “The intricacies of multinational tax law and international money transfers, currency fluctuations, and unique law society regulations in different countries, makes it hard to operate a consolidated internal firm with a single profit pool.”
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