Globalization and technology are two separate, yet interconnected, elements central to the delivery of legal services. As cross and multi-border transactions, investigations, regulatory issues, and litigation become the norm, not the exception, several law firms are scaling rapidly in an attempt to meet client needs.
Some of the largest firms are engaged in an acquisition spree, seeking to differentiate themselves as “one-stop” global legal providers. This channels the global imprint and branding created by the Big Four accounting firms — whose service and product offerings extend well beyond accounting and include legal tasks. Dentons is outpacing the legal pack, at least in terms of the breathtaking increase in lawyer headcount, offices, and countries practicing under their brand.
Before considering some important questions raised by the recent Dentons spree, let’s quickly review its recent noteworthy moves. It’s not a “splash,” it’s a virtual tidal wave.
We begin in 2013 when the entity known as “Dentons” was created. Dentons emerged from a three way combination of Canadian-based Fraser Milner Casgrain LLP, Salans LLP in Europe, and SNR Denton which was, itself, the product of a 2010 cross-Atlantic merger.
Need a scorecard yet? We are just getting started …. During the current year — just entering the summer season — the pace and breadth of Dentons’ growth has accelerated and broadened.
It started in January when the firm engineered a merger with China’s largest legal practice, Dacheng Law Offices. This catapulted Dentons — the firm’s global brand name while Dacheng retains its own name in China — into the top spot as the world’s largest law firm by headcount, numbering about 6,600 lawyers and other professionals.
Dentons and Dacheng surmounted Chinese regulatory hurdles via a Swiss verein structure, an artifice which allows behemoths like Dentons, DLA, and other mega-firms (the BigFour are also Swiss vereins) to develop global brands while, at the same time, preserving their individual member firms’ names and regional identities. The Swiss verein goes well beyond regulatory hurdling and name retention; it also enables member firms to retain separate profit pools and accounting while sharing branding and global strategy.
Dentons and Dacheng surmounted Chinese regulatory hurdles via a Swiss verein structure.
If it seems like this permits firms to have it both ways, it does. The avoidance of client “confusion”— something ethics rules almost uniformly prohibit — is remedied by a fine print disclaimer that recites the brand’s Byzantine structure. But let’s return to chronicling Dentons latest moves before questioning their meaning and functional challenges.
This Spring, Dentons announced it “merged” with McKenna Long & Aldridge LLP, an Atlanta-based firm, enabling Dentons to expand its footprint in the U.S.
And just this week, the firm announced — this time in Palo Alto, California — that it is launching NextLaw Labs, described by BusinessWire as “a global collaborative innovation platform focused on developing, deploying, and investing in new technologies and processes to transform the practice of law around the world. “ Sound expansive and not particularly like a law firm?
Well, NextLaw Labs is an IT company and a wholly-owned subsidiary of Dentons. It describes itself as “a business accelerator focused on investing in, developing and deploying new technologies to transform the practice of law.” Presumably, NextLaw Labs is tasked with creating game-changing technology (noteworthy that the company’s CEO, Dan Jansen, stated that NextLaw Labs “is focused on one business vertical — the legal profession.”) whose initial user will be Dentons.
Dentons is clearly doubling down on the global law firm theme, and that applies to numbers (6,600 professionals), countries (50+), and offices (125). If breadth and depth count for something, Dentons is a good bet. Joseph Andrew, Dentons Global Chairman made clear that the firm is looking to garner a big chunk of the market, stating: “We compete with everyone. We compete with the largest law firms in the world and the smallest law firms.” Fair enough, but is the size differentiator sufficient to achieve success for the “we’ll take on the world” approach Dentons is taking?
Clearly, Dentons sees the challenge — and necessity — of integration. NextLaw Labs is no doubt an effort to shore up the IT piece of that integration. But what happens in the meantime? With all the different IT platforms in place coming from all its merged firms across the globe, how can Dentons drive efficiency, collaboration, and transparency? And that’s not to mention data security. It’s noteworthy that Dentons global chief legal officer has reported that Dacheng will not share client databases with its own “firm”, Dentons, unless it is necessary in specific cases. How are conflicts cleared and how is security maintained?
With all the different IT platforms in place coming from all its merged firms across the globe, how can Dentons drive efficiency, collaboration, and transparency?
Then there are practice and cultural integration challenges confronting Dentons, amplified by the rapid acquisition of so many firms from diverse parts of the globe — not to mention linguistic issues. Add to that the integration-retardant Swiss verein structure because remember: each “member” firm is its own profit center. One wonders how the firm’s partners and offices will function collaboratively with so many competing internal financial interests. Can Dentons create a culture where “the client comes first”? It’s one thing to say it, but there are many obstacles — internal and external — militating against it here.
Dentons provides a great litmus test for the global law firm, at least one borne of multiple merged firms, each of whom was built on a traditional legal model foundation. If that model is, itself, unsustainable, will putting it on steroids — as Dentons has done — restore it to sustainability? Or will a truly client-centric, collaborative, and integrated global law firm have to be built from scratch, at least as to its foundation which does not replicate the economic and cultural elements of traditional BigLaw?
Let’s see what happens to Dentons as well as watch for new entrants into the legal marketplace who launch with a different model.