Why Ballard Spahr Will Merge Twice In Just Four Months
Ballard Spahr chair Mark Stewart. Courtesy photo.
In just one week, Ballard Spahr has announced two mergers that will expand the firm in terms of practice and sheer size.
Just Tuesday, the law firm announced that it’s taking in all 25 lawyers at the elite Levine Sullivan Koch & Schulz (LSKS), which has offices in cities like Philly and Washington D.C. The firm specializes in First Amendment cases and has represented media clients like the New York Times, the AP (in the Cosby trial), and NBCUniversal.
Last week, Ballard announced that it will join with Lindquist & Vennum, a Minneapolis-based firm known for its middle-market M&A and private equity deal making.
Once both mergers are completed, Ballard will have more than 675 lawyers in 15 offices across the country. This means that by the start of 2018, the firm will have effectively added 200 lawyers and expanded its capacity in media and entertainment law and its M&A and private equity group.
Do these consecutive mergers prove that law firms are facing more pressure to “get big or go home” (Saul Ewing recently announced a merger, too), or is the melding just business as usual? BizPhilly caught up with Ballard Spahr’s chair, Mark Stewart, to find out. Stewart also tells the hardest part about merging and what’s on the horizon for the Center City firm.
BizPhilly: There’s a perception that law firms must get bigger with mergers and acquire the clients of competitors in order to survive. Is this phenomenon real? If so, are Ballard’s recent mergers a result?
Stewart: That’s certainly a perspective that people have, that it looks like law firms need to be bigger so people are doing these acquisitions. But that certainly wasn’t the motivation behind doing the acquisitions. There was no real feeling that we needed to be bigger.
There is a sense out there that the landscape is changing, that the clients are changing the landscape. It’s true that client expectations of law firms are changing, and the relationship that clients want to have with law firms is changing a bit. One of the consequences of that change is that law firms like ours want to be able to have a broader and deeper relationship with their clients. So if there’s an area of expertise or practice that firms don’t have that is important to their clients, they want to be able to provide that expertise. To maintain relationships, you try to have as broad a base as possible. You either do that or you become specialized in one area and you try to sell that area to clients. But we’re more of a full-service firm.
BizPhilly: So with Lindquist, did you set out saying you want to expand your M&A practice?
Stewart: Yes. The Lindquist deal added an area of need for us in M&A and private equity. We see that area of the law picking up in this environment due to more deals. We have a very strong and deep litigation practice here and across the country. What we’re looking to do is add some strength in the business and finance area so it’s as strong as our litigation practice.
BizPhilly: Since the Lindquist deal is bringing in a significant amount of new lawyers — around 150 — can you talk about how “culture” fits into this arrangement?
It’s very difficult to translate culture and marketing advantage, but we try to do it and clients see how culture works to their benefit. With the Lindquist case, we worked with a search firm that we were using to help us grow in another area. The individual consultant we were working with knew about our needs and Lindquist’s needs and said we should talk. When we looked at them and they looked at us, there really was this common cultural language of things that were important to the firms. We talked about how we work together as lawyers in a collaborative way. For example, we don’t have lawyers fighting over client credit and you don’t see bickering within the firm. We have an incredible pro bono program and commitment to doing pro bono work across the country, and Lindquist has that too. We have over the past 5 to 6 years developed a commitment on diversity and inclusion. They have that. We see these things as benefits to the firms and to the clients in the same ways. That’s why it works.
BizPhilly: What’s been the hardest part about mergers for Ballard?
Stewart: The hardest part of our mergers is integration. You see the benefits when you’re having these negotiations. You see all this potential but then you have to do the hard work to reach that potential, and that’s hard for a lot of reasons.
It’s hard because lawyers are busy and they have their own client needs and some of this requires that they stop what they’re doing to go and learn what somebody else does. And it’s not that there’s any resistance to it. It’s that people are busy and you have to maintain a constant effort to get it done. Culture becomes so important in the success of our mergers because you can’t put two firms together that talk a different language when it comes to how to serve clients. With these mergers, we’re not expecting to see that obstacle. We’re all starting on the same page for the best interest of our clients. Then it’s about getting very busy attorneys to take the time to do the hard work of understanding what another person’s practice is.
BizPhilly: Can you speak on any previous Ballard mergers that illustrate this difficulty?
Stewart: We did a similar type thing when we acquired an IP boutique in Atlanta — Needle & Rosenberg. We had a modest IP practice, particularly in copyright and trademarks. This was a full scale IP firm. It was a major change for us. We acquired a group of lawyers who had major expertise in an area that we knew a bit about. But we didn’t know as much as they did, and it was a new city.
We went into that with everyone seeing all sorts of opportunities with our clients to try to bring IP work to them. And everybody came in with the best intentions, and it still took maybe two to two and a half years before we really saw the full benefits of it. Not because we weren’t working hard and not because lawyers didn’t have the best intentions. But look, clients already have lawyer relationships. People are busy and clients are busy. You want to take your new partner to see a new client, but sometimes you can’t book that meeting. It takes time. We went into that with the same culture, objectives, and understanding. But it was still hard work.
BizPhilly: As Ballard expands its services, what’s the firm’s biggest threat?
Stewart: The threat to Ballard isn’t any different than the threat to any other law firm. The risk to any professional services organization is that clients change their minds. Clients look for something else. They take work elsewhere. That’s the threat you wake up with everyday. But by the same token, it is a great opportunity for us knowing that clients are open to new relationships. When I wake up in the morning, I can either worry or see it as a great opportunity. I prefer to do the latter and wake up saying we will be able to take a new client today.
BizPhilly: Looking ahead, what’s next for the firm once the mergers are completed?
Stewart: These transactions are driven in large part by what clients are expecting, and one of the areas of significant growth for the firm right now is cyber security. We have a guy we brought in last year who was part of the U.S. Attorney’s Office in Delaware and also part of the Justice Department in Washington. He’s the national expert in cyber security and cyber terrorism. Fifteen years ago if you asked me, “What are your clients most worried about,” I would’ve said their intellectual property, that they’re worried about protecting it. Now if you ask me what most clients are worried about, it’s their privacy and the information that they have. We’ll be launching a blog on cyber stuff. That’s still an area of growth for us.
Overall, we’re looking at our practice and saying as a group, five years out, what’s coming in terms of client needs that we haven’t been thinking about? If you don’t take the time to actually think about it and prepare for it, you just might miss it.
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