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Elite Law Firm Mergers and Reputational Competition: Is Bigger Really Better? An International Comparison

Bruce E. Aronson-2007-05-01-SSRN Electronic Journal
11

TL;DRAbstract

Although rapid law firm growth has been with us since the 1980s, the acceleration of this trend over the last decade by means of mergers is puzzling. Why would normally conservative law firms embark on a merger strategy which appears to encompass significant risk and uncertain benefits? And is this trend a peculiarly American (or Anglo-American) phenomenon? Most of the popular explanations for law firm mergers focus on a single factor; law firms everywhere cite strikingly similar reasons based on a presumed client demand for one-stop shopping. This article contributes to providing a more robust, multi-causal explanation for law firm behavior through a comparative study of reputational competition among elite law firms in selected jurisdictions - the U.S., U.K., Germany, Australia and Japan. It posits that industry consolidation and changing market conditions have intensified law firm competition, and that since firm quality is hard to measure law firms compete largely on the basis of r

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Although rapid law firm growth has been with us since the 1980s, the acceleration of this trend over the last decade by means of mergers is puzzling. Why would normally conservative law firms embark on a merger strategy which appears to encompass significant risk and uncertain benefits? And is this trend a peculiarly American (or Anglo-American) phenomenon? Most of the popular explanations for law firm mergers focus on a single factor; law firms everywhere cite strikingly similar reasons based on a presumed client demand for one-stop shopping. This article contributes to providing a more robust, multi-causal explanation for law firm behavior through a comparative study of reputational competition among elite law firms in selected jurisdictions - the U.S., U.K., Germany, Australia and Japan. It posits that industry consolidation and changing market conditions have intensified law firm competition, and that since firm quality is hard to measure law firms compete largely on the basis of r

Keywords

Competition lawMergers and acquisitionsCompetition (biology)BusinessReputationConsolidation (business)Corporate lawPredatory pricing

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