Note to myself for an article from the Economist about vereins of law firms.
Mergers between large law firms has not been fruitful. Even it seems still hard to see synergetic outcome. Report on April 2014 highlighted disappointing performance in 2013 of 'six giant alternatives'. America's top 15 firms by revenue have been created by mergers in past decade. But their profit per partner (ppp) has fell by 8.2% in spite of 2.7% rise in rest of 94 in top 100 law firms in the country.
Norton Rose Fulbright and Dentons born last year in mergers faced difficulty as the profitability has been dragged down by foreign firms with far less lucrative. This is clear reason for the above fall of ppp. But big advantage of global alliances is far to materialise.
Vereins can't attribute their under performance to global dilution. White & Case which is not verein achieved their ppp of $1.9m despite 58% of revenues are abroad while DLA Piper which is most profitable verein barely had $1.3m. It appears that size of vereins is not driving factor for their business in terms of economies of scale. Most profitable strong lawyers are half size of vereins DLA Pipers and Baker Mckenzie.
An explanation of such disappointing outcome is that most of joiners in the alliances doesn't have leadership but they are interested in becoming a part of global giant. But a boss of one of revreins says there is no magic to be profitable from beginning and it's not the structure but they should be in the market where there are clients who are prepared to pay to them.
Some vereins' doubters reckon that the compensation system discourages lawyers from collaborating across the countires. Refer work are already in different profit pool. The reward has been already drawn. When the more alignment in the remuneration system are made, there are greater chances to provide wider services to the client.
Most of lawyers in verein says they have been seamlessly integrated but their rival vereins are merely operating 'franchise model'. This is simply wrong.