Law firms looking to expand services turn to forging legal unions

By Bernadette Starzee
The Daily Record Newswire
 
LONG?ISLAND?— Clients demand more specialized expertise of their attorneys than ever, leading many law firms to go on a shopping spree for partners or entire firms to allow them to expand their offerings.

“We’re now in the era of specialization of law,” said Ralph Rosella, managing partner of Lazer Aptheker Rosella & Yedid.

He noted that commercial law firms “have become more sophisticated and are always looking to expand the services they provide.”

Meltzer, Lippe, Goldstein & Breitstone wants to add to its full-service offerings in a couple of key areas.

“We’re looking for land use and zoning, and I think the whole world is looking for healthcare,” said Managing Partner Lew Meltzer. “We’re probably a natural fit for a healthcare law firm because of our huge specialties in tax and labor and corporate and real estate; they all tie together. If I got a call from a land use or healthcare practice, I’d say, ‘Let’s meet later today.’”

At the start of 2015, the firm merged in Post Heymann & Koffler, a three-person firm with a corporate and real estate practice.

The deal “added to two of our strengths — corporate law and real estate — giving us more depth in both of those areas as well as new clients,” Meltzer said. “For instance, they represented several real estate investment trusts, which we did not, and we have the tax expertise piece that we were able to provide them with, which they were previously bringing in other firms for.”

Meltzer Lippe is currently in merger talks with a 15-lawyer firm in a “complementary field that would allow us to combine our existing strengths,” Meltzer said.
Mergers and acquisitions has been a strong trend this year for Rivkin Radler, according to Managing Partner Evan Krinick, who said the firm “will continue to be active in 2016.”

“We’ve strengthened at the partner level in some key areas — real estate, corporate and intellectual property — and we acquired Ullman, Shapiro & Ullman, with an FDA and nutraceutical practice, a new area for us,” Krinick said. “We saw an opportunity for synergy with our healthcare practice — to bring in FDA expertise to expand the services we provide in the healthcare and pharmaceutical arena.”

Going forward, Rivkin Radler is interested in adding depth to its real estate, tax and corporate practices.

“Everyone has the same issue,” Rosella said. “If you’re a full-service commercial law firm and you’re good lawyers and want to provide proper service, you have to be able to handle the variation of issues that come up within a transaction or litigation.”

For instance, environmental issues often arise in commercial real estate transactions.

“Clients will expect us to deal with it,” Rosella said. “We don’t want to have to go out and find that piece. When you have it in-house, you have more control over it – you can tell the attorney it has to be done this afternoon, and the attorney is accustomed to our client base. It works more smoothly that way and is more profitable for the firm” than going out of house.

If Rosella Aptheker were to hire an environmental lawyer, it probably wouldn’t have enough work for him or her on day one.

But if the firm were to acquire a boutique environmental firm, “the firm would bring its own accounts, and through synergy we could make it a bigger practice,” Rosella said.

In addition to environmental law, the firm is looking to supplement its core practice areas with greater depth in corporate tax and certain types of intellectual property expertise.

Geographic expansion is also on the agenda for many larger firms.

Rivkin Radler doubled its team in Hackensack, N.J., in the past year, to about 13 attorneys and took larger space in Manhattan in anticipation of adding talent.

“We view ourselves as a regional law firm, and by expanding our depth in various parts of the region it enhances our ability to serve clients on a regional basis,” Krinick said. “Our client base is throughout the region, in New York, New Jersey and Connecticut, and we can service our clients more readily with a variety of offices and by adding depth to those offices.”

Rosella Aptheker opened an office in Manhattan this year and Meltzer Lippe is focused on growing its city office — “probably by combining existing practices more than just hiring new lawyers,” Meltzer said.

“What’s clear is, if you can establish yourself as quality and then deliver work to city-based clients at Long Island prices, that’s a magic formula,” he said. “In the last year, I heard many stories about big companies using lawyers all over the country to avoid New York City prices. Anywhere from $700, $800 up to $1,000 an hour is the norm in Manhattan.”

Bond, Schoeneck & King, a full-service law firm with nine offices statewide, including Garden City, recently acquired Buffalo firm Jaeckle Fleischmann & Mugel.

The deal, which will be effective at the start of this year, will make Bond’s Buffalo office one of the largest law offices in that city.

The firm currently has 230 lawyers in New York, Florida and Kansas, including 14 in Garden City.

The recent acquisition is part of an “overall strategic plan to become more of a regional firm,” said Bernard Kennedy, co-managing member of the Garden City office.

“We had a small office in Buffalo, and it’s hard to grow a small office organically. It’s difficult to realize strategic goals without making mergers and acquisitions. We want to be able to service clients all around the state and ultimately the region. Acquiring firms in strategic areas gives you boots on the ground so you can do that.”
Finding the right merger partner can be tricky, however.

“It almost has to fall in your lap,” Meltzer said. “You can say you’re looking, but I think it’s half luck.”

Krinick has found there is a lot of interest among boutique law firms in joining forces with a larger firm.

“Most of the people that we’ve chatted with are people we know,” he said. “We have relationships through cases we’ve handled together; we already have an appreciation for them as attorneys and people.”

Joining a larger firm allows a small firm to service its existing clients in a more complete way, Kennedy said.

“From a small firm’s perspective, running a practice takes a lot of effort,” Rosella said. “If they have one or two lawyers they don’t have a back-up, and there’s the whole administrative piece. They’re very profitable because there’s less overhead — they like it from the money point of view, but it’s very wearing. We can take over all their administrative work and provide personnel support. It’s easier for us to hire – I can pay a better salary and hire people out of law school every year and have a stockpile of talent whenever they need it. As they get older, the attorneys can slow down at a reasonable pace and enjoy their senior years in practice.”

However, he added, “Some firms are looking for an answer because they’re struggling financially —you have to be careful.”

Though aging firm partners often look to join a larger firm as an exit strategy, that scenario isn’t necessarily attractive to Meltzer.

“Between five and 10 years ago we brought in several older practitioners looking for exit strategies and it worked out pretty well,” Meltzer said. “But we’re generally not thrilled if something is presented to us as someone looking for an exit strategy. People are expecting to be bought out, and they’re not going to be there for a long time to make it work. We don’t want to be an exit vehicle. If someone is looking to ease off, we’re not going to take the risk that their practice eases off with them and wind up buying something that evaporates.”

It’s preferable to join forces with a growing firm that is complementary.

“Let’s say it’s a firm that does labor and employment work,” Meltzer said. “We have a large labor and employment practice, and by joining us, to put it in retail terms, they now get more things that they can sell.”

Meltzer Lippe has just under 60 lawyers.

“We’re the biggest we’ve ever been, and we think we’ll keep growing through mergers and hiring people in practice areas where we are somewhat limited,” Meltzer said.