John Carney thinks a recent notable move of prominent banking partners from Latham to Milbank might signal that “debt financing for takeovers is about to take off,” just as it did when the same team moved from Skadden to Latham in 2004. This would also be consistent “with corporate cash piling up to record levels.”
It would be ironic if, after Latham took at 200-lawyer hit last year because of the end of the boom, it couldn’t capitalize on the upswing.
What interests me more than the transfer of business between firms is what this signals about the future of Big Law. As discussed in my Death of Big Law, takeover activity creates a demand for the sort of instant-access one-stop shopping that only big law provides. Beardslee, Nanda and Coates explain clients’ relationships with preferred-provider outside law firms as “legal capacity insurance.”
So would a big increase in m & a activity mean a rebirth of Big Law? It’s not clear.
I note in my paper that
[a]cquisition activity may be a threat as well as a boon to big law. Mergers and other restructuring, particularly in the financial services industry, can unsettle client relationships through management changes. Moreover, to the extent that restructuring involves disaggregation of firms, it can reduce the need for the sort of large, vertically integrated companies that need the services of the largest law firms.
I also wonder if the sort of outsourcing and technology I describe in my article has made one-stop-shopping less necessary even for takeover work. And billing is more constrained than it used to be. On the other hand, regulatory barriers have increased, so firms need more advice on takeovers than ever.
The bottom line is that the next wave of m & a activity, if it comes, may be an important test of my theory that Big Law really is dead rather than merely sleeping, waiting for the next big meal to come along.