The geography of the law is being rewritten by the brutal gravity of the Mega-Firm.
For decades, the legal market was protected by a moat of relationships. A regional company in Nashville or Denver hired a regional firm because they played golf at the same club. The rates were reasonable. The service was personal.
That era is evaporating.
As Mega-Firms invade secondary markets – planting flags in Austin, Miami, and Salt Lake City – the assumption was that they would struggle to compete with the lower cost structures of incumbent regional firms.
The opposite is happening.
Mega-Firms are not competing on price. They are competing on Skill, Reputation, and Victory.
When a national powerhouse enters a new market, they offer something the local “white shoe” firm cannot: The absolute assurance of the elite brand. Local and regional companies are realizing that in an increasingly litigious and globalized environment, the cost of a lawyer is a rounding error compared to the cost of losing the deal or the case.
Here is the stark reality of why regional companies are bypassing their old friends to hire Mega-Firms.
Corporate General Counsel live in a state of existential risk. Mega-Firms are not just selling legal services; they are selling job security for the General Counsel. They are the ultimate insurance policy. In the adversarial system, reputation is leverage. When a regional company hires a global giant, they are sending a psychological missile to the other side of the table.
Mega-Firms firms also carry a reputation that is “fearsome.” When opposing counsel sees a Kirkland or a Quinn Emanuel on the docket, the calculus changes. They know the opposition has infinite resources and a bench of experts that runs deep. Simultaneously, there is an element of “High Quality Trust.” Opposing counsel knows that a Mega-Firm understands the unwritten rules of the game. They can be trusted to deliver – even when they are pushing hard. This reputation greases the wheels of settlement and negotiation in a way that an unknown local entity cannot.
In addition, business is no longer local. Even mid-sized regional companies now have supply chains in Asia, investors in London, and IP concerns in China. The local firm might be excellent at state contract law, but they lack international offices and relationships. As business becomes globalized, the need for a “One-Stop Shop” becomes critical. Mega-Firms offer a synchronized machine. They provide the M&A partner in New York, the regulatory expert in D.C., and the labor specialist in Europe. Regional companies are trading the intimacy of the local partner for the vast utility of the global network.
Local firms will continue to exist, but they are being pushed into the commodity tier. For the regional company facing a crisis or a transformative deal, the checkbook is open. They are not looking for a bargain. They are looking for a win. And in the current legal economy, the market believes that winning has a brand name.