In one of two combinations it announced Monday evening, global firm Dentons is entering the Pennsylvania legal market by absorbing Pittsburgh-based midsize firm Cohen & Grigsby.

Dentons is supercharging its ambitions for the United States, announcing combinations with Cohen & Grigsby and Midwest-based Bingham Greenebaum Doll as a starting point for its campaign to build what it calls the first "national" U.S. law firm.

Already the largest firm in the world, Dentons is adding over 300 attorneys with these two deals. The moves are the first salvos in a campaign the firm has dubbed "Operation Golden Spike"—named for the ceremonial 17.6-karat gold spike that tied together the Transcontinental Railroad in 1869.

Dentons' leaders point out that none of the 10 largest full-service firms in the country can boast a presence in all 20 of the largest U.S. markets—and they see an appetite for that kind of scale.

"Clients are seeking seamless service and one-stop shopping," said Dentons global CEO Elliott Portnoy. "They simply can't get that today in all of the markets that matter to their business in the U.S."

After growing dramatically across the globe since the firm was created in a 2013 three-way merger, Dentons has been open about its aspirations for the American market. The tie-ups with Bingham Greenebaum and Cohen & Grigsby mark just the first step. But when finalized in January, they will give Dentons roughly 1,100 attorneys in the U.S., more than all but 10 other firms.

Prior to the combination, Dentons had offices in 23 U.S. cities, part of an overall 181 offices in 73 countries. By combining with 176-lawyer Bingham Greenebaum and 140-plus attorney Cohen & Grigsby, the firm adds the former's offices in Indianapolis and Cincinnati and  Louisville and Lexington, Kentucky, and two smaller Indiana cities, along with the latter's offices in Pittsburgh and Harrisburg and Naples, Florida.

There's plenty more room to grow, the firm's top management contends.

"When you do that research, you see how law firms in the U.S. are comparably much smaller than law firms in virtually any other market in the world," said Dentons global chair Joe Andrew.

If Dentons were as large in America as the firm is in its U.K and the Middle East region, relative to the size of the legal market, it would have 2,274 U.S. lawyers. If it were as large here as it is in Canada, it would have 6,082 lawyers. And if its U.S. head count matched Dentons' China region, it would have 9,065 American lawyers.

Andrew made the case that clients, who are increasingly working with a smaller number of firms, are clamoring for more scale.

Dentons chairman Joe Andrew and CEO Elliott Portnoy Dentons chairman Joe Andrew (left) and CEO Elliott Portnoy. (Courtesy photo)

"If a client has to go to 10 law firms instead of one, you need to have significantly more people in house to manage that," he said.

That's part of why Zeughauser Group consultant Kent Zimmermann said he was "surprised" that no one has tried this sooner.

"The industry is consolidating rapidly and the drivers of that consolidation are becoming clearer," he said. "Law firms realize that with scale comes a higher profile, better known brand and reputation, more at bats for sought-after clients' matters, more resources to use to serve clients with evolving technology and to train lawyers as they come up through the ranks, and more resources also to attract and retain sought after lawyers."

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A Dual Partnership

The challenge is to land on a structure for expansion that works.

Bingham Greenebaum, Cohen & Grigsby and any future firms that join in Operation Golden Spike—two are talking with Dentons this week and four more before Thanksgiving, the firm says—will become part of a dual partnership model. Lawyers will remain part of their existing firms while also becoming partners of the new Dentons U.S. firm.

This is intended to avoid the fundamental problems with the two primary strategies law firms use to grow. Expanding via laterals is time-consuming and risky, and it can't capture the reputation that specific firms have established in their respective markets. Mergers are just as tricky to pull off, and when successful, they can sand away the cultural attributes that gave the firm a leg up on competing in a given marketplace.

Through 15 months of discussion with the leaders of Bingham Greenebaum and Cohen & Grigsby, the firm's leadership hit on a model that seeks to replicate the incentive structure of a traditional partnership, where all lawyers gain through sharing work with their colleagues.

"How do we replicate that system?" Andrew asked. "Everyone is the member of one partnership, when people are also part of different economic entities."

The economics are based on the premise that half of a firm's profit, or margin, derives from originating the work. When different firms under the Dentons U.S. umbrella share work, in a process that will be guided by the leaders of the firm's national practice groups, the firm that brought in the client will earn half the margin, while the firm handling the matter will earn the other half.

"On average, that's how all partnerships work," Andrew said. "By being overt about it, we're putting everyone in the position of trying to increase the margin."

That not only means growing the client relationship, but also striving to reduce costs. And firms like Cohen & Grigsby and Bingham Greenebaum who plug in will also realize savings on technology, insurance and administrative costs.

Bingham Greenebaum managing partner Toby McClamroch said the firm's analysis showed that for every dollar it moves to the national platform, it will ultimately save $1.20.

"With technology and process and data, there really are economies of scale," said professor of law William Henderson at Indiana University Maurer School of Law.

But achieving savings isn't the only selling point for regional firms that may have thus far been resistant to joining a larger enterprise.

"The model gives you the opportunity to continue to serve growing client needs while maintaining the legacy that you have today," said Cohen & Grigsby president and CEO Chris Carson.

His firm and others will be able to retain control over elements that have been traditionally part of their domain, like governance, compensation structure, leadership.

"The beauty of this proposal is that clients don't care about these things," McClamroch said.

What clients do care about is maintaining relationships with trusted counsel, and this makes it more possible to do so, even as businesses grow their reach beyond their initial geographic region.

"This is an opportunity for a lawyer to stay part of that journey and be the quarterback navigating the global landscape. That's the potential upside," Henderson said. "You can stay with your client as they continue to grow."

The firms that join will also retain their legacy names, at least for now. Cohen & Grigsby will rebrand as Dentons Cohen & Grigsby, while Bingham Greenebaum will become Dentons Bingham Greenebaum.

And if Dentons' rapid growth overseas offers any lesson, expect to see that name in front of more firms from all across the U.S.

"One of the really interesting things we've experienced together in the last 15 months is we learned that there are a very similar firms with a lot of talent all over the country that could really benefit from this kind of model," Carson said.

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