Pittsburgh. Credit: Getty Images/iStockphoto

The largest law firm in the world is setting up shop in Pittsburgh, and it sees big potential in the midmarket city.

Dentons officially kicked off its U.S. expansion strategy Monday evening, announcing its plans to combine with Pittsburgh-based Cohen & Grigsby as well as Midwest-based Bingham Greenebaum Doll. The Pittsburgh firm will rebrand as Dentons Cohen & Grigsby.

"Pittsburgh is a market we know well because it's a priority market for our clients," Elliott Portnoy said in an interview Tuesday. "They've identified Pittsburgh as a market where there's outstanding legal talent and a market where they have significant business needs."

Portnoy said Dentons and Cohen & Grigsby had a number of shared clients in the financial institutions, technology and health care sectors. He said his firm first approached Cohen & Grigsby about 15 months ago, and that it was Dentons' "first choice" of expansion partner in Pittsburgh.

Portnoy added that Dentons has reached out to other Pennsylvania firms, and was on the receiving end of inquiries by other firms in the state.

"It is striking to us that there are a number of legal markets in the state of Pennsylvania, including Philadelphia, that really don't have a significant global law firm presence and we think that's a missed opportunity," Portnoy said.

Chris Carson, Cohen & Grigsby's president and CEO, said his firm worked on its strategy throughout 2015 and 2016 and was not out looking for a merger partner. In fact, he mentioned, Cohen & Grigsby turned down a few merger offers in recent years. But the unique combination structure Dentons offered was compelling, he said.

While Cohen & Grigsby, Bingham Greenebaum and others that may combine with Dentons will now wear the international firm's brand in addition to their own, they will still maintain influence over day-to-day operations in their local markets. Portnoy said the regional firms will maintain control over billing rates, compensation structure and governance.

Carson said that allows his firm to have the resources of an international firm, including its bench strength and technological capabilities, "without giving up the heritage of who we are."

He also noted that client needs were a major consideration. The combination, Carson said, gives his team the ability to "flex up and flex down" as needed when demand is high, and to keep matters in other jurisdictions rather than referring them to other firms.

A 'Vibrant Market'

As for Pittsburgh, Carson said Dentons' interest in the market is reflective of its evolution over time.

"There is a broad recognition of how Pittsburgh has changed in the last 30 to 40 years, what a resurgence it's made from a talent perspective," Carson said.

Others in the Pittsburgh legal market echoed that idea.

"There are opportunities—and an influx of talent—not just in the legal industry, but in a variety of areas like technology, education, health care, and energy. Dentons, like Google, Uber, and Facebook, sees the potential," David B. White, a founding member and executive committee member at Pittsburgh-based Burns White, said in an email interview.

White said Dentons' move into the city will likely generate interest among other large firms, "but we've seen this happen over the years. Firms have come and gone. Some are successful and some are not."

Donald Bluedorn, managing shareholder of Pittsburgh-based midsize firm Babst, Calland, Clements and Zomnir, said he's not surprised that another full-service, international firm has an interest in Pittsburgh.

"Pittsburgh is, I think, a growing, vibrant market," he said. "I don't think we'll see a flood of other firms coming into Pittsburgh. But I think we will continue to see some of those national full-service firms look for opportunities to establish a footprint here."

Bluedorn also said he wouldn't be shocked if other Pittsburgh-based firms were intrigued by the idea of merging with an entity like Dentons. He noted that he is friendly with a number of lawyers at Cohen & Grigsby, and hopes the move works out well for them.

"For some people a merger like that is a way to solve some problems. In that sense, for some other firms that may be attractive," he said, generally.

However, Bluedorn said he would not be interested in becoming part of an international firm.

"We're really looking for those client- or market-driven opportunities where we get growth in multiple dimensions, multiple connections within the firm," he said. And in terms of competition, he said, he's not worried.

"There will be people [to whom] it undoubtedly will be a threat," he said. "For us it's really more of an opportunity because we can distinguish ourselves" from larger firms.

Likewise, White said Burns White feels no pressure to become part of an international operation.

"We have worked hard to build a business on our reputation and personal relationships in targeted markets. When a firm becomes part of a larger, global entity, it risks the ability to maintain a unified culture. Any expansion that we've undertaken over the years has been strategic, with minimal disruption to our firm's culture, and this has been a successful approach for us," White said.

Pittsburgh-area legal recruiter Lori Carpenter said Dentons' expansion plan is "an interesting concept," especially with regard to the infrastructure and technology the larger firm can provide to Cohen & Grigsby's lawyers. But she's curious as to what it means for existing partners of the acquired firms and their clients, particularly in terms of conflicts.

Portnoy said the structure of these combinations does not eliminate the potential for conflicts, as Dentons will operate "as a single law firm" from a client-facing perspective. But in choosing which firms to approach, he said, Dentons has been careful to avoid creating conflicts issues.

Carpenter also noted that one of the ways Cohen & Grigsby attracted lateral hires was by not being a Big Law firm like some of the other locally founded firms have become.

"Their whole draw was drawing in people from K&L Gates and Reed Smith, who didn't want to be part of a large firm," she said.

Carson said that won't be any different post-merger.

"We think we can still go to market in recruiting with that same strategy. It actually helps us because the [Dentons] name recognition is so strong," he said.

He said the governance model allows Cohen & Grigsby to maintain its community ties, rather than being part of a "colonial big firm model."

Read More

Pittsburgh's Cohen & Grigsby to Combine With Global Megafirm Dentons