The recent Law360 article argues that midsize law firms actively avoiding mergers—such as Pryor Cashman LLP—leverage independence as a strategic advantage in a consolidating market. While the claims of flexibility and firm identity are compelling, the data strongly supports this strategy as, more than anecdotal, firms like Pryor Cashman are outperforming their merged peers in retention, stability, and adaptability to market conditions. Here’s why avoiding mergers is a sound strategic decision for some firms, backed by evidence.
Retention and Attrition: A Data-Driven Comparison
A comparative analysis of Pryor Cashman LLP, a non-merged midsize firm with around 180 attorneys, and Foster Garvey PC, which underwent a merger in 2019, reveals striking differences in retention success:
Pryor Cashman:
- Associates: Retained 75.82% over five years (69 out of 91 hires).
- Partners: Achieved a 100% retention rate (19 out of 19 hires stayed).
- Counsel: Retained 87.5% (7 out of 8 hires).
Foster Garvey:
- Associates: Retained 64.29% over five years (18 out of 28 hires).
- Partners: Retained 90.91% (10 out of 11 hires).
- Counsel: Retained 61.11% (11 out of 18 hires).
Overall, Pryor Cashman achieved an 80.51% retention rate across all levels, compared to Foster Garvey’s 68.42%. This stark difference highlights that mergers often introduce cultural integration challenges and destabilize key talent—issues that independent firms like Pryor Cashman can avoid.
Challenges of Post-Merger Growth
Mergers promise enhanced resources, geographic reach, and economies of scale, but the reality often needs to be improved. An analysis of 44 firms that merged in 2023 reveals a pattern:
- Growth Decline (In the context of law firm revenue or attorney hiring trends, “growth decline” refers to a decrease in the rate of growth or a slowdown in expansion within law firms): Merged firms experienced an average growth decline of 22%.
- Attorney Movement: On average, 29 attorneys left during the merger signing, signaling disruption.
- Retention Rates: While retention averaged 85%, the numbers reveal higher attrition in specific roles, particularly among associates and counsel.
These findings suggest that while beneficial in theory, mergers can disrupt firm culture and stability, resulting in a decline in overall performance and growth.
Advantages of Independence
Non-merging firms, like Pryor Cashman, are better positioned to:
- Maintain Firm Culture: Firms that remain independent can offer a consistent and cohesive culture, often a key driver of lateral recruitment and retention.
- Adapt to Market Demands: Independence allows firms to offer greater rate flexibility to clients, a vital competitive advantage in a cost-sensitive market.
- Avoid Integration Risks: Mergers often create friction due to differing management styles, technology systems, and geographic priorities—factors that independent firms sidestep entirely.
Pryor Cashman’s deliberate strategy to avoid mergers has resulted in a highly stable environment that prioritizes its people, as reflected in its stellar retention rates.
Counterpoints to Industry Arguments
The Law360 article suggests that midsize firms may be vulnerable without the resources of larger entities, but data and strategy contradict this:
- Client Rate Flexibility: Midsize firms can often offer lower rates, avoiding the billing pressures of larger firms’ post-merger. This flexibility is increasingly attractive to cost-conscious clients.
- Niche Expertise: Midsize firms excel by focusing on niche practice areas, differentiating themselves in a competitive market.
- Retention of Key Talent: The case of Pryor Cashman shows that non-merged firms can create a desirable workplace environment, making them less likely to lose key personnel.
To reinforce the premise that mergers are not a guaranteed solution for midsized firms aiming to grow or reduce attrition, recent data on 18 law firm mergers involving firms with headcounts between 51 and 200 attorneys reveals several key trends that challenge this assumption. Over a five-year span, these mergers often resulted in high attrition and operational instability, undermining the argument that consolidation is the optimal path forward. For instance, firms like Bricker Graydon LLP, formed in 2024, experienced significant movement with 69 attorneys departing at the time of signing, while others such as Amundsen Davis LLC saw a 28% growth decline post-merger. Even with notable retention successes in specific cases, such as Hand Arendall Harrison Sale, which retained 92% of its attorneys, these instances are exceptions rather than the rule. The average post-merger retention rate of 79% still lagged behind firms like Pryor Cashman, which consistently achieved an 80.51% rate without the cultural and structural upheavals that mergers often entail. These findings further underscore that independence, rather than mergers, can offer midsized firms the stability and adaptability needed to thrive in competitive markets.
The fears driving firms toward mergers may not be as well-founded as the industry believes. For firms like Pryor Cashman, independence is a strategic asset, enabling them to maintain cultural cohesion, retain top talent, and offer client-friendly flexibility. The evidence suggests that staying independent, rather than merging, can be a winning strategy for midsize firms looking to thrive in a competitive and ever-changing legal landscape.
