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Law Firm IPOs--The Great Equalizer?

The only law firm economics specialist I know of is Bruce MacEwen. His opinion of the utility of the much-mentioned but little discussed Clementi (non-lawyer ownership, read: corporate-style reforms, is that the large established firms don't need them: don't need the capital, don't have any trouble expanding when and where they want to, don't need more money for infrastructure. Pause. I find this difficult to believe, but then, I'm not an economist.

On the flip side, regional and "consumer-oriented" (read: personal injury and other mainly contingency-fee firms) do need all these things. And an IPO can give it to them. I'm sure that none of the AmLaw 100 firms are worried about PI firms getting more cash--the two groups move in askew lines. However, on the margins, I see this as a huge tipping point.

What about the smaller national firms, or the larger regional firms--isn't capitalization a large issue for them? Couldn't an additional tidy eight-figure sum mean the difference between expansion and retraction for them? Thus, I see the possibility of law firm IPOs as simply the next logical step in the "arms-race" for market dominance and, for that matter, market survival. As the philosophers say (at least the ones I like) and as the savvy money managers say (I now read the Accentureand Wharton on-line resources, too) life/survival is all about growth. If law firm IPOs are going to mean the ability of a large swathe of firms to expand--and potentially "take it to the next level" in terms of national or regional expansion--this is going to have real impact on growth and for that matter retention on the part of ALL firms--large and small.

I think whether or not IPOs could have an immediate impact on the big-law types, such firms are going to be hard pressed to forego the possibility once the kinks get worked out (yes, and after the rules get re-written). If they do forego, we are going to see the IPO used as an offensive weapon to create far more competition for partner attraction at the just-below-first-tier. And that potential for greater competition and thus playing-field-leveler, is a good thing.

To boot, it doesn't appear that a law-firm IPO would necessarily have much negative impact on a partnership in terms of productivity, focus, etc. If we take the words of the MP of the first law firm to do it, it is as easy as falling of a horse. Read MacEwen's interview here.

The bell has been rung.

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