As another firm heads South, Nashville's lawyers ask why

Email | Print By Bill Carey

Nashville lawyers have seen this so many times that some have given it a name: The Ohio River Valley Strategy. 

Two weeks ago, Dinsmore & Shohl, a Cincinnati law firm with more than 200 attorneys in six offices in Ohio and Kentucky, announced it would acquire the Nashville law firm of Yopp & Sweeney. As a part of that transaction, seven of Yopp & Sweeney's 23 lawyers, including Mike Yopp, are leaving that firm to join Waller Lansden Dortch & Davis.

With the merger, Dinsmore & Shohl will join Wyatt Tarrant & Combs, Greenebaum Doll & McDonald and Brown Todd & Heyburn as Ohio- or Kentucky-based law firms that decided Nashville has so much legal business that there is room for more players.

Why do they believe this?

There appear to be several possible reasons. The first is that over the years, many Nashville companies began using out-of-town firms for some parts of their legal work. Those relationships inevitably led some of those out-of-town firms to conclude that they might as well start a Nashville office. Dinsmore & Shohl, for instance, already does legal work for Shoney's and Cracker Barrel, two of Yopp & Sweeney's main clients.

Another possible cause is that several law firms are leaving the nation's "rust belt" in search of greener pastures. "There is a real perception that Nashville and Middle Tennessee is the place to be," says Dick Lodge of Bass Berry & Sims. "Look at the car industry, for example. Compare the expansions at Nissan and Saturn to what has been happening in the Midwest."

It is also possible that there is a perception that "bigger is better" and that a law firm with more branch offices can offer more to its clients. Yopp & Sweeney partner Matt Sweeney says that is exactly what caused his firm to merge with Dinsmore & Shohl. "In order to best represent our clients, we needed to be bigger and have more resources," he says. "The firms that do the type of work we do are moving to the regional model."

Charles Bone, managing partner of Wyatt Tarrant & Combs' Nashville office, says that this strategy has worked for his firm. "We have five specialties - banking, health care, securities law, environmental law and bankruptcy," Mr. Bone says. "We have found that by spreading half a dozen lawyers over two states in each of those areas that we can sell our services to a lot more clients than we could if we were in one city."

The "bigger is better" strategy is especially prominent in the Midwest right now. Perhaps the most dramatic example of this phenomenon is the Cleveland law firm Squire, Sanders & Dempsey. Once a regional firm, Squire Sanders now has 675 attorneys and 25 offices in the U.S., Asia and Europe.

So will there be work for all these new lawyers coming to Nashville?

There are those here who wonder if these law firms have done their homework. After all, Nashville already has almost 3,000 lawyers, and virtually all of the city's larger firms added associates this year. Many firms' existing client relationships are so long-standing that it is hard to imagine their being broken. Several of Nashville's larger companies, including HCA, Gaylord Entertainment, Prison Realty, Thomas Nelson, Shoney's and Service Merchandise, have not done well of late, putting a damper on the city's business outlook. And some lawyers think that the city's legal community has not even begun to realize how much the loss of First American and J.C. Bradford will hurt Nashville.

"We have just lost over 2,000 financial services jobs," says Sam Bartholomew, a founding partner with the law firm Stokes Bartholomew Evans & Petree, a firm just created out of a merger between Nashville's Stokes & Bartholomew and Memphis' Evans & Petree. "Both J.C. Bradford and First American threw off a lot of legal work. When you become a branch city, the level of those services drops dramatically."

Bob Patterson, managing partner of Boult Cummings Conners & Berry, believes there may be flaw to the "bigger is better" strategy. Mr. Patterson points out that the nature of legal work has changed dramatically in the past decade. "10 years ago, when bond deals were still in vogue, we would have lawyers in planes the last month of the year flying from place to place closing deals all over the country," says Mr. Patterson, whose firm does not have a branch office. "Now, lawyers sit in their office and close those deals by e-mail."

Mr. Patterson said he recently spoke to one of his partners who pointed out that he had worked with a lawyer in Colorado on 13 different deals in nine states, but never met that lawyer face to face. "The consolidation is going to create a need to be efficient," he says. "If you are trying to be efficient, you should try to do as much electronically as you can. Technology breaks down geographic barriers and allows us to serve our clients wherever they might be."

However, Mark Manner, the managing partner at Harwell Howard Hyne Gabbert & Manner, says that there are still many aspects of the Nashville's economy that still tempt outsiders. "Nashville still has a very active merger and acquisition practice, and there is a burgeoning interest in town in venture capital," he says.

Mr. Manner also says that Nashville's larger law firms are still small compared to the law firms in cities like Charlotte and Cincinnati. He thinks as long as that remains the case, there will be interest from outsiders.

"As a member of a stand-alone law firm, I sometimes marvel at how these multi-city firms think that they can make more money by acquiring another location," says Mr. Manner, whose firm has 38 attorneys and no branch offices. "But given what has happened across the country, I'm actually surprised that larger and more national firms haven't moved in here already."