Biggest law firms becoming much bigger

Meitar Liquornik Geva Leshem Tal takes over at the top in "Globes DUNS 100" rankings.

Ten years ago, the biggest law firm in Israel employed 87 lawyers. Today, the biggest firm in Israel employs 231 lawyers - reflecting 165% growth; the Israeli firm ranked 20th in size employed 31 lawyers a decade ago; its equivalent today employs 56 lawyers (80% growth).

These figures reflect the dramatic growth of the market for lawyers in the past decade, and the prominent place held by one-stop-shop offices, but also serve to illustrate the gap between the big firms and the medium-sized firms. In 2004 the gap between them was 180%. Within ten years, the gap between the biggest firm in Israel and the 20th in size widened to 310%.

Together, the twenty biggest law firms in Israel employ 2,442 lawyers. They employed 2,246 last year, 1,700 in 2010, 1,200 in 2005, and only 650 in 1999.

Though not on the same scale, significant growth was also recorded in the number of partners in law firms over the past decade. Today the firms have 721 partners; in 2000 they had only 200. In addition, the 20 biggest firms employ 500 interns - a small fraction of the nearly 3000 annual law-school graduates.

These figures and others are published as part of Globesand Dun & Bradstreets Globes DUNS 100 rankings, in which all the law firms are ranked annually by size and number of employees (quality rankings of the firms were published in Globes in February).

If, in the past, the rankings were characterized by a degree of stagnation and firms preserving their placements in the rankings, and particularly by the hegemony of the leading firm in the list, Herzog, Fox & Neeman, which ranked first for many years; in the last three years, mergers and shifts in the legal market have rendered the ranking for the largest firm dynamic, and, the rankings of the firms change every year.

Thus, this year, the top ranking firm is Meitar Liquornik Geva Leshem Tal, which employs no fewer than 231 lawyers. The firm, which is young relative to the more veteran firms in the market, exhibited significant growth, hundreds of percent in recent years.

2013 was a significant year for the firm in this regard, as it reported a mega-meger in January between Meitar Liquornik Geva & Leshem Brandwein and Kantor Elhanani Tal & Co. Following the merger, the company had 200 lawyers, 58 of them partners, and was ranked last year as the 3rd largest in Israel.

It was, however, not the merger that boosted the firm into this years first place ranking, but rather the continued hiring. In the past year, the firm has hired nearly 30 lawyers, many of them new lawyers who completed internships at the firm.

Adv. Dan Geva, a senior partner at Meitar Liquornik Geva Leshem Tal, is pleased with the results, but emphasizes that size is not the goal. We want to be in first place in terms of quality, personal attention, customer service, teamwork, and long-term service of our clients. Often, size is a function of this as well, but size is not the goal, he says.

He sees steady growth as characteristic of the firm. This is a fairly long process, in which also last year had significant growth. We consistently grow in our areas, and also try to expand the areas that are important to us in order to be a firm that provides a one-stop-shop service. For instance, last year, we accomplished this by adding what we call the Tel Aviv branch, Kantor Elhanani Tal & Co., which brings with it banking, which we didnt have, and doubled our real-estate practice. Most of our growth was internal, in our significant areas of operation. We primarily promote people who work with us. For example, this year, we promoted 9 lawyers to partner, 5 of whom were interns in our offices.

Meitar did, in fact, record significant growth this year, and reached first place, but the second and third placed firms were very close behind, trailing by only a few points. Second place in the rankings is held by Herzog, Fox & Neeman, with 229 lawyers - only two fewer than the leading firm.

Immediately after Herzog, Fox & Neeman in the rankings is Goldfarb Seligman & Co., which was in first place last year, and currently occupies third place, with its 228 lawyers.

In 2011, Herzog Fox & Neeman lost its first-place standing as the largest firm in Israel for the first time in the past decade, following the dramatic merger between the offices of Goldfarb, Levy, Eran, Meiri, Tzafrir & Co. and M. Seligman & Co., which gave rise to the new largest law firm in Israel that year.

The three largest firms all crossed the 200-lawyer threshold.

Following them in the top ten are the big firms that did not reach this threshold, but employ more than 100 lawyers. In fourth place is Fischer Behar Chen Well Orion & Co. (employing 165 lawyers); in fifth place is Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. (145), followed by Yigal Arnon & Co. (139), M. Firon (136), Gornitzky & Co. (130), Shibolet & Co. (127), S. Horowitz & Co. (126), and Naschitz Brandes & Co. (ranked 11th, also with 126).

The game of musical chairs among the top three firms, which continued this year as well, was a product of the dramatic mergers in the market over recent years, among other things. The data gathered by Dun & Bradstreet indicate that the trend of mergers in the sector is long-lasting, and is changing the leadership table in terms of size, as well as areas of expertise.

Besides the Meitar merger, there were a number of other noteworthy mergers between major firms in 2013, including: the split between J. Zaltzman, Gilat, Knoller, Graus, Salomon & Co., in which some of the lawyers and partners joined Shibolet & Co., while most went Epstein, Knoller, Chomsky, Gilat, Tenenboim & Co., and created the merged firm Epstein, Knoller, Chomsky, Osnat, Gilat, Tenenboim & Co. In addition, Pearl Cohen Zedek Latzer merged with Baratz & Co.

According to Adv. Dan Geva, the trend of mergers is not new. A decade ago, we merged with Reli Leshem and the offices of Leshem Brandwein, and there were other big mergers in the market between other firms. The advantage of a merger is that you can add manpower in areas that you do not specialize in, as well as clients, and the most notable example of this is of course Dalia Tal and the field of banking.

I think that lawyers are realizing that there is a big advantage to being able to give broader service to their clients, certainly in international deals. This has been the trend for twenty years already, that there are more and more areas of specialization, and fewer and fewer lawyers who do everything - who handle deals, write wills, and appear in the Labor Court, and more - and today it is necessary to have a higher level of specialization, and depth of expertise, in order to provide service to the client, and this brings along with it the advantage of size.

This trend can be clearly observed on the ground. The Globes DUNS 100 rankings demonstrate that the trend of creating mega-firms, intended to provide one-stop comprehensive services to clients, continues this year.

Furthermore, the large commercial firms are broadening their areas of expertise, and are beginning to establish specialties in areas that were traditionally dominated by boutique firms, such as labor law, antitrust, and taxation.

A lawyer for every 150 citizens: growth of 1,141% in the number of law students in colleges in eight years.

Globes DUNS 100 examined additional trends in the legal sector, and the big picture in the market as of the start of 2014, such as the worrisome growth in the number of lawyers each year.

In this regard, the survey confirms what we already know: the market is flooded. At the end of 2013, for every 100,000 residents, there were 679 lawyers; a lawyer for every 150 citizens. This compares with 585 lawyers for every 100,000 residents in 2010, and 538 in 2008.

Judges in Israel can only dream of such a ratio between judges and citizens. The survey shows that in Israel today there are 8 judges for every 100,000 residents. This statistic is similar to that of recent years, in which there was no significant growth in the number of judges relative to citizens. This comes at a time when the number of open cases in court stands at 435,000. (It should be noted that the number of open cases is in a constant downward trend due to the reforms underway over the past few years by the court administration, but it is still a tremendous number of open cases that faces the judges.)

In Israel there are 55,200 active lawyers today, reflecting a growth of 5,000 lawyers since last year. In the last four years alone, the pool of lawyers grew by 10,000, as in 2010 there were a mere 45,000 active lawyers.

In the past decade the number of lawyers has doubled. The growth trend began in the 1990s, when the number of lawyers more than doubled between 1990 and 2000, from 10,000 to 23,000.

These figures may be attributed to the college revolution - the establishment of colleges in the early 1990s and the opening of the higher education to students who did not succeed in gaining acceptance to the universities - and thus also to the legal profession. Whether this is for better or for worse depends on whom you ask, but these are the facts.

In keeping with this trend, the survey shows 312% growth since 1994-1995 in the number of Bachelor of Law graduates in all educational institutions - universities and colleges alike.

The data indicate that 253 students graduated from the newly-opened colleges in the 1994-1995 academic year, while in 2011-2012, there were 2,887 Bachelor of Law graduates - 1,141% growth in just eight years.

Alongside these trends - and this has been an open secret in recent years (Israeli universities are losing more and more candidates each year in all disciplines) - there has been a drop in the number graduates from the universities law departments: while in 1994-1995 there 895 university law graduates, in 2011-2012 there were only 696 - representing a 22% drop in recent years.

Published by Globes [online], Israel business news - www.globes-online.com - on March 6, 2014

Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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