Some acquisitions by Walter | Haverfield put the business firmly in growth mode.
The Cleveland-based firm is rolling up two smaller Ohio firms: Hurtuk & Daroff, a real estate and finance firm in Mayfield Heights, and Nardone Ltd., a tax planning and business services firm in Columbus. They mark WH’s first acquisitions since the firm was founded in 1932.
It’s all part of a strategy to beef up work in what the firm sees as high-growth practice areas as it plans for the future.
“This really represents the evolution that we have undergone as we’ve grown,” said WH managing partner Ralph Cascarilla. “We’ve been able to take on larger-scale activity and we feel we are well-positioned now to take on the acquisitions of these two firms. Frankly, next year, I’m looking at others.”
Nardone, founded in 2008, is the smaller of the two outfits with five staffers, including two attorneys. They’ve moved into WH’s existing Columbus office, which the firm opened with a couple of attorneys in September 2018. That deal was effective as of mid-October.
Concurrent with that move, managing principal Vince Nardone has been named partner-in-charge at the Columbus location, which now staffs six lawyers. He’s also joined the firm’s executive committee.
“We’re eager to combine our business and tax law practices with those at Walter | Haverfield, and to leverage the collective expertise of our groups,” Nardone said in a statement. “This consolidation marks the start of a new growth phase for us as Walter | Haverfield continues to expand in the Columbus market.”
Hurtuk & Daroff has 13 employees, including seven lawyers. The merger is effective Nov. 1.
That operation will continue working out of its existing Mayfield Heights location, adding a new presence for WH on Cleveland’s East Side and bringing the firm’s total footprint to four offices (the other locations are in downtown Cleveland and Avon).
“For many years, we’ve been privileged to guide clients in significant transactions in Ohio and elsewhere throughout the country,” said Edward Hurtuk in a statement. “Partnering with Walter | Haverfield is a natural next step for our firm because of the pre-eminent role its real estate practice group has played in deals that are transforming Cleveland and beyond.”
Hurtuk & Daroff complements WH’s existing real estate practice, bringing a bit more national scope to it.
The combination also works into a succession plan for the acquired firm, although there are no immediate retirement plans for anyone there.
Cascarilla described Nardone as someone who built up a good practice that has about reached its capacity.
“He needed a bigger resources base to go to the next level, and we were looking for exactly that person, someone who had energy to build and grow a practice with concepts we embrace as a firm,” Cascarilla said.
With the combinations, the WH bench grows to about 90 attorneys.
The business reported 77 attorneys for Crain’s 2019 law firms list. With almost all of those in the Northeast Ohio market, WH ranked as the 11th-largest firm in Cleveland (by number of in- market attorneys). With the new lawyers added in, the firm cracks the top 10, leapfrogging McDonald Hopkins and falling between Roetzel & Andress and Ulmer & Berne in terms of its size in the regional legal market.
WH has increased in size by about 50% in the past decade with lateral hires, but no firm acquisitions. Planning for the future is what’s spurring deals now, Cascarilla said.
The retiring of baby boomer firm leaders, meanwhile, presents opportunities for mergers that weren’t as prevalent in years past.
Perhaps not coincidentally, law firm mergers across the U.S. “exploded” in the third quarter of this year, with 38 combinations announced after otherwise little activity through the first half of the year, according to Altman Weil MergerLine.
A handful of Ohio deals played into that merger frenzy, including Frantz Ward (Cleveland headquarters, 56 lawyers at the time of the deal) acquiring Kadish Hinkel & Weibel (Cleveland, 11 lawyers) in July; Taft Stettinius & Hollister (which was founded in Cincinnati, but lists Indianapolis as its main office, 474 lawyers) acquiring Briggs and Morgan (Minneapolis, 135 lawyers) in August in the largest deal of the quarter; and Green and Spiegel (Toronto, 34 lawyers) acquiring Ritter Halliday (Beachwood, four lawyers) in September.
“Every corner of the marketplace was on display last quarter,” said Altman Weil principal and merger adviser Tom Clay in an Altman Weil report. “Big deals, regional plays, AmLaw firms cherrypicking premium boutiques and the meat and potatoes of incremental growth by small firms in local markets.”
Forward-thinking firms like WH are stepping into buying roles.
The firm had its best year yet for revenue in 2018, Cascarilla said, adding the company is “building from a strategy we put in place over the last five to 10 years.”
Cascarilla said a concerted effort to draw in younger lawyers and partners has lowered the firm’s median age from about 57 to 47. Nine people on the executive committee there are now younger than 50.
That’s come with some cultural evolution, which WH seems to embrace. Cascarilla recently spoke with Crain’s about how the legal industry is evolving in general as the millennial workforce moves through the profession and how the firm is adapting as a result to attract and retain those people.
Law firms of the 1970s and ’80s were very structured, top-down organizations. Now, even young associates are more involved in the business itself, at least at more progressive firms.
“It’s a more democratic flow of information, with younger lawyers typically part of a team for a particular client matter,” Cascarilla said. “Fifteen or 20 years ago, associates rarely interacted with clients. That was all done through the partners.”
He added he is trying to build a firm that allows for participation at all levels, which “we think is a significant cultural advantage.”
In terms of the pipeline for other deals, Cascarilla indicated more are likely in store for 2020, but emphasized that growing to a certain number isn’t as important as selecting the right people.
“We do want to grow and develop that Columbus office. How that growth and development occurs will really be a work in process because I think you make bad decisions if you say, ‘Oh, we need to have eight more lawyers by the end of the year,’ ” Cascarilla said. “I don’t want to just have bodies that are not going to be a good fit.”