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• Dentons, one of the largest law firms, sets up a consulting firm with private equity cash.
• Dentons Global Advisors is initially purchasing the Albright Stonebridge Group for an undisclosed amount.
• The new consulting firm hopes to compete with McKinsey, BCG and parts of the Big Four.
• Check out Insider’s business page for more stories.

Dentons, one of the largest law firms in the world, is using private equity funds to create a new consulting firm, starting with the acquisition of a consulting firm founded by former Secretary of State Madeleine Albright.

The consulting firm, called Dentons Global Advisors or DGA, is led by Ed Reilly, the strategic communications manager Dentons hired from FTI Consulting in 2019. The law firm will hold a minority stake in DGA, the financial backing of an unnamed private equity firm, Reilly said in an interview.

The cornerstone of the new company is the Albright Stonebridge Group, a Washington, DC-based consulting firm headed by the former top US diplomat. This firm, to be renamed Dentons Global Advisors ASG, has advised corporate giants such as Pfizer, Amazon, Microsoft, Lyft and Discovery Communications and has at least half a dozen alumni serving in the Biden administration.

Ed Reilly of Dentons Global Advisors.

Dentons

ASG calls its services “commercial diplomacy”. Employees include policy experts, former corporate executives and lawyers who provide advice on strategy, regulatory and public affairs advice. Albright, who headed the State Department from 1997 to 2001, “has an obligation to stay with us,” said Reilly.

Joe Andrew, chairman of Dentons, said the new company has plans to build one of the “most advanced consulting firms in the world” that can rival McKinsey, the Boston Consulting Group, and consulting units of the Big Four accounting firms.

“We’re trying to build a permanent institution here that will stand alongside Dentons,” said Reilly. “A strong partnership and relationship, but independent.”

Dentons’ minority stake in Dentons Global Advisors is unusual

Some law firms have advisory units that provide non-privileged business advice. Many others also provide crisis communication advice to clients who want to make sure they are not making mistakes in their communications with policy makers, courts, regulators, and the public.

Joe Andrew from Dentons.

Dentons

But law firms typically employ these advisors directly, have a subsidiary, or hire outside crisis communications professionals. It is unusual, if not unprecedented, for a third-party law firm to take a minority stake in a consulting firm.

Michael Warren, managing director of ASG, said moving under the Dentons umbrella would give law firm and DGA clients the advantage of having attorneys and business strategy specialists in the room with business leaders at the same time. Executives face “complex problems that are very, very difficult to solve,” he said.

ASG employs more than 100 people in the US, China and other countries, plus dozens of other experts who help from time to time, according to managing director Dan Rosenthal. He said the consulting firm’s sales were higher in 2020 than they were in 2019 and were cautious and deliberate in his months of conversations with Dentons.

“Our reputation is our greatest and most valuable asset, and we have not made this easy for ourselves,” he said. He said ASG executives would be “material owners” of DGA.

This is not Dentons’s first communications and advisory company

Dentons has dealt with communication and advice before. In 2013 she founded the crisis management consultancy Wirthlin-Dentons. In 2015, it founded Nextlaw Labs, a legal technology accelerator, and expanded the Nextlaw brand to include a venture capital firm and legal and public referral networks. And in 2019, it founded Dentons Risk Consulting, despite a legal news website in March reporting that the project no longer existed.

Michael Warren of Albright Stonebridge Group, which Dentons Global Advisors will acquire.

Dentons

On Thursday, Dentons said it was restructuring its nextlaw offering. A spokesman said parts of the Nextlaw Public Affairs Network could join the DGA. Andrew said in an interview that a final decision has not yet been made as to which Dentons assets would move to DGA.

“There is a certainty that some of them will,” said Andrew.

Founded in 2013 through a law firm merger, Dentons is structured as a network of partnerships employing 20,000 people, according to the firm. It recently “partnered” with other US midsize law firms in cities such as Louisville, Kentucky and Des Moines, Iowa, where few global law firms have offices, to expand its reach.

It has also grown internationally over the past year, adding law firms in Ecuador, Tanzania and several other countries. Andrew said the law firm’s stake in DGA is held by a Dutch company that manages Dentons’ intercompany payments.

Law.com put Dentons’ 2019 sales at $ 2.9 billion; The company said the number is incorrect and no revenue will be released. Two entities whose finances are publicly held, Dentons UK and Middle East LLP and Dentons Europe LLP, had sales of $ 328 million and $ 561 million at current exchange rates for the past few years, respectively.