By Casey Sullivan

In the latest sign of financial pressures in the legal industry, the 123-year-old Boston law firm Bingham McCutchen is seeking a merger with another top U.S. firm and has reached out to at least four in the past three months, sources told Reuters.

In recent weeks, Bingham has approached Chicago-based Winston & Strawn, according to three people familiar with both firms, as well as Philadelphia-based Morgan Lewis & Bockius, two other sources said.

In the spring, Bingham reached out to O'Melveny & Myers and Morrison & Foerster, according to one of the sources, although both firms rejected Bingham's overture.

The outreach by 800-lawyer Bingham to its competitors exemplifies the ills facing many major U.S. law firms, which have been forced to consolidate because of sluggish demand as major corporations slash their budgets and demand that lawyers discount fees.

“There is a shrinking legal market and the impetus to join forces to put yourself in a better position to compete is pretty strong,” said Carter Phillips, the chairman of Sidley Austin, who has hired large groups of Bingham lawyers over the past year.

Bingham's problems have been exacerbated by a changing business landscape over the last five years, since the financial crisis, with legal work in practices like securities and bankruptcies not as lucrative as it once was, legal experts and lawyers have said.

Time of change

Bingham has worked on some of the highest-profile cases in the world. It is currently representing a group of Argentina bondholders as the country risks default and is advising Amazon.com in a large abusive transfer-pricing case. At the same time, the firm has seen reduced profits and a high turnover.

In recent months, partners and heads of major practices have jumped ship following a fall in revenue. This was caused by the settling of big cases like the 2010 BP oil spill and the drying up of business in the fields of mortgaged-backed securities and restructuring, which were once fueled by the financial crisis, according to sources inside and outside of Bingham.

In February, a firm spokeswoman told Reuters Bingham's revenue was down 12 percent, standing at $762 million compared to $872 million in 2012. Meanwhile, Bingham has laid off an unknown number of lawyers and staff, and dealt pay cuts in the past year.

A new leader, Steven Browne, was chosen this year to replace long-time chair Jay Zimmerman, who helped expand Bingham from a regional Boston firm into a global one.

Browne declined to comment on the merger possibilities, and Zimmerman did not respond to requests for comment.

Known for representing major financial institutions like UBS, Bank of America and Morgan Stanley, Bingham's ranks include former politicians and government officials, like Steve Merrill, once governor of New Hampshire, and Christopher Cox, former chairman of the Securities and Exchange Commission.

The 900-lawyer Winston & Strawn, meanwhile, has a prestigious litigation practice. It was recently in the news for bringing an antitrust class action against the National Collegiate Athletic Association on behalf of college football and men's basketball players over the limited financial aid they can receive.

Morgan Lewis, with 1,300 lawyers, is at present representing the Mortgage Bankers Association in a challenge to the Obama administration’s regulations about overtime status for loan officers that the Supreme Court agreed to take up next term.

'Fire sale'

Two sources close to Winston & Strawn said that while the firm had not officially rejected Bingham's overture, they were skeptical it would happen because Winston would prefer to poach Bingham's biggest rainmakers instead.

As for Morgan Lewis, one source said the two firms were moving toward an exclusivity arrangement, meaning they would not talk to any other firm about a merger while their own discussions were going on.

New York law firm consultant Bruce MacEwen said the risk of approaching numerous firms for a merger was that it created a "fire sale" effect, where competitors could swoop in under the pretense of merger talks but instead poach the firm's most important partners.

"That, of course, leaves what's left of the target firm more compromised," he said.

While a successful merger with another top 50 U.S. law firm like Morgan Lewis would create one of the world's top five biggest firms, according to a Reuters analysis of figures in the trade publication The American Lawyer, sources have said achieving it would not be easy.

Dan DiPietro, chair of the law firm lending group at Citi Private Bank, said that, generally speaking, there would be conflicts between the large clients of two top law firms.

Winston managing partner Tom Fitzgerald declined to comment. Winston chairman Dan Webb did not respond to a request for comment. Nor did Morgan Lewis chairwoman-elect Jami Wintz McKeon. Representatives of O'Melveny & Myers and Morrison & Foerster did not respond to requests for comment.