In mid-November the Hildebrandt Institute predicted that law firm mergers would rebound strongly in 2011 and we can now report that we tracked 45 completed mergers last year that involved U.S. firms. This is a 67% increase over 2010, a year that saw only 27 mergers, reflecting a slowdown in the overall demand for legal services at that point in time. And while firms continue to remain somewhat cautious about large combinations – often preferring regional tie-ups – merger activity appears to be heading back towards pre-recessionary levels which typically saw 55+ mergers per year. With a rise in mergers in the fourth quarter to 14 (up from nine in the third quarter) and with the new year already off to a strong start, we predict this trend will continue in 2012.
The largest merger in 2011 between two U.S.-based firms was the combination of Kilpatrick Stockton and Townsend Townsend and Crew to create Kilpatrick Townsend & Stockton, followed by the Edwards Angell Palmer & Dodge and Wildman, Harrold, Allen & Dixon combination that created Edwards Wildman Palmer.
Mergers in 2011 covered a wide range of locations including seven mergers in California, six of which were in Los Angeles; five in Texas, of which four were in Houston; four in Illinois; and three apiece in Florida and New Jersey.
There have been 11 U.S. mergers announced thus far in 2012, which is almost double the number (6) announced by this point a year ago. The Midwest is a locus of activity, and Indianapolis in particular, accounting for three mergers involving firms based there. The largest of these mergers is the combination of Faegre & Benson in Minneapolis and Baker & Daniels in Indianapolis, which began operating as Faegre Baker Daniels on January 1. Kentucky’s Greenebaum Doll & McDonald combined with Indianapolis’ Bingham McHale to become Bingham Greenebaum Doll (January 2) and Ice Miller in Indianapolis combined with Schottenstein Zox & Dunn in Columbus, Ohio (January 1). In addition, Bryan Cave in St. Louis and Denver’s Holme Roberts & Owen announced their combination which also went live on January 1.
Illustrating the continuing globalization of the legal industry, mergers outside the U.S. jumped to 54 in 2011 compared to the 44 and 48 that we tracked in 2010 and 2009, respectively. Many of the cross-border tie-ups were significant in size, including the 1,275 lawyer combination of Squire Sanders & Dempsey with Hammonds in the U.K. in January (followed later in the year by Squire Sanders with 80+ Perth-based lawyers from Minter Ellison). In the spring, DLA Piper combined with Australia’s DLA Phillips Fox creating a firm with over 4,000 lawyers. Canadian law firm Ogilvy Renault and South African law firm Deneys Reitz joined Norton Rose Group in June creating a global law practice of 2,500 lawyers.
However, not all large mergers outside the U.S. last year were across national boundaries. In the U.K., Clyde & Co combined with Barlow Lyde & Gilbert creating a firm with over 1,250 fee earners, and Beachcroft combined with Davies Arnold Cooper to create DAC Beachcroft with over 1,200 legal professionals. Canadian firms McMillan and Lang Michener combined to create a firm of 400 lawyers.
For 2012, a number of large cross-border mergers are in the wings or have recently become effective, with Canada, Australia and Asia key locations of interest. Norton Rose Group combined with Canadian law firm Macleod Dixon on January 1, creating an international legal practice with more than 2,900 lawyers. The U.K.’s Ashurst and Australia’s Blake Dawson announced plans to combine their businesses in Asia by March 2012 with a full merger, conditional on a further vote of the partnerships, by 2014. And recently, Australia’s Mallesons Stephen Jaques and China’s King & Wood announced the combination of their firms to create King & Wood Mallesons, effective March 1, 2012, with over 1,800 lawyers.
Posted by Marianne Purzycki