First quarter law firm merger activity showed strong growth over last year and reflects an overall trend towards increased consolidation in the industry, according to the latest Hildebrandt Institute MergerWatch Report. The Hildebrandt Institute tracked 20 completed law firm mergers that involved U.S. firms in the first quarter of 2012. That represents a 43 percent increase over the first quarter of 2011, which saw only 14 completed mergers and is in stark contrast to the four completed mergers in the first quarter of 2010. Merger activity thus far in 2012 is more in keeping with pre-recessionary levels, which saw 33 completed U.S. mergers in the first quarter of 2009, and 22 in the first quarter of 2008.
Merger activity so far in 2012 appears to build off of the increased merger activity in 2011 when the Hildebrandt Institute tracked 45 completed mergers, a substantial jump from 2010, which saw only 27 mergers. It appears that law firm merger activity has been encouraged by signs of economic recovery.
The largest merger in the first quarter was the combination of Faegre & Benson in Minneapolis and Baker & Daniels in Indianapolis, which began operating as Faegre Baker Daniels on January 1. Other large combinations included:
- Bryan Cave in St. Louis and Denver’s Holme Roberts & Owen, which also went live on January 1
- McKenna Long & Aldridge with Luce, Forward, Hamilton & Scripps in San Diego
- Kentucky’s Greenebaum Doll & McDonald with Indianapolis’ Bingham McHale to become Bingham Greenebaum Doll
- Ice Miller in Indianapolis with Schottenstein Zox & Dunn in Columbus, Ohio
- Arnold & Porter with Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco
Aside from the significant combinations, much of the current merger activity is being driven by large firms making small, strategic acquisitions. Baker Donelson merged with seven-lawyer litigation boutique Drucker, Rutledge & Smith, solidifying the firm’s presence in Houston, a market it entered last fall with the acquisition of Spain Chambers. Similarly, Moore & Van Allen absorbed nine-lawyer Hagood & Kerr to strengthen the firm’s Charleston, South Carolina office.
Mergers in the first quarter covered a wide range of locations, with continued interest in the California market (three mergers), as well as the Midwest. Ohio and Wisconsin each had three mergers. Colorado recorded two mergers and there was one merger apiece in Illinois, Indiana, Kentucky, New York, South Carolina, Tennessee, Texas, and Washington.
International mergers involving U.S. firms included locations in Germany and Italy. Carroll, Burdick & McDonough combined its operations with Schweiger & Partners, a German intellectual property boutique. And K&L Gates combined with the Italian firm Marini Salsi Picciau Studio Legale in Milan.
Mergers Involving Non-U.S. Firms
There were 19 completed mergers involving non-U.S. law firms in the first quarter, including a number of large cross-border mergers. Norton Rose Group combined with Canada’s Macleod Dixon, creating an international legal practice with more than 2,900 lawyers. The U.K.’s Ashurst and Australia’s Blake Dawson combined their businesses in Asia in March, with a full merger (conditional on a further vote of the partnerships) by 2014. China’s King & Wood and Australia’s Mallesons Stephen Jaques combined their firms on March 1, resulting in King & Wood Mallesons with more than 1,800 lawyers, representing the first real emergence of a Chinese law firm in the global market.
A further 12 combinations have been announced thus far for completion later in the year, the largest being the May 1 merger of Pinsent Masons and national law firm McGrigors in the U.K., which will result in a firm of over 1,500 lawyers.
Also in the U.K., under the new Legal Services Act which allows investors to hold equity stakes in law firms (subject to regulatory approval), a number of acquisitions targeted toward the consumer legal market have been announced. Quindell Portfolio, an AIM-listed company, announced its intention to acquire Liverpool-based firm Silverbeck Rymer and Australian listed law firm Slater & Gordon also announced that it intended to acquire Russell Jones & Walker. In addition, Duke Street Capital has announced its decision to acquire a majority stake in Parabis Group, the parent company of insurance litigation law firms Plexus Law and Cogent Law.
Posted by Marianne Purzycki