Tag Archives: merger

U.S. Mergers, Job Growth Up for Q1 2013

Posted on April 9, 2013 by | Leave a comment

Thanks to the highest number of U.S. mergers announced in a quarter in six years and the largest single-month gain in legal sector jobs in a year, 2013 began with a bang.

According to Altman Weil’s MergerLine, there were 21 U.S. law firm mergers announced in the first quarter—the highest number of mergers announced in a quarter since Q1 2009. Of those, 16 combinations were finalized in Q1. There also were seven firms that finalized mergers announced earlier, for a total of 23 mergers or acquisitions effective by March 31.

The majority of mergers—24 of the announced or finalized combinations—were targeted acquisitions of smaller, specialty firms with fewer than 25 lawyers. Only four combinations—Clark Hill with 82-lawyer Thorp Reed & Armstrong, Dickinson Wright with 60-lawyer Mariscal Weeks McIntyre & Friedlander, Novak Druce with 49-lawyer Connolly Bove and K&L Gates with 300-lawyer Middletons—involved merging with larger firms.

“Firms are picking up specialty practices, expanding in strong markets and adding offices in new cities,” said Ward Bower, a principal at Altman Weil. (You can read the full Q1 2013 report here.)

The high number of mergers seems to be good for job growth. According to the U.S. Department of Labor’s preliminary data, March saw a gain of 2,000 legal sector jobs—the largest gain seen in a year and the first addition of jobs since the beginning of 2013.

In fact, as compared to March of last year, there are 9,000 more people employed in the legal industry. Yet, as the ABA Journal points out, the total number of legal sector jobs—1,126,900 as of March 2013—has yet to rebound from the prerecession peak of 1.18 million.

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Lone Star State Law Firm Business Booming

Posted on January 17, 2013 by | Leave a comment

Texas remains a hot bed of law firm activity with the opening of a new office, mergers and the possibility of more foreign lawyers sitting for the state’s bar exam.

Reed Smith became the latest law firm to expand into Texas with the announcement of a new office in Houston. While no opening date has been set, it will be the 25th location of the Pittsburgh-based firm. Reed Smith joins the ranks of a number of law firms—including Sidley Austin and Paul Hastings—who “opened Houston offices and hired several partners from Texas-based law firms to bulk up their energy practices” last year.

The region’s energy work is a big draw. Houston-based Beirne, Maynard & Parsons LLP recently announced it will merge with Lemle & Kelleher LLP, a Louisiana law firm, in part to bolster its litigation practice in energy. The addition of Lemle & Kelleher’s 19 lawyers increases Beirne to a total of 80 lawyers in six offices, increasing its foothold in the Gulf Coast area.

Why Texas? As a WSJ Law Blog post states:

An international legal hub Texas is not. But it has certain traits to recommend it. More Fortune 500 companies are based in Texas than in any other state. It has the second-largest economy. It borders another country.

And with the possible lowering of the state’s bar requirements for foreign lawyers, law firm expansions into Texas will most likely continue at an increased pace.

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National, International Mergers Continue

Posted on January 3, 2013 by | Leave a comment

The mergers just keep coming. With the finalization of national and international mergers, the trend of quickly growing firms through law firm acquisitions continues.

AmLaw Daily reports the acquisition of Phoenix law firm Mariscal Weeks McIntyre & Friedlander by Detroit-based Dickinson Wright. The merger took effect Jan. 1. It increases Dickinson Wright’s foothold in the Phoenix market by 60 lawyers, giving the firm more than 350 lawyers in the U.S. and Canada who cover more than 40 practice areas.

Also effective Jan. 1, Houston’s Powers & Front LLP merged with national firm Wilson Elser Moskowitz Edelman & Dicker LLP. This adds eight lawyers to Wilson Elser’s Houston office, bringing the total number of lawyers in that office to 20. According to the Houston Business Journal, legal experts expect that mergers and acquisitions by law firms who want a foothold in the Houston law firm market will be on the rise in 2013.

On the international side of things, U.S.-based K&L Gates LLP merged with Australian firm Middletons on Jan. 1. This makes K&L the “largest U.S.-based firm in the Asia-Pacific region” and increases the firm’s Asian presence from seven offices to 11. It also gives K&L Gates a foothold in the Australian market with the addition of Middletons’ four offices. The increase of 400 lawyers in Asia and 300 in Australia brings K&L Gates’ total to more than 2,000 attorneys around the world.

According a Wall Street Journal article, “past expansions by U.S. and U.K. law firms largely targeted world financial centers such as London or Hong Kong.” The current trend in international and national mergers, however, seems to be aimed at putting “lawyers on the ground wherever clients are doing business.”

Getting lawyers on the ground is only part of the puzzle, however, as evidenced by U.S.-based Edwards Wildmans’ 2006 expansion into Hong Kong. Until the beginning of this year, the firm “operated through an association with Lister Lo Lui & Choy” and not under its own brand. This changed at the beginning of the year as the Hong Kong Law Society approved the firm’s full integration and the Hong Kong office changed its name to Edwards Wildman Palmer.

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Mega-Mergers Transform the Canadian Legal Market

Posted on December 6, 2012 by | Leave a comment

In a market that some might have described a few years ago as less than vibrant and rather confined within the country’s borders, * the Canadian legal market could now more accurately be described as “red-hot.”

Similar to the recent transformation of the Australian legal market, Canada has recently undergone a wave of mergers involving international law firms that has dramatically changed the upper tier of the country’s legal landscape.  The largest firms, ranging from approximately 600 to 800 lawyers, such as Gowlings and McCarthy Tétrault, are now competing against global giants, four to five times their size, with major operations in Canada as well as global networks that can provide a significant competitive advantage.

Cross-Border Mergers

Marking the beginning of this new wave of mega-mergers, Norton Rose Group combined with Ogilvy Renault and South African law firm Deneys Reitz, in a three-way arrangement in June 2011.

Six months later, in January 2012, Norton Rose added Calgary-based Macleod Dixon to the Group, building additional depth in the firm’s mining and energy practices.  The move created a firm with more than 2,900 lawyers around the globe, 700 of which are part of the firm’s Canadian operation known as Norton Rose Canada LLP, and ranking it as one of the largest legal practices in Canada.  In addition to Macleod’s lawyers based in Canada, the merger also gave Norton Rose** a significant presence in Latin America (60 lawyers in Venezuela and Colombia), a 13-lawyer office in Almaty (Kazakhstan) and a team of lawyers in Moscow.

The most recent combination shaking up Canada’s legal industry is that among US & UK-based SNR Denton and Canada’s top-ranked Fraser Milner Casgrain (FMC) as well as Paris-based Salans.  The three-way SNR Denton/Salans/FMC combination will rank the firm as one of the largest law firms in the world with more than 2,500 lawyers. Rebranded as Dentons, the combination is expected to go live in the first quarter of 2013.

FMC has no lawyers or offices outside of Canada, but has strong energy and mining practices – the firm has over 100 lawyers in its Calgary office.  The merger will enable the firm to have a greater global reach that will undoubtedly help FMC’s clients conducting business in major international markets. “It really is an opportunity for transformational change for our firm and we think frankly it’s a transformational step in the evolution of the Canadian legal profession,” Chris Pinnington, FMC’s chief executive officer, said in an interview with The Globe and Mail before the firms’ partners voted to approve the merger.

Canadian Law Firm Mergers Announced from 2008 to YTD 2012

By announcement date; Source: Thomson Reuters’ MergerWatch

By announcement date; Source: Thomson Reuters’ MergerWatch

 Smaller Cross-Border Deals

In a similar but smaller combination, Fasken Martineau, which already had a small outpost in South Africa, announced in October that it was merging next February with Johannesburg-based law firm Bell Dewar.  Primarily driven by its work for mining industry clients as they seek investment opportunities throughout the continent, the firm believes that the addition of the 76-lawyer Bell Dewar team gives Fasken Martineau the largest international footprint of any Canadian-based law firm.  The firm, which has offices across Canada, will have almost 800 lawyers in total,  approximately 170 outside its borders, including a substantial presence in London (the result of its 2007 merger with Stringer Saul) and an office in Paris.

And while work in the mining, infrastructure, energy and project finance sectors may be driving many of these deals, insurance work has also been a factor in some of the smaller cross-border mergers. For example, UK firm DAC Beachcroft, which is well-known for its insurance practice capability, and insurance specialist firm McCague Borlack (Toronto) agreed to a formal association this past May, a precursor to a full merger in 2014.

In 2011, another Canadian insurance firm, Nicholl Paskell-Mede (Montreal), joined forces with Clyde & Co, a UK-based global insurance and reinsurance practice powerhouse.

Domestic Mergers

Domestically, most of the mergers were small to moderate in size over the last five years. The largest merger was the combination last year between McMillan and Lang Michener, combining under the single name, McMillan, and creating a firm with close to 400 lawyers across Canada and with a presence in Hong Kong.

Other examples include Toronto’s Miller Thomson, which merged with Balfour Moss, a 24-lawyer firm in Saskatchewan 2010; Halifax-based McInnes Cooper, which acquired New Brunswick law firm Clark Drummie, also in 2010; and McCarthy Tétrault, which expanded its office in Calgary by absorbing Venn Law, a boutique energy firm, in 2011.

Posted by Marianne Purzycki

* Many of the top Canadian firms have had small offices in key international markets such as London and New York for some time, and more recently in China and the Middle East. Very few international firms have branch offices in Canada – Baker & McKenzie, Shearman & Sterling and Skadden Arps are among the handful. 

 ** In mid-November, Norton Rose announced yet another combination.  Confirming long-held rumors, the firm reported that it will combine with Houston-based Fulbright & Jaworski on June 1, 2013 to form 3,800-lawyer Norton Rose Fulbright.

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International Mergers Up Sharply in Q3, Says Hildebrandt Institute MergerWatch Report

Posted on October 2, 2012 by | 1 Comment

Law firm mergers through the third quarter of 2012 were on par with the same period last year, according to the latest Hildebrandt Institute MergerWatch Report.  The Hildebrandt Institute tracked eight completed mergers that involved U.S. firms in the third quarter of the year.  This brings the total of mergers in the first three-quarters of the year to 33, higher than the 31 mergers completed in 2011 and the 20 mergers completed in 2010.  However, merger activity still lags behind 2009, which saw 49 completed mergers in the same time period.

While we are seeing a continuing trend of low to moderate merger activity in the U.S., merger activity outside the U.S. is quite robust, particularly in the UK and Australia, a trend observed since the beginning of the year.

U.S. Mergers

With the exception of the merger between personal injury law firm Jacoby & Meyers and Chicago-based Macey Bankruptcy Law in July, which created a 300-attorney firm, the combinations continue to be rather small in scope, an indication of a U.S. legal market that has little room for further segmentation at the top end.  Firms continue to make small acquisitions, either to expand their geographic footprint, build upon an existing regional presence or to create strength-in-depth, a trend that we are also observing in the Australian domestic market, described below.

Three of the domestic combinations involved firms located in New York:

  • ASK Financial based in St. Paul combined with Neiger LLP, a six-lawyer bankruptcy practice
  • Richmond, Virginia’s Murphy & McGonigle combined with Wall Street’s Krebsbach & Snyder
  • Former FBI Director Louis J. Freeh’s firm, Freeh Sporkin & Sullivan, joined with Philadelphia-based Pepper Hamilton

The remaining four domestic mergers took place in the West and South:

  • In Nevada, 23-lawyer firm Jones Vargas joined with Phoenix-based Fennemore Craig
  • Kansas City’s Spencer Fane Britt & Browne combined with Denver’s 21-lawyer Grimshaw & Harring, giving Spencer Fane a new office in the Mile High City
  • Sacramento’s Weintraub Genshlea Chediak Tobin & Tobin merged with Los Angeles entertainment law firm Weissmann Wolff Bergman Coleman Grodin
  • Kentucky’s Wyatt, Tarrant & Combs boosted its Memphis office with the addition of Williams McDaniel

Non-U.S. Mergers

In contrast to the domestic U.S. legal market, international merger activity was up sharply in the third quarter. The number of combinations involving two non-U.S.-based law firms in the third quarter was 21, more than double the nine mergers tracked in 2011. For the first three quarters of 2012, there were 61 mergers.  The number of combinations thus far in 2012 is almost two times greater than for the first three quarters of 2011, which saw 32 mergers, as well as for prior years, which saw 32 combinations in 2010 and 35 in 2009.

The brisk pace of law firm consolidation in the U.K. is ongoing, with a number of combinations completed this quarter including between Anderson Fyfe in Glasgow and TLT in Bristol (Jul 1); Glasgow’s Biggart Baillie and DWF in Manchester (Jul 1); and DAC Beachcroft and Glasgow’s Andersons Solicitors (Sep 3); and Shakespeares and Harvey Ingram (Sep 1).

Rapid change is also occurring in the Pacific Rim legal market.  The region remains a desirable location for law firms and notably, U.K. firms continue to show strong interest in the Australian market.  Herbert Smith and Australia’s Freehills merged to create Herbert Smith Freehills with 2,800 lawyers, effective October 1.  Global law firm K&L Gates and Australian national law firm Middletons have acknowledged that they are in discussions regarding a possible combination that if approved, would create a firm of more than 2,000 lawyers.  As we noted above, the Australian domestic market is also undergoing significant change as a number of middle market firms tie up to reposition themselves to compete more effectively for domestic work.  Sixteen domestic combinations have been announced since 2010, including seven so far this year, almost double that of 2011.

Posted by Marianne Purzycki

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UK Merger Fervour Continues

Posted on August 16, 2012 by | 4 Comments

The UK market continues to undergo extensive market consolidation in 2012. A recent analysis of the Hildebrandt Institute’s MergerWatch data across all size ranges indicates that UK merger activity for 2012 has already exceeded that of 2011, with almost the entire second half of the year to come. This is particularly true of domestic UK M&A.

*Based on merger announcement date; a cross-border deal is defined as any UK merger or acquisition involving a non-UK headquartered entity, either as target or acquiror. 

Last week we examined the returning trend of redundancies to the UK market as firms look to strategically re-adjust their practices in areas suffering from low demand. At the same time, firms are continuously looking to grow and build their competitive advantage in terms of scale, deeper or broader service capabilities, and geographic coverage, in order to be viewed as credible candidates for work by clients. For many firms, merger is currently the preferred growth route for building deeper or broader bench-strength in certain practice areas, or when looking to expand their geographic platform.While international mergers received much of the spotlight in 2011 as a number of leading UK firms looked to add international capabilities in markets such as Australia and Canada, this year it has been the UK middle market which has seen much of the recent UK merger activity. And within the mid-market, it has been Scotland that has seen the largest amount of interest.

Eight mergers involving Scottish firms have occurred so far this year and five of the eight have involved English firms acquiring Scottish targets. The largest and most prominent saw UK national firm, Pinsent Masons, merge with McGrigors, one of the four leaders in Scotland (termed the ‘Big 4’). The four other Anglo-Scottish tie-ups also saw English-based national firms (or ‘emerging nationals’ in terms of regional firms seeking to build national scope to their regional businesses) adding Scottish operations:

  • Shoosmiths, a regional firm with substantial operations across the midlands and southern England, acquired Edinburgh-based commercial firm, Archibald Campbell & Harley;
  • Southwest regional firm, TLT acquired Glasgow’s Anderson Fyfe, a Scottish firm with both a mid-market commercial focus and a volume services division concentrated on debt recovery services for financial services clients;
  • Northern commercial firm, DWF* merged with mid-sized Scottish firm, Biggart Baille;
  • Nationally-focused insurance and disputes firm, DAC Beachcroft†, acquired Glasgow’s Anderson Solicitors, a similarly focused insurance and dispute resolution specialist.

In addition, Legal Business recently reported in its July/August issue that both Dundas & Wilson and Maclay Murray Spens, two other ‘Big Four’ firms recently held unsuccessful merger discussions with English firms, Bircham Dyson Bell and Bond Pearce respectively. Moreover, according to Legal Business, up to half of the Top 20 firms in Scotland are in merger discussions or seriously considering merger at present.

The situation in Scotland is a good example of consolidation driven and accelerated by market forces. The Scottish market contracted greatly during the credit crunch. The UK government was forced to bailout two of the largest Scottish Financial Institution clients, Halifax Bank of Scotland (HBOS) and Royal Bank of Scotland (RBS). HBOS was ultimately taken over by a rival UK bank, Lloyds TSB, while RBS continues to be majority-owned by the UK Government.

This had a huge impact on demand levels in the legal market, particularly in transactional areas, as operations and decisions making has moved to London, and little prospect of this aspect of the market returning to pre-Lehman levels.

While a few Scottish leaders had already begun to position themselves more broadly as national competitors in the UK, the credit crunch has accelerated this movement and has now driven mid-market firms to seek a similar positioning. The end result has been an increasing number of Scottish firms joining (or contemplating joining) larger UK firms. They provide a broader geographic platform and brand awareness across the UK market, allowing the Scottish targets greater access to work and clients outside of Scotland.

Posted by Tricia Pelton

* Interestingly, this merger has followed three other mergers over the past year which has seen DWF build greater market coverage across the north of England, including Newcastle’s Crutes, Manchester-based insurance specialist, Buller Jeffries, as well as private client boutique, Lane-Smith, also based in Manchester.

† DAC Beachcroft is itself a product of a very recent merger between two insurance and disputes focused firms; London’s Davies Arnold Cooper and UK national firm, Beachcroft.

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Leaner and Meaner: UK Firms are Streamlining Again

Posted on August 9, 2012 by | 3 Comments

Much of the world’s attention over the past fortnight has been focused on the UK as London hosts the 2012 Olympic Games. The country has been flying high with positive Olympic sentiment and pride on the back of the host nation’s success; not only on the sporting field in terms of Team GB’s better than expected gold medal haul, but also in terms of a well-run games (potential issues concerning travel chaos and its notoriously fickle weather have by and large been unfounded). However, what has snuck under the radar this week was the announcement of worsening economic conditions as UK economic forecasters revised their 2012 estimates.

The UK economy remains in a double dip recession, with negative growth recorded for the last three consecutive quarters. Furthermore, according to a report in the Financial Times (registration required), the UK economy will not only decline by half a percent this year, but sluggish growth is predicted in 2013, as it struggles with the continued global economic downturn, weaker domestic consumption and increased competition from cheaper imports.

This long-term economic slump continues to affect the UK legal market; increased levels of competition, market segmentation and industry consolidation occur at pace, in an already competitive market.

Few firms were immune to some level of restructuring in 2009, as the industry adjusted to the reduced demand levels that occurred in the post-Lehman world. This was mainly via large scale redundancies, but also via re-deployments to practices or international offices less affected by reduced demand and actively approaching clients to arrange secondments. A report this week by The Lawyer indicates that redundancy programs are back on the agenda for a number of UK firms, due to a growing range of reasons.

Some of the cuts are the result of firms continuing re-adjustments to staffing levels in areas with overcapacity. For example, a number of UK-based operations have announced staff cuts in response to the prolonged economic downturn. They include London firm Charles Russell, as well as U.S. firm Mayer Brown and Scottish firm Dundas & Wilson*.

However, matching supply with demand is not the only driver of redundancy consultations. A return to redundancies has also occurred in the wake of:

1. Firms re-focusing on strategically important practice areas

The economic environment has provided firms with an opportunity to implement strategic resizing of underperforming practices, or those which lack the necessary strategic fit.

UK regional firm Shoosmiths announced in July that 86 fee earners and support staff, mainly within the motor vehicle personal injury division of its consumer legal services arm, had been made redundant in its Basingstoke operations (southeast of London). The firm cited a strategic downsizing of the volume personal injury business, to focus more specifically on conveyancing, medical negligence, high-net-worth wills and probate and complex personal injury litigation.

Likewise, leading Scottish firm, Maclay Murray & Spens revealed in June that it was making a handful of redundancies in the Glasgow office. These redundancies, concentrated in the private client team, have reportedly been made following a strategic review and a re-focusing on practices targeted for long-term, profitable growth.

2. Reduced levels of associate attrition

Three firms have indicated that reduced attrition levels among the associates ranks are playing a part in their decisions to undertake further redundancies.

Clifford Chance announced in March that it was making 13 associates in the London capital markets and finance teams redundant, despite the fact that the firm has seen growth within these practices. The firm reported that it chose to make the cuts to make way for younger lawyers coming up.

Similarly, Herbert Smith concluded a voluntary redundancy consultation in June that saw it eliminate 43.5 full time equivalent jobs in London, including 24 lawyers within its corporate and real estate ranks. The firm cites a combination of over-capacity (due to a partnership restructuring during 2011 in which 15 corporate and finance partners were asked to leave the firm) and low associate attrition, which resulted in “uneven” associate staffing levels, according to Managing Partner, David Willis.

Most recently, leading UK national firm Addleshaw Goddard reported in June that it had 24 positions at the managing associate and legal director levels under consultation with the aim of rebalancing a “top-heavy fee earner structure”.

3. Removing duplicate roles following merger

The global financial crisis has accelerated consolidation of the legal market (a topic I will discuss in greater depth in an upcoming post). One of the largest mergers to occur this year, the combination of Pinsent Masons with Scottish ‘Big 4’ firm McGrigors, has led to redundancy consultations with at least 40 support staff in a bid to remove duplicated roles within the support functions.

Furthermore, the recent mid-market merger of two Midlands-based firms, Shakespeares (Birmingham) and Harvey Ingram (Leicester) is also likely to result in a similar program, according to comments made in The Lawyer by the combined firm’s CEO, Paul Wilson.

Posted by Tricia Pelton

*According to reports in The Lawyer, Dundas & Wilson made 30 lawyers and support staff redundant in April; Mayer Brown announced 20 lawyers and staff were under consultation in May; Charles Russell announced a redundancy consultation for 9 positions in June.

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MergerWatch Q2 2012 Report Available Now

Posted on July 3, 2012 by | Leave a comment

Last Wednesday we revealed preliminary law firm merger numbers for the second quarter of the year as tracked by the Hildebrandt Institute.  While the numbers and trends remain essentially unchanged, the big news since then was the announcement last Thursday that Herbert Smith and Australia’s Freehills will combine in October to create a new firm, Herbert Smith Freehills, with 2,800 lawyers.  To read the full MergerWatch report, please click here.  

Posted by Marianne Purzycki

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Law Firm Mergers Continue Upward Trend in the First Half of 2012

Posted on June 27, 2012 by | 4 Comments

MergerWatch’s Q2 report is due out in early July, but we have a sneak peek at the numbers for our readers.  Preliminary numbers indicate that law firm mergers for the first half of 2012 are in keeping with the upward merger trend that we saw building last year.  The Hildebrandt Institute tracked five completed mergers that involved US firms in the second quarter of the year.  This brings the total for the first half of the year to 25.  That number is slightly ahead of what we saw last year at this time, which saw 22 mergers in the first half of 2011.  The last two years stand out in stark contrast to 1H 2010, with only 14 mergers, and are more in keeping with the years prior to the recession, which saw 42 mergers in 1H 2009 and 36 in 1H 2008.

US Mergers

In keeping with a trend that we noted in the first quarter of the year, one driver of merger activity continues to be large firms making small, strategic acquisitions, often to solidify an existing footprint.  Illustrating that point are the combinations completed thus far in the second quarter:

  • Frost Brown Todd expanded its Nashville location by merging with seven-lawyer MGLAW
  • Pittsburgh’s Buchanan Ingersoll & Rooney acquired seven-lawyer local firm Manion McDonough & Lucas
  • Kupelian, Ormond & Magy, a nine-lawyer Southfield, Michigan firm, joined Detroit’s Clark Hill
  • Birmingham’s Balch & Bingham combined with local firm Presley Burton & Collier (seven lawyers)
  • Tampa’s Fowler White Boggs merged with 11-lawyer Atkinson, Diner, Stone, Mankuta & Ploucha, which significantly expands Fowler’s Ft. Lauderdale office

Non-US Mergers

Outside the US, there were 19 completed mergers in the second quarter, for a total of 38 in 1H 2012.  This compares with 15 mergers in the second quarter of 2011 and nine mergers in second quarter 2010.

While there were not as many blockbuster mergers in Q2 as in the first quarter, May 1 saw the merger of England’s Pinsent Masons and Edinburgh law firm McGrigors, resulting in a firm of over 1,500 lawyers.  Law firm consolidation in the UK is setting a brisk pace, with a number of combinations either effective or about to go live between firms in Scotland and England, in particular.  Most notable are tie-ups between Anderson Fyfe in Glasgow and TLT in Bristol (July 1); Archibald Campbell & Harley in Edinburgh and Shoosmiths in England (in the fall of 2012); Glasgow’s Biggart Baillie and DWF in Manchester (July 1); and DAC Beachcroft and Glasgow’s Andersons Solicitors (Sep 3).

Australia’s Slater & Gordon’s first overseas move – its acquisition of the UK’s Russell Jones & Walker – was approved by the Solicitors’ Regulation Authority in April, which granted the firm a license to practice law in the UK as an incorporated entity with non-lawyer ownership.

We’ll give a full report in our quarterly MergerWatch update at the beginning of next month.

Posted by Marianne Purzycki

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Strong Law Firm Merger Trend Continues in the First Quarter of 2012

Posted on April 3, 2012 by | 6 Comments

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.

U.S. Mergers

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

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