Report: Law Firm Mergers Poised for Record Year in 2013
The Am Law Daily
UPDATE: 7/9/13, 11:00 a.m. EDT. Schiff Hardin has announced a merger with 11-lawyer New York firm Mazur Carp & Rubin, the Am Law 100 firm's second merger of the year following its tie-up in January with Washington, D.C.'s Bruder, Gentile & Marcoux. Mazur Carp specializes in construction and trusts and estates work, according to sibling publication the New York Law Journal. The American Lawyer reported last month on how some Am Law 100 firms are abandoning and embracing the latter practice group.
A quarterly report by legal consultancy Altman Weil states that the 39 total mergers through the first six months of 2013 are putting the year on a potentially record-setting pace for U.S. law firm tie-ups.
Husch Blackwell announced one of the largest merger deals so far this year by picking up 67-lawyer Texas firm Brown McCarroll. The deal was one of several mergers— mostly between smaller regional shops—that contributed to a late surge in second- quarter deals.
“We had a strong first quarter, and the second quarter started slowly but also ended strong,” says Altman Weil principal Ward Bower, a veteran of the law firm merger market. “I think we need to wait and see what happens in the next six months, but there’s a cautious optimism among some law firm leaders.”
Bower says that many firms today are pursuing geographic growth strategies that have them expanding into new regions, which he notes is cheaper in the short term than making lateral hires. “About 50 percent of laterals don’t work out,” adds Bower, reiterating what he told The American Lawyer earlier this year for a story about lateral hiring by large firms.
In April, a first-quarter report by Altman Weil stated that the U.S. legal industry was on pace to see more mergers take place in 2013 than each of the past two years. Bower says that key factors in determining whether the U.S. merger mania continues are a potential rise in interest rates and the overall health of the general economy, of which the legal economy closely follows.
Some of the largest and most notable mergers announced so far this year include Baker & McKenzie’s merger with 45-lawyer United Arab Emirates firm Habib Al Mulla; Fox Rothschild bolstering its nascent Denver office by absorbing 16-lawyer local firm Lottner Rubin Fishman Saul; Ballard Spahr joining forces in New York with litigation boutique Stillman & Friedman; Detroit's Clark Hill clinching a tie-up with Pittsburgh’s Thorp Reed & Armstrong; and Adams and Reese picking up 23-lawyer South Carolina shop Ellis Lawhorne.
Other deals reportedly in the works, such as Carlton Fields’s proposed merger with 60-lawyer insurance firm Jorden Burt, have yet to be officially announced.
According to Altman Weil, the largest annual total for U.S. firm mergers was 70 in 2008, a year that brought about the worldwide economic downturn but also saw Troutman Sanders ink a tie-up with Washington, D.C.’s Ross, Dixon & Bell, while Charlotte’s Helms Mullis & Wicker and Kennedy Covington Lobdell & Hickman were absorbed into McGuireWoods and K&L Gates, respectively. That same year, the Missouri legal market consolidated following the mergers between Polsinelli Shalton and Shugart Thomson & Kilroy and Blackwell Sanders and Husch & Eppenberger. (Polsinelli’s continued growth was recently profiled in The American Lawyer.)
Megamergers that have gone live this year include the formation of Dentons after SNR Denton completed a three-way merger with Canada’s Fraser Milner Casgrain and Paris-based Salans, while Norton Rose Fulbright solidified its presence among the global legal giants following the London-based firm’s integration of Fulbright & Jaworski, according to our previous reports. (None of the latter two mergers are included in Altman Weil’s numbers for this year, as the Newtown Square, Pennsylvania–based consultancy’s metrics are based on the date a deal is announced, rather than the day it becomes effective.)
Citing Norton Rose’s merger with Fulbright, Bower says that Texas remains a key market for future U.S. firm mergers, noting that the Lone Star State “never really had a recession” thanks to its role as a hub for the country’s energy industry, of which the United States’s shale gas reserves have helped it become a player in the global oil and gas arena.
Of course, it’s not only the U.S. where mergers are on the rise. Altman Weil’s strategic alliance partner, London-based Jomati Consultants, maintains its own database of mergers involving U.K. firms and their counterparts at home and abroad.
Earlier this year, Jomati reported that 2012 was a record year for mergers among British firms, with 2013 promising even bigger returns.