The legal industry toppled multiple merger records as law firms fought over market share in 2015, according to the latest report from legal consultancy Altman Weil.
The group recorded not only the highest number of law firm mergers since it started tracking this data in 2007, but also some of the biggest combinations ever to shake up the legal market.
Of the 91 combinations recorded by Altman Weil in 2015, eight were announced by Dentons, growing the behemoth to 7,400 lawyers worldwide. The year started out with the announcement that Dentons would merge with China’s Dacheng to form the world’s largest firm. Dentons went on to combine with Gadens in Australia, McKenna Long & Aldridge in the U.S. and Singapore-based Rodyk, as well as firms in Luxembourg, New York, Bogota and Mexico City.
Altman Weil principal Ward Bower said Dentons’ rapid growth last year was ambitions, as well as challenging to pull off.
“It takes time to integrate mergers,” he said. “The jury’s still out on vereins anyhow,” he added, referring to the organizational structure used by Dentons and other firms that allows acquisitions to keep their finances separate.
Bower said the number of international deals was up across the board in 2015—a trend he said he expects to continue this year.
“We’re aware of firms that are talking to each other,” he said, without discussing specific firms. Bower said he would not be surprised to see a trans-Atlantic combination or large push into South America in 2016.
Alan Hodgart, a law firm strategist in London, agreed that a large trans-Atlantic merger is likely imminent as big firms try to prevent their clients from going elsewhere for certain matters. “They’ve said to their clients, ‘We’re setting out to meet your needs everywhere,’” Hodgart said.
U.S.-based combinations were up as well. Hodgart said that’s because “more and more firms realize that they’re too thin on the ground in some of the key practices that they profess.”
Not all regions in the U.S. saw equal levels of law firm merger activity. In 2015, 28 percent of all the U.S. firms acquired were based in the South and 23 percent were in the Midwest, compared with the 3 percent that were based in New England, according to the Altman Weil report.
Texas, Florida and Illinois, particularly Chicago, were host to a number of target firms. Nixon Peabody, Cozen O’Connor and Shook Hardy all acquired Chicago firms that had more than 25 lawyers, while Dykema, Blank Rome and Kilpatrick Townsend & Stockton each picked up fairly large shops in Texas.
Throughout the year, Am Law 200 firms bolted on IP boutiques, a trend that Bower said is not new. This strategy is driven by the larger firms’ desire to become one-stop shops for intellectual property-related work. The boutiques are finding that they can’t attract bet-the-company IP cases without the resources of a big firm, Bower said.
Tony Williams, a principal at Jomati Consultants in London, which is affiliated with Altman Weil, said he was surprised not to see more large combinations at the end of 2015. Last year at this time, the legal industry was digesting the news of Morgan, Lewis & Bockius’s hire of 227 Bingham McCutchen partners as Bingham dissolved, while Locke Lord merged with Edwards Wildman Palmer.
Though reports of large merger talks surfaced toward the end of 2015, no major deals closed. A potential combination between Bryan Cave and Dickstein Shapiro fizzled out, while Pillsbury Winthrop Shaw Pittman denied rumors that it was set to combine with Chadbourne & Parke.
The ongoing merger mania is to be expected, Bower said, since firms are understandably eager to increase their share of the already-saturated legal market.
“The quickest way to do that is by way of merger,” he said.