Nelson Mullins Riley & Scarborough is merging with Florida firm Broad and Cassel, which will extend Nelson Mullins’ footprint along the Eastern Seaboard from Boston all the way to Miami.
The merger, set to take effect Aug. 1, will create a 725-lawyer firm with combined revenue of more than $500 million. The addition of Broad and Cassel, which has 150 lawyers in 10 Florida offices, will transform the super-regional firm, based in Columbia, South Carolina, into a super-duper-regional firm.
“The real opportunities lie in our being able to service our clients with resources we’ve never had in Florida and in areas we never had,” said Nelson Mullins’ managing partner Jim Lehman.
Key practices for both firms that will benefit from the tie-up are real estate, health care and white collar defense, along with litigation and transactional practices more generally, said Lehman and C. David Brown II, Broad and Cassel’s chairman.
Lehman will continue as managing partner of the combined firm, while Brown and Jeff Deutch, who heads the Florida firm’s Boca Raton office, will have seats on the nine-person executive committee. Brown and Deutch both have real estate law practices.
After the tie-up, Nelson Mullins will be known in Florida as Nelson Mullins Broad and Cassel.
Big law firms are combining at a rapid pace these days as the legal industry continues to consolidate, but this tie-up came after a long and deliberate courtship.
The two firms have been talking to each other for almost 2½ years, Lehman said. “The time has allowed us to really get to know each other individually and as firms and develop confidence in each other,” he said. “This is not a shotgun wedding for either firm. Both are doing very well financially.”
“Both firms are very conservatively managed and neither has any debt,” he added.
Broad and Cassel’s leadership had been thinking for six or seven years about a merger to expand beyond its Florida base, Brown said, because many of its clients were expanding beyond the state.
“Their needs were not restricted to the geography of Florida,” Brown said, which, he added, has become the third-most populous state in the U.S., surpassing New York. “We need the footprint to serve them in the best way possible.”
So Broad and Cassel began to “quietly explore some discussions with different firms and groups,” he said.
Meanwhile, Nelson Mullins, which has small outposts in Tallahassee and Jacksonville, wanted a greater Florida presence to serve clients with operations there. Broad and Cassel’s largest offices are in Orlando and Miami, with extensive South Florida coverage.
“It allows us to extend our litigation capabilities in Florida. A number of clients over the years have said they would love to give us more work there,” Lehman said.
The two firms connected about three years ago, when some Broad and Cassel partners asked Lehman to serve as co-counsel for a mutual hospital client that was under government investigation outside of Florida. Over the course of a several-month engagement they hit it off, he said.
“I said to them that, if they ever decided they wanted to think beyond Florida, we would love to talk to them. About eight or nine months later, I was talking to David Brown,” he said.
“It was a long courtship,” Brown said. “We had time to think through the issues without any financial pressures.”
No major client conflicts presented themselves, the rate structures and finances of the two firms were compatible, and both firms saw a lot of benefit on the client side, the two firm leaders said.
“For a transaction of this size, it was remarkably free of conflicts,” Lehman said.
Nelson Mullins reported $405.4 million in revenue last year, placing it at No. 87 in the Am Law 100 ranking of the nation’s highest-grossing firms. Revenue of $500 million would have placed it at roughly No. 68 in this year’s rankings.
Broad and Cassel has not made its financials public, but both firm leaders said Nelson Mullins’ profit per partner was higher. A 10.1 percent increase in net income last year, buoyed by earnings from Encompass, its e-discovery unit, pushed profit per partner at the Southeastern firm past $1 million for the first time, to $1,094,000.
The revenue per lawyer is the most important metric, Lehman said. “We both think we’re very compatible in that regard.” Nelson Mullins’ RPL last year was $759,000.
The merger will not change Broad and Cassel’s rates, Brown said, which was an important factor for the firm. “Both our systems allow some variability,” he said.
From an average rate standpoint, Lehman said, the firms’ rate structures were similar, adding that partners at Nelson Mullins have some discretion in setting their rates.
“If you join a national or international firm, too many of your clients will not make the move, because the cost structure and the pricing change too dramatically,” said Mark Raymond, the Florida firm’s Miami managing partner.
“Our clients are in growing cities, but not the New Yorks and LAs, where the nationals and internationals have their biggest offices,” he added. “They’re not going to pay $950 or $1,250 an hour.”
As Broad and Cassel has started sharing the merger news with its clients, Raymond said, “we’re finding out that we have a lot of clients that do business in the super-regional area of the Carolinas, Atlanta and Florida.”
When Raymond called one of the firm’s developer clients to tell him the news, the developer said, “Mark, do you realize I have $4 billion worth of property in D.C.? I said, ‘No, but I’m listening.’ And he’s building two buildings in Atlanta.”
Nelson Mullins is based in Columbia, South Carolina, but its largest office, with more than 150 lawyers, is in Atlanta, which will remain the case post-merger. Lehman said he would like to extend the middle-market transactional practice from its Atlanta hub to Florida.
Creating a “first-in-class” health care practice is one of the big opportunities of the tie-up, Lehman said.
Broad and Cassel has a national health care compliance practice, representing providers, including hospitals and nursing homes, as well as payers, such as insurance companies, while Nelson Mullins has an extensive health care transactional practice, Brown said.
“To bring the two together is very powerful,” Lehman said. Combined, the firms will have 50 lawyers in the group.
Broad and Cassel also has a strong white-collar practice focused on health care fraud, an area that Lehman said Nelson Mullins has been building. “South Florida is a hotbed of white-collar investigations,” he added.
In real estate, the Florida firm represents developers and REITs, notably in the multifamily arena, Brown said, while Nelson Mullins’ focus is more structured finance.
Multi-Housing News ranked Broad and Cassel as a Top 20 real estate firm nationally last year on a list crowded with far larger Am Law 50 firms.
The combined real estate practice will have more than 100 lawyers after the tie-up, with 40 from Broad and Cassel.
Nelson Mullins adds some new capabilities for Broad and Cassel, said Raymond, such as a data privacy and security practice. “Boardrooms around the country are laser-focused on this issue,” he said. “Nelson Mullins has depth there. We don’t.”
Raymond called Nelson Mullins “visionary, not reactionary, and said he’s excited about Encompass and its legal-tech think tank. “We need to get out in front of this,” he said of the rapidly evolving role of technology in law practice. “Broad and Cassel can’t do this on our own.”