While legal consultancies Altman Weil and the Hildebrandt Institute report that mergers involving U.S. law firms were down in the second quarter of 2012 compared with the same period last year, statistics show that the industry saw more tie-ups in the first half of this year than it did during the first six months of 2011.
Hildebrandt, a division of Thomson Reuters, announced Tuesday that its tally recorded 25 mergers involving U.S. firms in the first two quarters of 2012, three more than the 22 that occurred in the first half of 2011 and 11 more than the 14 completed in the first half of 2010.
“This year’s level of activity is closer to that of the years immediately prior to the recession, which saw 42 mergers in [the first half of 2009] and 36 in [the first half of 2008],” Hildebrandt said in a press release announcing its findings. “Overall, firms still appear to be somewhat cautious.”
Altman Weil, which unveiled its quarterly merger data Monday, suggested that the second quarter’s drop-off in merger activity was a result of what principal Ward Bower called a “Dewey effect.” In short, according to Bower, the abrupt demise of Dewey & LeBoeuf — the largest law firm failure in U.S. history — suppressed some firms’ urge to merge by flooding the legal market with scores of partners, associates, and staffers, as well as “hundreds of millions of dollars” in available legal business.
Last month Tony Williams, the former managing partner of Magic Circle firm Clifford Chance and founder of London-based law firm adviser Jomati Consultants, told The Am Law Daily that the collapse of Dewey — itself the product of a 2007 tie-up between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae — was “more a creature of circumstance” than a sign of underlying weakness in the strategy of law firms pursuing mergers as a means of growth.
Williams — who also spoke about the overseas market for mergers, particularly among midmarket firms in the United Kingdom, as well as expansion opportunities in Asia — reiterated the notion that firms are taking a “more measured approach” to tie-ups these days as a result of the tenuous global economic situation. At the same time, Williams noted that the downturn presents an ideal opportunity for firms to “pull away from the pack.”
London-based legal giant Norton Rose, which is on the prowl for a U.S. merger partner, has held informal talks with Fulbright & Jaworski, according to a May report by U.K. publication Legal Week. Another top European shop, CMS Cameron McKenna and its affiliate firms, have reportedly made finding a U.S. merger partner a top priority.
Last week, London-based Herbert Smith approved a merger deal with leading Australian firm Freehills to create a 2,800-lawyer global giant called Herbert Smith Freehills on Oct. 1, according to sibling publication The Asian Lawyer.
The deal represents a full financial merger of equals with the combined firm’s 460 partners sharing a single profit pool — a departure from the recent mergers that created Ashurst Australia and King & Wood Mallesons, according to Australian legal publication The New Lawyer. As with the firms created in a previous spate of transatlantic mergers, both new Asia Pacific legal giants Ashurst Australia and King & Wood Mallesons relied on a Swiss verein model, under which profit pools among the Australian and international partners are kept separate, according to The Asian Lawyer.
Of course, mergers themselves have immediate consequences for some lawyers and staffers. London-based Pinsent Masons, which merged with leading Scottish firm McGrigors earlier this year and recently announced plans for a new office in Munich, just announced 40 redundancies in the U.K.
Meanwhile, though more modest in size, there have been some notable mergers of late in the United States. They include:
• Buchanan Ingersoll & Rooney has acquired seven-lawyer Pittsburgh litigation boutique Manion McDonough & Lucas, according to sibling publication The Legal Intelligencer. The acquisition came about two months after the Am Law 100 firm added five of the six lawyers working at former Wyomissing, Pa.-based energy boutique Ryan, Russell, Ogden & Seltzer.
• Detroit-based Clark Hill is absorbing Kupelian Ormond & Magy, a nine-lawyer shop based in suburban Southfield, Mich., according to Crain’s Detroit Business.
• Fennemore Craig, a Phoenix-based former Am Law 200 firm, announced this week the acquisition of 23-lawyer Nevada firm Jones Vargas, which has offices throughout the state. The combined 200-lawyer firm, which will initially be known in Nevada as Fennemore Craig Jones Vargas, will have offices in Las Vegas, Reno, Denver, Phoenix, Tucson, and Nogales, Ariz.
• And two roughly 30-lawyer Columbus, Ohio – based firms, Isaac, Brant, Ledman & Teetor and Wiles, Boyle, Burkholder & Bringardner, have agreed to combine operations to form a nearly 60-lawyer local shop, according to a report last week by Columbus Business First.
Brian Baxter writes for The Am Law Daily, a Daily Report affiliate.