UK Mergers

UPDATE: 12/16/13, 6:45 p.m. EST. Polsinelli is the latest Am Law 200 firm to get into the merger game, picking up 11-lawyer Atlanta litigation boutique Rafuse Hill & Hodges, according to The Daily Report, while fellow sibling publication the New York Law Journal notes that Syracuse-based Bond, Schoeneck & King has acquired two firms on Long Island.

The U.S. set a record for law firm mergers in 2013, even if a few late year tie-ups failed to materialize. Now large firms in the U.K., Canada and South Africa firm are getting into the act, with four notable combinations announced this week.

CMS Cameron McKenna confirmed Thursday it has agreed to absorb leading Scottish firm Dundas & Wilson into its U.K. partnership as of May 1, 2014. CMS Cameron McKenna is the U.K. arm of CMS Legal Services, a 2,335-lawyer legal giant structured as a European Economic Interest Group, a structure similar to the increasingly popular Swiss verein system.

According to The American Lawyer’s most recent Global 100 report—which notes that EEIGs and vereins differ from other Global 100 firms due to the way they restrict the sharing of profits between partners—CMS had nearly $1.1 billion in gross revenue in 2012.

By acquiring 300-lawyer Dundas & Wilson, CMS will now have roughly 2,600 lawyers in its network, making it among the world’s largest firms by attorney head count behind such vereins as Baker & McKenzie, DLA Piper and Norton Rose Fulbright. (Norton Rose’s combination this summer with Fulbright & Jaworski came too late to factor into the most recent Global 100 rankings.)

Dundas & Wilson’s decision to join up with CMS comes as Scotland’s largest law firms face increased competition with their British peers, even as the country pursues its own form of independence from the U.K.

Earlier this year storied Scottish firm Semple Fraser broke apart, and over the past two years a number of other leading local shops have sought out combinations in an effort to survive. One of those firms, McGrigors—the only large firm with a Falklands office—merged last year with London-based Pinsent Masons. As it happens, Edinburgh-based litigation firm Simpson & Marwick saw its own merger talks scuttled this week with Kennedys, a firm with nearly 20 offices in the U.K. and overseas.

Founded in 1759, Edinburgh-based Dundas & Wilson, broke off merger talks two years ago with London-based Bircham Dyson Bell. Earlier this year Dundas & Wilson was rumored to have held preliminary talks with Eversheds, a notion subsequently debunked by both parties. Dundas & Wilson has struggled with partner defections and slipping financials in recent months.

With Dundas & Wilson now in its ranks, CMS expects to post annual gross revenue of roughly $440 million, a sum that would place the combined firm toward the bottom of the Global 100.

In another large firm merger deal announced in the U.K. this week, London-based Lawrence Graham and Birmingham, England–based Wragge & Co are expected to create a combined firm with about $280 million in annual gross revenue once it goes live on May 1, 2014. (The fiscal year for most U.K. firms starts on May 1.)

While those numbers would leave the combined firm far short of the Global 100, the merger is nonetheless significant in the British legal market given that it will create a 770-lawyer firm with offices throughout the U.K., Europe, the Middle East and Asia.

The new firm, which is to be called Wragge Lawrence Graham & Co, will be among the 20-largest in the U.K. The deal comes about a month after 570-lawyer Lawrence Graham and 190-lawyer Wragge were first reported to be in merger talks, and a year after LG, as the firm is informally known, called off discussions with London-based Field Fisher Waterhouse.

The LG–Wragge and CMS–Dundas & Wilson deals cap what has been a relatively slow year for mergers in the U.K., whose large firm legal market is predominantly focused on London.

Tony Williams, who runs London-based legal consultancy Jomati, which tracks merger activity among firms in the U.K., says this week’s combinations reflect the changing dynamic of the country’s legal marketplace.

“[The two deals] are classics in terms of developing greater strength and breadth in the U.K. and providing a platform from which to build an emergent international operations,” Williams, a former managing partner of Magic Circle firm Clifford Chance, said via email, noting that he did not advise any of the four firms on their current merger plans.

According to Williams, the most notable unions in the U.K. this year include Australian plaintiffs shop Slater & Gordon—the world’s first publicly-listed law firm—continuing its expansion in the country by picking up Manchester’s Pannone, and London-based SJ Berwin joining forces with Asian legal giant King & Wood Mallesons. (Three years ago, SJ Berwin held discussions about a potential combination with Proskauer Rose that ultimately proved fruitless.)

“In a more competitive market, a level of consolidation is inevitable as clients are even more demanding and larger firms have more profile and capital with which to invest in laterals, systems or international development,” Williams added. “As U.K. firms start to improve their profitability it is likely that transatlantic mergers will become a reality again.”

Meanwhile, in Canada, Halifax-based McInnes Cooper announced Thursday that it will merge with 20-lawyer Ottenheimer Baker as of Jan. 2 in a deal that the Canadian Lawyer Magazine reports will create the largest firm in Newfoundland and Labrador. The two firms began discussing a potential union this fall.

McInnes Cooper—which was founded in 1859 and has more than 200 lawyers spread across the Canadian Maritimes—had been looking to expand its presence in Ottenheimer Baker’s home city of St. John’s. The Newfoundland capital is currently benefiting from an offshore oil boom, and McInnes Cooper has had a role advising on pipeline deals connecting Canada’s oil-rich western provinces with ports in the country’s east.

In South Africa, another member of the British Commonwealth of Nations, where Hogan Lovells recently picked up 120-lawyer local firm Routledge Modise, leading local shop ENS, formerly known as Edward Nathan Sonnenbergs, continued its African expansion efforts this week by acquiring seven-lawyer De Comarmond & Koenig, the oldest law firm on the Indian Ocean island nation of Mauritius. (De Comarmond & Koenig is known for its insolvency work.)

The U.S. legal market also continues to add to its record-setting tie-up total. As of Friday, legal consultancy Altman Weil had this year’s tally at 91—a figure that did not yet include the latest merger.

Saiber, a 53-lawyer litigation firm based in Newark, announced Thursday its acquisition of six-lawyer transactional boutique Marcus, Brody, Ford & Kessler in nearby Roseland, according to sibling publication the New Jersey Law Journal.

The Am Law Daily reported earlier this week on Littler Mendelson’s merger with Puerto Rican firm Schuster Aguilo, the Am Law 100 firm’s latest addition to its Littler Global network.