Eric A. Seeger. Handout photo. 2/2012
Eric A. Seeger. Handout photo. 2/2012 ()

The law firm merger front was quiet in the third quarter of 2016, but a spate of combinations announced within the past week suggests that the end of the year will likely bring the usual uptick in merger news.

Am Law 100 labor and employment giant Littler Mendelson announced Monday that it had combined with Fromont Briens, a 170-lawyer employment firm with offices in Paris and Lyon, France. Last week, Los Angeles-based Haight Brown & Bonesteel acquired Sacramento real estate shop CVM Law Group, while leading offshore firm Collas Crill announced plans to merge with British Virgin Islands-based Farara Kerins.

Meanwhile, three British firms unveiled plans for the U.K.’s largest-ever legal services merger by forming a single 4,500-lawyer firm with 65 offices in 36 countries. The firms involved in the combination, slated to go live in May 2017, are CMS Cameron McKenna, Nabarro and Olswang, as noted by London-based sibling publication Legal Week.

“We do normally see an increase in merger activity in the fourth quarter,” said Eric Seeger, a principal at the legal consultancy Altman Weil Inc. “We expect to see the same this year.”

Seeger said smaller firms with financial or succession issues are coming to Altman Weil seeking help finding a larger firm to join. He said he expects that most of the mergers announced in the last few months of the year to include a small firm.

There have been rumors reported of larger combinations in the works. There are the ongoing discussions between Arnold & Porter and Kaye Scholer, as well as Cadwalader, Wickersham & Taft’s reported discussions with King & Spalding, though neither have come to fruition. Last year talks were called off between Chadbourne & Parke and Pillsbury Winthrop Shaw Pittman, while some potential trans-Atlantic tie-ups over the past year have been scuttled between Foley & Lardner and Eversheds and Greenberg Traurig and Berwin Leighton Paisner.

Seeger said large firms are preoccupied with overcapacity issues at the moment. He expects most will decide to deal with that issue “before going back into the market to talk [about a] major merger.”

Overcapacity is hurting law firm’s profitability, according to a May report released by Altman Weil. Of the 356 firms surveyed, nearly 60 percent said overcapacity is actively affecting their bottom line. Among firms with 250 lawyers or more, the problem is even more common, the report found.

In the third quarter of this year, Altman Weil counted 12 firm mergers, compared with 20 in the first quarter and 28 in the second quarter. The majority of combinations this year have involved firms with less than 20 lawyers. A similar report by another legal consultancy, Fairfax Associates, found that merger activity this year has so far remained mostly flat compared to 2015.