For Becker & Poliakoff’s Gary Rosen, finding a merger partner is like going to a dance: sometimes he’s the pursuer, sometimes he’s pursued.
When his firm acquired the four-lawyer Cornett, Googe & Associates of Stuart late last year, he was the pursuer. But when his firm combined with the small Boca Raton litigation boutique Seiden Alter & Associates last month, he was the one wooed.
"How do we decide who we merge with? It’s really all over the map," said Rosen, Becker & Poliakoff’s managing partner. "Our strategy is to find the right people to bring into the law firm who would be a very strong cultural and business fit with the firm."
Rosen is not the only Florida law firm executive dancing with potential merger partners these days. Mergermania is sweeping the Florida legal market.
It’s part of a national trend. According to a recent report by legal consultancy Altman Weil, the U.S. legal industry is on pace to see more law firm combinations take place in 2013 than in either of the last two years.
The number of combinations or mergers in the first quarter of 2013 topped the 14 reported in the first quarters of 2012 and 2011 after nearly coming to standstill during the economic downturn, studies show.
"Mergers took a nose dive in the recession," said Thomas Clay of Altman Weil. "After the recession, everyone went quiet and conservative. When you’re in a low-growth economy, you’re just not expanding the way you used to. Now, firms are in expansion mode. Firms are going out and buying market share by merging with other firms."
Nowhere is that more evident than in the southeastern U.S., which is "as robust as any single area in the country," Clay noted.
And that phenomenon is magnified in Florida, where, it seems, every law firm in the country is clamoring to invade.
"There was some pent-up demand in Florida," Clay said. "We have regional and super-regional firms in the southeast that are avarice growers."
• Fort Lauderdale-based Greenspoon Marder acquired Ruden McClosky 18 months ago to create a 160-lawyer firm with 10 offices throughout the state. Greenspoon is continuing to look for partners in Florida and hopes to grow to 200 lawyers by next year. (See related story, Page A14)
• In April, San Francisco-based Sedgwick acquired most of Abadin Cook, a Miami boutique litigation firm run by prominent attorney Ray Abadin. Sedgwick’s newest Miami office has five lawyers.
• In late 2012, Fort Lauderdale-based Becker & Poliakoff announced two mergers: one with Litman Law, a 12-member intellectual property firm in Virginia, and another with four-lawyer Cornett, Googe & Associates in Stuart. The firm is looking for other merger partners.
• Last year, Fowler White Boggs merged with Atkinson Diner Stone in Fort Lauderdale, creating a 30-lawyer office there. The firm is continuing to talk with potential merger partners.
• In October 2012, New Orleans-based Adams and Reese acquired Igler & Dougherty in Tallahassee, giving it its fourth Florida office.
• In October 2012, Tampa-based Carlton Fields opened its first office outside the southeast as it acquired the six-attorney boutique firm Rosner & Napierala in New York City. Now, the firm is poised to merge with Jorden Burt, an 80-lawyer firm with offices in Miami, Washington, D.C., and Simsbury, Connecticut.
• Burr & Forman, a Birmingham, Alabama-based firm, continued its push into Florida. After opening an Orlando operation in 2009, the firm launched an office in Fort Lauderdale last year and acquired the 23-attorney Williams Schifino Mangione & Steady firm in Tampa in September.
• In September 2012, Balch & Bingham of Birmingham, Alabama acquired Stoneburner Berry Glocker Purcell & Greenhut of Jacksonville to enhance its financial services practice.
• In early June , two prominent southwest Florida law firms, Rhodes, Tucker & Garretson and Phoenix File & Pagidipati, announced they would merge. The law firm will have offices in Fort Myers, Marco Island, Sanibel and Naples.
• In April, GrayRobinson acquired a small Boca Raton law firm, gaining its 11th Florida office.
• In November 2012, prominent Miami litigator Jeremy Alters merged his law firm with the New York class action firm Morelli Ratner to form a 20-attorney shop focusing on mass torts, personal injury and gender-based pay discrimination. Morelli Alters Ratner has offices in New York, Miami and Washington, D.C.
"From our standpoint, we see a lot of northern firms coming to Florida because Florida is a growing opportunity for all of them," said Byrd "Biff" Marshall, chairman and CEO of GrayRobinson. "They don’t have the same kind of growth potential in their states. I don’t see the same opportunity for us to go to their states."
Legal recruiter Kendall Sharp of Fort Lauderdale-based Search for Excellence agreed. She put together GrayRobinson’s Boca Raton acquisition and is on the hunt for a West Palm Beach firm for Gray to acquire.
"I think there are a lot of firms that either don’t have a presence in South Florida or have a small presence in South Florida and want to increase it," she said. "In the state of Florida, Miami is the only true financial center. If you’re going to be in Florida, you have to have a Miami office."
That’s certainly true for Sedgwick. The firm already had an office in Fort Lauderdale but was looking to boost its footprint in the southeast.
"We looked at Atlanta and we looked at Miami," managing partner Michael Tanenbaum said. "Miami had always been an area where we were interested in coming. It provides us with entree into South and Central America."
Other firms have chosen to court specific attorneys and practices with heavy books of business from other firms rather than take on an entire firm or office. That has been Greenberg Traurig’s winning strategy for years.
GrayRobinson will acquire small boutique firms, but prefers to target individual attorneys and practice groups.
"I much prefer to cherry pick," Marshall said. "Inevitably in a merger you get baggage, legacy debt weight, people who have been there forever and are making tons of money."
Sedgwick’s Tanenbaum agrees. His firm picked up the bulk, but not all, of Miami’s Abadin Cook.
"I’m not going to suggest that one way is better than the other," he said. "What we have found is when we have opportunities with people we know, who we have shared clients with, we can work well with and integrate well with them.
"My perception is oftentimes mergers lead to disaffected participants. Sometimes you see a 300-lawyer firm merging with a 100-lawyer firm and a year later, 60 people are no longer there. Large mergers are much more complicated in terms of integration."
Yet some mid-sized firms don’t share Tanenbaum’s view. They have other reasons for merging rather than achieving growth. Debt heavy or in financial trouble, they may be looking to a merger as a way to survive or hand off debt to someone else. Or upper echelon attorneys may be on the verge of retirement and looking to a merger as an exit strategy.
That’s the case with Jorden Burt. The 80-lawyer firm has been scouting for a merger partner for awhile now that managing partner and key rainmaker Jim Jorden, who is in his 70s, is looking toward retirement, sources say.
For more than a year, the firm has been in talks with Tampa-based Carlton Fields, which has 300 lawyers. Carlton partners approved the merger last month and Jorden Burt partners are to vote on it in July. The merger would give Carlton entree into Washington, D.C., and Connecticut, where Jorden Burt has offices, and a highly sophisticated, blue-ribbon insurance practice. According to sources, Jorden would get a personal guarantee of up to $3 million for three years.
"It makes a lot of sense because it’s synergistic," said Joe Ankus, a legal recruiter with Ankus Consulting of Weston. "Jorden Burt has a great reputation in insurance regulatory work and very complex insurance-related disputes and Carlton has wanted to expand its presence outside Florida. It gives Carlton depth. That merger is two puzzle pieces that fit legitimately together."
Another law firm that has been eyeing potential partners is Tampa-based Fowler White Boggs. Managing partner Rhea Law said her firm regularly is contacted by out of state law firms.
"Our footprint around the state of Florida, as well as our people, are very much of interest to a number of firms," she said. "Firms weren’t looking at Florida during the recession. The good news is firms are interested in coming to Florida again. It shows we have a robust legal market. We have the attention of the nation as well as the world that Florida is a good place to practice law and to do business."
According to sources inside and outside the firm, Fowler White has struggled with the defections of a number of lawyers in Jacksonvillle. Ten attorneys, including several rainmaking partners recently jumped to Smith, Gambrell & Russell and may be under financial pressure to seek a merger partner.
The firm was in late-stage talks with Memphis-based Baker Donelson, say sources, but the talks fell apart due to conflict issues.
Industry experts say the benefit of a full merger is that the beneficiary law firm takes over the other firm’s accounts receivable. When firms pick up individual attorneys, they have a "dry" period without any profits coming in for several months, said Sharp, the legal recruiter.
One credo law firms in merger talks universally follow: any such negotiations must remain in a cone of silence. When word leaks out, the deal is dead, Sharp said.
That was the case with Akerman Senterfitt in its well-publicized 2008 merger negotiations with Philadelphia-based WolfBlock. The talks broke down after details were continuously leaked to news outlets. WolfBlock subsequently shut down.
Similarly, in late 2011, Ruden McClosky’s talks with Cleveland-based Benesch broke down at the 11th hour after news of the deal was reported in The Daily Business Review.
"When word comes out, it doesn’t go through," Sharp said. "No one wants to talk about these deals beforehand."