Cross-border combinations continued to propel law firm merger activity through the second quarter of 2017 as U.S. firms continue to look outside the domestic marketplace for growth opportunities, according to reports by legal consultancies Altman Weil Inc. and Fairfax Associates.
Over the first half of 2017, there have been 52 combinations announced, including 24 within the last three months, which Altman Weil’s report saidsurpasses last year’s mid-year total of 48 tie-ups, a former first-half record. There were five cross-border acquisitions in the second quarter. This brings the total number of cross-borders deals to 11 in 2017, according to Altman Weil’s study, which counts mergers and combinations as they are announced, rather than completed.
“More firms are looking to grow through a major merger driven by flat U.S. demand and the fact that their lateral hiring at many firms has not delivered as anticipated,” said Altman Weil principal Eric Seeger. “[So] firms are looking for other avenues for growth, which is fueling renewed interest in cross-border deals.”
The report by Fairfax also noted that cross-border acquisitions are steadily driving the merger market, a trend that’s been occurring since last year. However, unlike years past, it isn’t merely large law firms that are looking for tie-ups abroad that are dominating the merger count, but rather national and regional firms that are accounting for increased cross-border activity.
In the largest tie-up of the second quarter, British firm Bond Dickinson is poised to merge with Winston-Salem, North Carolina-based Womble Carlyle Sandridge & Rice to create 1,000-lawyer firm focused on the middle-market. When the combination is completed in October, the new firm known as Womble Bond Dickinson will have a combined gross revenue of roughly $415 million.
“We’re going to see an increasing number of the national firms looking for international opportunities over the next decade, largely driven by the market itself, the economy and what clients are doing,” said Fairfax principal Kristin Stark. “[This] is an indicator of our expectation of heightened international activity in the coming years.”
In May, Littler Mendelson added to its growing global network by bolting on 16-lawyer British boutique GQ Employment Law. New Jersey-based insurance firm Carroll, McNulty & Kull announced that same month a tie-up with the U.K.’s Kennedys to form a 32-office firm with close to 1,000 lawyers.
There were also several other notable international unions as traditional players looked to acquire new clients and expand their brands amid a battle for a slice of market share.
Norton Rose Fulbright, which last week finalized its combination with Chadbourne & Parke, announced in June its plans to absorb 179-lawyer Australian firm Henry Davis York into its network. Dentons, another firm operating under the Swiss verein structure, also continued its expansion across the globe by picking up Peru’s Gallo Barrios Pickmann and Livingstons Legal in Myanmar. (Dentons got the third quarter started this week by absorbing Avent Advokat, a 10-lawyer firm based in Tashkent, Uzbekistan.)
On the domestic front, Altman Weil and Fairfax found slight decreases in the number of acquisitions of firms with 20 or fewer lawyers. But Fairfax’s Stark believes this trend will reverse itself in the latter half of 2017.
Boies Schiller & Flexner took on 26 lawyers in Los Angeles after acquiring local litigation boutique Caldwell Leslie & Proctor in April, while Fox Rothschild moved into Seattle by acquiring 39-lawyer Riddell Williams in May. Hogan Lovells also opened an office in Boston last month after bolting onlocal litigation and life sciences boutique Collora.
The Altman Weil and Faifax reports also highlighted increased merger activity in regional markets in the Midwest—including Missouri and Michigan—as well as the southern U.S.
“We may see record numbers of deals this year,” Seeger said. “I expect that the number of deals announced this year will exceed last year’s total.”
Meghan Tribe is a reporter covering the changing face of Big Law, from lateral moves and work-from-home programs to diversity initiatives. Contact her at firstname.lastname@example.org. On Twitter: @TribeMeghan