A frothy law firm merger market in Texas helped push the number of consolidations in the second quarter of 2018 past the figure from the previous year, according to a June 29 report from consultancy Fairfax Associates.
The 16 completed mergers recorded by the consultants trailed the 20 that occurred during the first quarter, but exceeded the 13 recorded from the second quarter of 2017. Overall, the 36 mergers completed in the first half of 2018 outpace the 35 from the first half of 2017, itself a record-breaking year, according to one analysis.
“To some extent it’s more of the same, in that you’re seeing a lot of small combinations, but the real story is around Texas,” said Fairfax principal Lisa Smith.
The Lone Star State saw the three largest domestic mergers in the quarter, and was also the top market in terms of in-bound merger activity, which highlights the home of the smaller firm.
Three of these in-bound mergers were focused on Dallas. There, Foley & Lardner linked up with Gardere Wynne Sewell, gaining 233 lawyers; Clark Hill picked up 133 lawyers in a tie-up with Strasburger & Price; and Stinson Leonard Street took on 16 lawyers from Lackey Hershman.
The fourth deal in the state saw Hunton & Williams combine with Houston-based Andrews Kurth Kenyon to become Hunton Andrews Kurth, which involved 311 attorneys in Texas.
“It’s certainly a big economy and one that—particularly Dallas—is growing,” Smith said. “It’s not one that’s under-lawyered, necessarily, but under-branched.”
The relative paucity of out-of-state players, especially in Dallas, may not last for long, especially with rumors that Kirkland & Ellis is on its way into town.
“It’s a good market for firms that are looking to build their national platform,” Smith concluded about Texas.
Four of the mergers completed in the second quarter were cross-border combinations, for a total of five in the first half of 2018. The largest of these was Bryan Cave’s combination with Berwin Leighton Paisner in London, which officially launched in early April, creating a 1,600-lawyer trans-Atlantic firm.
And more deals are on the horizon, thanks to Dentons‘ relentless growth. The firm has announced seven international acquisitions to occur during the second half of the year, involving firms in Africa, Southeast Asia and the Caribbean, along with a combination with the 44 lawyers of Hawaii’s Alston Hunt Floyd & Ing.
“When we look at international office openings of U.S. firms—counting Dentons as a U.S. firm—60 percent of them in the last five years has been driven by 10 firms, and Dentons leads the pack,” Smith said.
That raises the question of how to actually geographically situate some of these firms. Dentons, for example, defines itself as “polycentric,” and most of its lawyers are now based outside of the United States.
“When you take firms like Dentons out of the merger stats, it actually does have an impact,” Smith said. “We haven’t done that at this point, but it’s something we might want to look at.”
The largest combination announced to date that will be completed in the second half of the year is the merger of Nelson Mullins Riley & Scarborough with Florida firm Broad and Cassel. That merger, announced for Aug. 1, will create a firm with over 725 lawyers mainly along the Eastern seaboard.