After a record-setting number of law firm mergers in 2017, the blistering pace of mergers has continued through the first half of this year, with 51 combinations announced so far in 2018, according to consulting firm Altman Weil Inc. Those included the acquisitions of four firms with more than 100 lawyers each.
Altman Weil MergerLine on Monday issued its quarterly report on law firm combination activity, showing that 21 firm mergers and acquisitions were announced in the second quarter of 2018, adding to the 30 combinations announced earlier in the year. Among other takeaways, Altman Weil said the size of acquisition targets has been particularly large in 2018: In the 21 deals announced in the second quarter, the average size of the acquired firm was 25 lawyers.
“We’ve gotten used to the constant drumbeat of law firm combinations, but what’s new is the size of some firms being acquired,” Altman Weil principal Eric Seeger said in a statement. “Already this year, four U.S. law firms, each with over a hundred lawyers, have traded their independence for the security and heft of a larger platform. That says a lot about the intensity of market competition in 2018.”
The largest deal in the second quarter brought together Detroit-based Clark Hill, with its 450 lawyers, and Dallas’ 195-lawyer Strasburger & Price, according to the MergerLine data. Nelson Mullins Riley & Scarborough, with its 584 lawyers, and its tie-up with Orlando-based 160-lawyer Broad and Cassel, accounted for the quarter’s second-largest deal. The Nelson Mullins deal is scheduled to take effect Aug. 1, while the Clark Hill deal took effect in April.
In terms of geographic spread, Altman Weil found that the highest number of acquisition targets were located in the mid-Atlantic region, including in Pennsylvania and New York, and the western United States, in places such as California, Colorado, Hawaii, Oregon and Washington. The only international deal in the second quarter was the acquisition by labor and employment specialty firm Littler Mendelson of an eight-lawyer Dutch employment boutique, which gave Littler a new office in Amsterdam.
Altman Weil also noted contributions by global legal giant Dentons to the high pace of merger announcements this year. In 2018, the firm unveiled eight acquisitions, with the announced bolting-on of a 44-lawyer Hawaii firm, Alston Hunt Floyd & Ing, coming in the second quarter. Fox Rothschild also had more than one deal in the second quarter, doubling its presence in Chicago with the acquisition of 23-lawyer Shaw Fishman Glantz & Towbin and expanding the firm’s Denver office with the six-lawyer Rollin Braswell Fisher.
Altman Weil’s second quarter merger data shows a continuation of what has been an active past 18 months for law firm combinations. After ranging between 82 and 91 mergers per year in 2013 through 2016, law firm mergers hit a record high of 102 in 2017, according to MergerLine data.
An active market in Texas, in particular, has helped keep the pace of law firm combinations high in 2018. As ALM reported on June 29, a report from consultancy Fairfax Associates reported 16 completed mergers in the second quarter of 2018, coming on top of 20 mergers completed in the first three months of the year.
Those 36 mergers completed in the first half of 2018 outpaced the 35 from the first half of 2017, Fairfax noted, and Texas saw the three largest domestic mergers in the second quarter. The Lone Star State was also the top market in terms of inbound merger activity, meaning that Texas tended to be the home of smaller firms involved in deals, according to Fairfax.
Altman Weil also highlighted Texas as an active market in its latest MergerLine report, noting that three large firms in the state have been targeted in 2018 by larger regional firms. In addition to the Clark Hill-Strasburger & Price deal, this year has seen 300-lawyer Andrews Kurth Kenyon merge with Hunton & Williams and 230-lawyer Gardere Wynne Sewell combine with Foley & Lardner.