More law firm mergers than usual closed in the first three months of 2019, according to the consultant Fairfax Associates, helped along mostly by consolidation among smaller firms across the country.
Fairfax tallied 24 finalized mergers during the first quarter, including three cross-borders tie-ups and 21 U.S. firms joining forces. That figure is higher than the 21 it recorded in the first quarter of 2018 and above the average of 20 mergers in the same period over the past decade, Fairfax said.
While the national economy has faced concerns over when the post-recessionary growth will come to a halt, Kristin Stark, a Fairfax principal, said smaller firms tend not to think about the next downturn so much as about their ability to compete with national and international competitors. An acquisition can also be a way to move into a high-cost market with less risk, she said.
“They’re under competitive pressure,” she said. “They think growth is their way to try to counteract that competitive pressure.”
Fairfax’s findings contrast somewhat with data collected so far this year by Altman Weil, which tracks law firm mergers as they are announced rather than when they close. Altman has logged 27 reported deals so far this quarter, compared to 31 in the first three months of last year—and the average size of the acquired firms in the company’s 2019 tally is far smaller than in Q1 last year.
Stark said she saw no signs of an imminent downturn in legal M&A, however.
The biggest mergers that Fairfax tallied over the past three months include Alabama-based Burr & Forman’s tie-up with McNair Law Firm, a firm in the Carolinas that had a reported 84 attorneys, and Arent Fox’s sealed deal with Boston-based Posternak Blankstein & Lund, which had 55 lawyers. California, New York and Illinois were each home to three firms that joined larger firms, the consultancy reported.
The Chicago headquarters of Butler Rubin Saltarelli & Boyd became the eighth office for the Columbus-based firm of Porter Wright Morris & Arthur earlier this year. Robert Tannous, Porter Wright’s managing partner, said the merger was part of the firm’s strategy to grow across the Midwest and comes on the heels of an expansion to Pittsburgh that grew lawyer-by-lawyer.
In Pittsburgh, Tannous said, Porter Wright has jumped from office to office as it has expanded. In Chicago, by contrast, everyone has managed to stay put; the only issues to speak of with the merger have been technology-related, he said, with the standard transition from one filing system to another still ongoing.
“Because of the cost of doing business in Chicago, in terms of when you’re looking at rent … I think it would be very difficult to do that on a one-by-one basis unless you’re confident you could do that fairly quickly to grow out the space.”
Two of the New York firms that were acquired called New York City home, with Mayerson Abramowitz & Kahn linking up with Schwartz Sladkus Reich Greenberg Atlas and the 10 or so lawyers at Salon Marrow Dyckman Newman & Broudy becoming the latest lawyers in the area to join Baltimore-based Offit Kurman, Attorneys at Law, Fairfax reported.
Moritt Hock & Hamroff of Long Island also joined forces with another small firm, adding seven lawyers from Karol & Sosnik to its team, the report said.
The biggest international cross-border merger announced this quarter has been the addition of 33 lawyers at Straits Law Practice in Singapore to K&L Gates, according to Fairfax.