The first three months of 2018 seem to be ushering in the year of the global mega-firm.
Three of the 30 combinations announced so far this year have resulted in law firms of over 1,000 lawyers.
Law firms have been consolidating at a brisk pace for much of the last decade, and 2017 was a record year with 102 mergers or acquisitions, according to Altman Weil MergerLine. Many such combinations have involved larger firms acquiring legal boutiques with dozens—not hundreds— of lawyers.
But the trend appears to be shifting. The biggest firms have been swallowing other large firms as they seek to expand their services and increase revenue.
“Intensifying market competition is making sizeable law firms with hundreds of lawyers receptive to merger offers that they would never have considered a few years ago,” said Thomas S. Clay, an Altman Weil principal.
Texas firms have been particularly popular as merger partners. Two of the three largest combinations this year have involved major firms merging with somewhat smaller Texas-based firms.
In February, Richmond, Va.-based Hunton & Williams, which has about 700 lawyers, agreed to merge with Houston-based Andrews Kurth, which has about 300 lawyers. And last month Milwaukee-based Foley & Lardner, with about 850 lawyers, said it would combine with Dallas-headquartered Gardere Wynne Sewell, a 230-lawyer firm.
“Texas has been one of the most desirable in-bound destinations for law firm mergers, acquisitions, and lateral hires over the last few years, but big deals like this are rare even in a prime market,” Clay said of the Gardere merger.
Transatlantic law firm combinations are also flourishing. The largest deal so far this year was between 900-lawyer Bryan Cave, based in St. Louis, and 650-lawyer Berwin Leighton Paisner, based in the United Kingdom.
In the first quarter of 2018, eight other cross-border combinations were announced. Seven of the eight were acquisitions by global mega-firm Dentons, which has 8,100 lawyers worldwide. It is adding 170 new lawyers from law firms in Barbados, the Cayman Islands, Indonesia, Kenya, Malaysia, and Mauritius.
DLA Piper, an international firm based in New York, announced that it would add a 20-lawyer firm in Santiago, Chile to its existing 4,000 lawyer bench.
But three-fourths of all law firm combinations thus far this year have been acquisitions of firms with twenty or fewer lawyers, most of which were in Southern states. Florida firms were popular targets, according to AltmanWeil.
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via Big Law Business