Law Firm Mergers Continue Upward Trend; International Mergers Up Sharply Says Hildebrandt Institute MergerWatch Report
WASHINGTON, D.C., October 2, 2012 – Law firm mergers through the third quarter of 2012 were on par with the same period last year, according to the latest Hildebrandt Institute MergerWatch Report. The Hildebrandt Institute tracked eight completed mergers that involved U.S. firms in the third quarter. This brings the total of mergers in the first three quarters of the year to 33, higher than the 31 mergers completed through the same period in 2011 and the 20 mergers completed in 2010. However, merger activity still lags behind 2009, which saw 49 completed mergers.
While we are seeing a continuing trend of low to moderate merger activity in the United States, merger activity outside the United States is quite robust, particularly in the UK and Australia, a trend observed since the beginning of the year.
With the exception of the merger between personal injury law firm Jacoby & Meyers and Chicago-based Macey Bankruptcy Law in July, which created a 300-attorney firm, the combinations continue to be rather small in scope, an indication of a U.S. legal market that has little room for further segmentation at the top end. Firms continue to make small acquisitions either to expand their geographic footprint, build upon an existing regional presence or to create strength-in-depth. We are seeing a similar trend in the Australian domestic market, which will be discussed further below.
Three of the domestic U.S. combinations involved firms located in New York: ASK Financial based in St. Paul combined with Neiger LLP, a six-lawyer bankruptcy practice; Richmond, Virginia’s Murphy & McGonigle combined with Wall Street’s Krebsbach & Snyder; and former FBI Director Louis J. Freeh’s firm, Freeh Sporkin & Sullivan, joined with Philadelphia-based Pepper Hamilton.
The remaining four domestic mergers took place in the West and South. In Nevada, 23-lawyer firm Jones Vargas joined with Phoenix-based Fennemore Craig, and Kansas City’s Spencer Fane Britt & Browne combined with Denver’s 21-lawyer Grimshaw & Harring, giving Spencer Fane a new office in the Mile High City. Sacramento’s Weintraub Genshlea Chediak Tobin & Tobin merged with Los Angeles entertainment law firm Weissmann Wolff Bergman Coleman Grodin, and Kentucky’s Wyatt, Tarrant & Combs boosted its Memphis office with the addition of Williams McDaniel.
In contrast to the domestic U.S. legal market, international merger activity was up sharply in the third quarter. The number of combinations involving non-U.S.-based law firms in the third quarter was 21, more than double the nine mergers tracked in 2011. For the first three quarters of 2012, there were 61 mergers. The number of combinations thus far in 2012 is almost twice that of the first three quarters of 2011 – which saw 32 mergers – as well as for prior years, which saw 32 combinations in 2010 and 35 in 2009.
The brisk pace of law firm consolidation in the U.K. is ongoing. Mergers completed this quarter included those between Anderson Fyfe in Glasgow and TLT in Bristol (July 1); Glasgow’s Biggart Baillie and DWF in Manchester (July 1); and DAC Beachcroft and Glasgow’s Andersons Solicitors (Sept. 3); and Shakespeares and Harvey Ingram (Sept. 1).
Rapid change also is occurring in the Pacific Rim legal market. The region remains a desirable location for law firms and, notably, UK firms continue to show strong interest in the Australian market. Herbert Smith and Australia’s Freehills merged to create Herbert Smith Freehills with 2,800 lawyers, effective Oct. 1. Global law firm K&L Gates and Australian national law firm Middletons have acknowledged that they are in discussions regarding a possible combination that, if approved, would create a firm of more than 2,000 lawyers. As noted earlier, the Australian domestic market also is undergoing significant change as a number of middle market firms tie up to reposition themselves to compete more effectively for domestic work. Seven domestic combinations have been announced so far this year, almost double the pace of 2011. Since the beginning of 2010, there have been a total of sixteen announced domestic mergers.
MergerWatch collects data from published reports, press releases and direct reports from law firms. U.S. mergers are reported where the acquired firm has five or more lawyers. Upon routine verification of the data, some historical numbers have been updated since previously issued reports, and the number of mergers contained herein may change as additional mergers are announced.
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