November Flurry Propels 2013 to Law Firm Merger Record
With five weeks left, 2013 is already a record-setting year for tie-ups involving U.S. law firms. And as the latest spate of deals pushed the total number of mergers announced so far this year to 78—past the previous high of 70 set in 2008—The Am Law Daily caught up with legal consultants Ward Bower and Tony Williams to discuss the trend toward consolidation here and abroad.
For his part, Bower, a principal with Newtown Square, Pa.–based legal consultancy Altman Weil, believes this year's tie-up total has yet to reach its peak. "I expect we'll see quite a few more before the end of the year," he says.
Altman Weil's website tracks mergers as they are announced, and when the consultancy released its third-quarter merger report last month, The Am Law Daily noted that a record-breaking year was on the horizon. The mark officially fell last week when Milwaukee-based DeWitt Ross & Stevens merged with smaller Minneapolis firm Mackall, Crounse & Moore to form a 100-lawyer firm with nearly $50 million in annual gross revenue.
Though that newly merged entity is unlikely to make its way onto next year's Am Law 200, the industry's continuing consolidation could well qualify others for inclusion in The American Lawyer's rankings of the country's highest-grossing firms—or ensure that those already residing within in its ranks to improve their positions.
For a firm to land on this year's Am Law 200 list, it needed to bring in at least $90.5 million in gross revenue in 2012. Texas firm Strasburger & Price and New Jersey's Sills Cummis & Gross both made the cut by hitting that number, according to our reporting on firm finances. As it happens, both firms executed mergers in recent years. Sills Cummis absorbed New York's Silverberg Stonehill Goldsmith & Haber in 2009, while Strasburger, which has seen some merger deals unwind, picked up San Antonio's Oppenheimer Blend Harrison & Tate in 2011.
This week's merger activity included deals involving two Am Law 200 firms that may now be poised to climb higher. Early in the week, Milwaukee-based Michael Best & Friedrich added the eight-lawyer Vantus Law Group in Salt Lake City. And on Friday, Am Law 100 stalwart Baker & Hostetler announced that it will combine with Philadelphia-based IP boutique Woodcock Washburn. Like many of the mergers Altman Weil has tallied the year, both transactions will officially go live on Jan. 1, 2014.
While many law firm leaders and clients remain skeptical about the value of mergers, Bower notes that combinations do offer certain advantages.
"The big question is, 'What's big enough?'" Bower says. "You don't have to have 4,000 lawyers in 30 countries. But you do need to be big enough to attract some clients or keep business away from others."
Tony Williams, the head of London-based Jomati Consultants—with which Altman Weil maintains a strategic alliance—also sees benefits in firms joining forces. Indeed, while acknowledging that there are other models for achieving growth, Williams, a former managing partner of Magic Circle firm Clifford Chance, says a merger can be the most efficient. "Lateral hires and bolt-ons are a time-consuming process," he told The Am Law Daily when we spoke with him earlier this month.
Though that may be true, some large firms appear happy to take their time. Litigation and arbitration powerhouse Quinn Emanuel Urquhart & Sullivan, for instance, has used lateral hiring to drive its expansion into Europe. Other firms like Baker & McKenzie, Dentons, DLA Piper, Hogan Lovells, King & Wood Mallesons, Norton Rose Fulbright and Squire Sanders—which announced an alliance in Indonesia this week—have opted to expand by operating under the Swiss verein structure, which at allows partner firms to maintain separate profit pools.