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Firm mergers continue strong showing this year
LAUREN P. DUNCAN
Law Bulletin columnist
Published: July 20, 2016
The number of law firm mergers in the U.S. is on track with last year’s record number of combinations — a pace that isn’t expected to slow down anytime soon.
Statistics released this week by Altman Weil MergerLine show that during the first half of this year, there were 48 mergers or acquisitions involving U.S. law firms.
That’s exactly how many combinations occurred in the first half of 2015, when the year-end total of 91 combinations was the highest number across the nation over the nine years MergerLine has tracked the data.
Of the 48 combinations during the first two quarters this year, 42 involved at least one firm with 25 or fewer attorneys — a sign that small firms continue to remain open to mergers or acquisitions.
“What we’re seeing so far this year continues the pace and theme of both large and small firms acquiring small firms all over the country,” said Eric Seeger, principal with Altman Weil. “There is no particular hot market, but we do continue to see firms of up to 25 lawyers being acquired pretty routinely.”
The continued pace from last year has some consultants expecting mergers to continue — in part due to both larger and smaller firms finding benefits through combining forces.
Three Chicago-based firms have been involved in combinations this year, according to the report. On Jan. 7, Clark, Hill PLC, a Detroit-based firm with 295 attorneys, announced it joined with the seven-attorney Chicago firm of Martin, Brown, Sullivan, Roadman & Hartnett Ltd.
Freeborn & Peters LLP, with 120 attorneys, added the six-attorney, Richmond, Va.-based firm Brenner, Evans & Millman P.C. in May.
And last month, two foreclosure firms — Pierce & Associates P.C. and Atlanta-based McCalla, Raymer LLC — combined to form McCalla, Raymer, Pierce LLC.
Some of the reasons Seeger credited for the consistent numbers of combinations include larger firms wanting to build up their presence in certain practice areas and the desire of some firms to expand their geographical footprints.
There have also been cases in which small firms combine with others simply because they lack succession plans when longtime attorneys are retiring, Seeger said.
In other cases, large firms take on smaller ones because it can be easier to acquire a small firm than to go through the process of making individual hires.
Although there’s no single cause that’s driving the merger trend, it’s anticipated to remain high. A survey of 37 managing partners of Chicago firms released this year by Zeughauser Group, which performs law firm consulting, found that 41 percent of the partners surveyed were open to considering a combination with another firm in the next three to five years.
Kent M. Zimmermann, a principal at Zeughauser Group, said he expects more mergers involving Chicago firms over the next year or so.
“I’m working on multiple potential combinations involving Chicago firms now,” he said. “Some involve firms of size. They won’t all happen, but some of them probably will. There will be more mergers in Chicago.”
Zimmermann said that many medium and large firms from outside of Chicago have expressed interest in combining with others here, which could create “a lot of good options,” for the Chicago firms. He said he’s also seeing an increased interest on the part of Chicago firms to combine.
“I find increasingly firms are dipping their toes in the water,” he said. “We are working on more deals today than we’ve ever worked on before by a factor of many.”
Seeger likewise said he expects the current pace of combinations to continue.
“We expect the merger market to remain active at a high level and we expect to see continued mergers of this sort with smaller firms being acquired,” he said. “We haven’t seen a large number of big firm-plus-big firm mergers in the last few years, but we know that firms are talking to each other and we would expect to see a couple of bigger deals announced by year end.”