Law firm mergers jumped by 67 percent in 2011, and are expected to rise again in 2012, according to the Hildebrandt Institute's MergerWatch. Law firm mergers are already off to a strong start for the new year.
The Hildebrandt Institute tracked 45 completed law firm mergers that involved U.S. firms in 2011. This marked a substantial jump from 2010, which saw only 27 mergers, reflecting a slowdown in the overall demand for legal services at that point in time. And while firms remain somewhat cautious about large combinations--often preferring regional tie-ups--merger activity appears to be heading back towards pre-recessionary levels, which typically saw 55 or more mergers per year. With a rise in mergers in the fourth quarter to 14, up from nine in the third quarter, and with mergers already off to a strong start in 2012, we predict this trend will continue this year.
The largest merger in 2011 between two U.S.-based firms was the combination of Kilpatrick Stockton with Townsend Townsend and Crew to create Kilpatrick Townsend and Stockton, followed by the Edwards Angell Palmer and Dodge and Wildman, Harrold, Allen and Dixon combination that created Edwards Wildman Palmer. Mergers in 2011 covered a wide range of locations, including seven mergers in California, six of which were in Los Angeles; five in Texas, of which four were in Houston; four in Illinois; and three apiece in Florida and New Jersey.
There have been 11 U.S. mergers announced so far in 2012, which is almost double the number (6) announced at this point a year ago. The Midwest is a locus of activity, with Indianapolis in particular accounting for three mergers involving firms based there. The largest of these mergers is the combination of Faegre and Benson in Minneapolis and Baker and Daniels in Indianapolis, which began operating as Faegre Baker Daniels on January 1. Kentucky's Greenebaum Doll and McDonald combined with Indianapolis' Bingham McHale to become Bingham Greenebaum Doll on January 2, and Ice Miller in Indianapolis combined with Schottenstein Zox and Dunn in Columbus, Ohio, on January 1. In addition, Bryan Cave in St. Louis and Denver's Holme Roberts and Owen announced their combination, which also went live on January 1.
Illustrating the continuing globalization of the legal industry, mergers outside the U.S. jumped to 54 in 2011 compared to the 44 tracked in 2010, and 48 in 2009. Many of the cross-border tie-ups were significant in size, including the 1,275-lawyer combination of Squire Sanders and Dempsey with Hammonds in the U.K. in January, followed later in the year by Squire Sanders with 80+ Perth-based lawyers from Minter Ellison. In the spring, DLA Piper combined with Australia's DLA Phillips Fox creating a firm with more than 4,000 lawyers. Canadian law firm Ogilvy Renault and South African law firm Deneys Reitz joined Norton Rose Group in June, creating a global law practice of 2,500 lawyers.
However, not all large mergers outside the U.S. last year were across national boundaries. In the U.K., Clyde and Co combined with Barlow Lyde and Gilbert creating a firm with more than 1,250 lawyers, and Beachcroft combined with Davies Arnold Cooper to create DAC Beachcroft with more than 1,200 legal professionals. Canadian firms McMillan and Lang Michener combined to create a firm of 400 lawyers.
For 2012, a number of large cross-border mergers are in the wings or have recently become effective, with Canada, Australia and Asia being key locations of interest. Norton Rose Group combined with Canadian law firm Macleod Dixon on January 1, creating an international legal practice with more than 2,900 lawyers. The U.K.'s Ashurst and Australia's Blake Dawson announced plans to combine their businesses in Asia by March 2012 with a full merger, conditional on a further vote of the partnerships, by 2014. And recently, Australia's Mallesons Stephen Jaques and China's King and Wood announced the combination of their firms to create King and Wood Mallesons with more than 1,800 lawyers, effective March 1, 2012.
MergerWatch collects data from published reports, press releases and direct reports from law firms. We include all mergers 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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