July 7, 2015
LOS ANGELES DAILY JOURNAL
By Steven Crighton
There have been a record-setting 48 law firm mergers so far in 2015, according to data released Monday by Altman Weil, a law firm consulting service.
It’s the largest number since Altman Weil began tracking law firm combinations nine years ago. The company’s MergerLine logs law firm combinations as they are reported by media outlets and in press releases.
The first quarter of 2015 also set records, with 29 law firm mergers and acquisitions, the data reveals. There were 19 law firm combinations in the second quarter this year.
“Some people look at the number of mergers taking place as an indicator of the general health of the profession,” Altman Weil principal Eric Seeger said in an interview Monday. “Mergers and acquisitions can indicate confidence and optimism.”
Seeger said that law firm mergers dropped off massively in 2009, but since the recession they have been steadily on the rise. He attributed the revival in mergers to “a combination of optimism, internal stability, and refocusing on strategy.”
“I think we’re seeing more optimism now in the general economic outlook, and firms are feeling like they are in a better financial and strategic position to move forward on growth plans,” Seeger said.
Seeger noted that the list includes Swiss Verein additions, in which law firms render legal services under one name while maintaining its own financial compensation structure. Only mergers that involved a U.S. company are included in the data, Seeger said.
Among this year’s biggest mergers is Dentons’ combo with McKenna Long & Aldridge LLP, which was finalized on July 1. It and Dentons’ planned merger with Chinese-firm Dacheng, would make Dentons the largest law firm in the world with over 6,000 lawyers.
Other mergers this year cited in Altman Weil’s study include Cozen O’Connor PC, a 575-lawyer Philadelphia-based firm which acquired 60-lawyer commercial litigation firm Meckler Bulger Tilson Marick & Pearson. Philadelphia-based Blank Rome LLP also acquired the 24-lawyer intellectual property boutique Wong, Cabello, Lutsch, Rutherford & Brucculeri LLP in Houston.
Legal recruiter Diane Rifkin of Rifkin Consulting said law firms merge to “capitalize on the trend towards an increasingly global economy.”
“While headcount may be one goal, more often firms seek merger partners in order to add geographic presence and practice abilities in order to better service clients in new markets,” Rifkin said.
Edwin Reeser, a Pasadena lawyer and former firm managing partner, said that it wasn’t just an appetite for expansion and an optimistic market that drove the rise in mergers, but the liquidation of firms with a questionable survival rate and a desire for “unhealthy” firms to merge their way out of a financial decline.
Larry Watanabe of Watanabe Nason LLC said that the uptick in merger activity largely reflects attempts from mid-profit firms to gain market share. Smaller firms, typically with 20 attorneys or less, pair best with middle-tier firms because of their “financial compatibility involving billing rates, profitability, and profit margins.”