Big Law Stays 'Bullish' on Small and Midsize Mergers
With three Am Law 200 firms announcing mergers this week, large firms are showing their appetites for acquiring smaller shops.
August 22, 2018 at 05:27 PM
5 minute read
There's no such thing as the summer doldrums this year for law firm mergers, as small and midsize firms continue to attract Big Law suitors.
The past two weeks alone brought news of at least six mergers involving an Am Law 200 or Global 100 firm, according to ALM reports and Altman Weil's MergerLine. A MergerLine report from earlier this summer showed that the legal industry was already on pace for another record-setting year for law firm mergers, with 51 combinations taking place in the first half.
Altman Weil consultant Eric Seeger said if inquiries by law firms are any indication, many more combinations are likely in the works.
“The firms that have seen consistently positive results are feeling bullish about growth, and have the willingness to make those investments,” Seeger said. “I can't remember a time when so many firms were calling us to find a firm to acquire, or to discuss a merger opportunity.”
On Tuesday, Washington, D.C.-based Venable announced a combination with IP firm Fitzpatrick, Cella, Harper & Scinto, in the biggest deal of the month so far. Fitzpatrick Cella adds 104 lawyers to Venable, which will have roughly 800 attorneys once the merger becomes official in November.
In the same day, Holland & Knight announced that it had acquired a six-lawyer international tax boutique based in Tampa, Sharp Partners.
On Monday, Milwaukee-based firm Michael Best & Friedrich added seven lawyers in Colorado through a merger with small firm Modus Law, which works with startup companies.
And last week, Kansas City-based Stinson Leonard Street announced plans to bulk up its presence in St. Louis in its second acquisition since the spring, with 24-lawyer intellectual property firm Senniger Powers.
Also last week, global firm Dentons picked up a 33-lawyer firm in Chile, and Squire Patton Boggs absorbed small IP shop Singularity in Northern California.
For Am Law 200 firms, small and midsize combination partners usually offer one of three things, said Barry Genkin, an M&A lawyer at Blank Rome: a geographic foothold, deep strength in a new practice area or added capabilities in an existing, key practice area. Often the smaller of two merging firms is looking for a way to keep its most successful partners, who may be looking to take their practices to a larger platform, he said.
“They're certainly not desperate, but they know the clock is ticking, and the longer they wait the harder it's going to be to find a [merger] partner that's compatible,” Genkin said. “You don't want to do something like that when you're under the gun.”
As for the smaller mergers of 10 lawyers or fewer, those are often akin to a group lateral partner hire in investment and impact on firm head count, but with a greater chance of success, said Frank D'Amore of Attorney Career Catalysts in Philadelphia.
“If you can bring a group, it's a bit stronger sign that the clients are going to come,” he said. “If you're able to get a firm, and you're able to lock in the key partners, it takes the client flight risk almost away, because you're getting the whole firm.”
Simply watching other combinations take place has been enough to make some firms take the plunge, D'Amore said. “Earlier in my recruiting career I had to do much more of an educational process” with firms that should consider a merger, he said. But now, firm leaders are more aware of the possibilities, because so many of their peers are making those moves.
Seeger echoed that sentiment, and said Altman Weil gets inquiries from firms that see their market being “stirred up.” As they watch neighbors merge, they're open to exploring opportunities for themselves, he said.
Meanwhile, pressures on certain niche practices can also drive movement. For instance, a number of this year's mergers have involved IP boutiques, including three of the most recently acquired firms—Fitzpatrick Cella, Senniger Powers and Singularity.
“I've heard from other IP firms that patent prosecution has been undergoing commoditization for years,” Seeger said. That places pressures on IP boutique profit margins, he said. But some large firms are willing to take on that less profitable group for the cross-selling opportunities.
That may be the case for other practice areas as well, Seeger said, such as employment law. However, he noted, there are plenty of highly profitable boutiques that merge with larger firms as well.
“Sophisticated niche expertise is valuable to large firms,” he said, “and to clients.”
READ MORE:
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllMore Big Law Firms Rush to Match Associate Bonuses, While Some Offer Potential for Even More
Holland & Knight, Akin, Crowell, Barnes and Day Pitney Add to DC Practices
3 minute readTrending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250