North Carolina-based Smith Moore Leatherwood, a midsize firm of 130 lawyers—with 20 in Atlanta—has agreed to be acquired by Philadelphia-based Fox Rothschild.

The combination is set to take effect Nov. 1, adding six offices to Fox Rothschild in North Carolina, South Carolina and Georgia. Fox Rothschild will now have more than 900 lawyers across its 27 U.S. offices.

The Legal Intelligencer, a Daily Report affiliate, first reported in July that the two firms were in merger talks.

As part of the deal, three Smith Moore partners will join Fox Rothschild's executive committee: current managing partner Julie Theall Earp, Raleigh office managing partner Matthew Leerberg and Greenville office managing partner Frank Williams.

“These are great markets—North Carolina, South Carolina and Atlanta—some of which we had on our radar screen for some time,” said Fox Rothschild chairman Mark Silow. “They gave us some practice areas that we found attractive that we weren't particularly strong or deep in.”

Those areas, the firm said, include manufacturing, clean energy, transportation and logistics, as well as a sports law practice that Fox Rothschild said will fit well with its existing entertainment practice.

Smith Moore has deep roots in the Southeast dating back to 1919. Earp said the decision to merge with a larger firm was client-driven.

“We started realizing that our clients are growing and were becoming more nationally based and were asking for services outside our geography,” Earp said. “It doesn't take a rocket scientist to realize maybe you should start looking at growing your model to service your clients where they are.”

After Smith Moore started down the merger-seeking path, the two firms were connected through law firm consultant Michael Short of LawVision, Silow said. They began seriously discussing a combination in the late fall of last year.

Because of the size of both firms, there were a number of conflicts to work through, Silow said, which is why the deal took so long to complete. Smith Moore also saw a number of lawyers depart since late 2017, Silow acknowledged, and some, but not all, of those were due to conflicts with Fox Rothschild.

As for billing rates, he said there's no question that rates at Smith Moore were lower than the average rates at Fox Rothschild, when taking all offices into account. However, he said, the firm will not rush integrating the rate structures in the Southeast region.

“We have an understanding of where their rates should be, but it will take some time,” Silow said. “Our goal is to bring their practice into Fox Rothschild's practice and not drive away any of their clients.”

That process of gradually integrating rates is something Fox Rothschild is “practiced at,” he said, dating back to some of its earliest mergers in the 1990s, when it expanded into suburban Philadelphia.

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Keeping a National Focus

Earp said Fox Rothschild was an attractive national merger partner because it was a regional firm not too long ago.

“They have been where we are headed, and they've done it really well,” she said. “They haven't lost that sense of where they came from.”

Many large, national and international law firms have made entries to the North Carolina market. More than 60 of the 500 largest U.S. law firms by head count have a presence in North Carolina, according to data from Legal affiliate The National Law Journal's NLJ 500. But only 10 NLJ 500 firms are based in North Carolina, including Smith Moore.

But Silow said Fox Rothschild brings a different approach to the Southeast than other large firms have done.

“A lot of the big national or international firms have established a presence primarily in the Charlotte market primarily to service the financial services community,” he said. “That's not the focus of our practice. We are a very broad, middle-market focused practice.”

Fox Rothschild has grown significantly through mergers with small and midsize firms in the past few years. Its largest one before this was in 2016, when it combined with with Oppenheimer Wolff & Donnelly, an 82-lawyer firm that was based in Minneapolis.

Since then, the firm has made several other acquisitions. It merged with 39-lawyer Riddell Williams in Seattle in May 2017 and gained 23 lawyers in Chicago and Wilmington, Delaware, when it acquired Shaw Fishman Glantz & Towbin at the end of May. The firm also completed a small merger last month, when it brought on six lawyers in Denver from Rollin Braswell Fisher.

“What gave us the courage to do a deal of this size is just how successful our prior deals have been,” Silow said.

As for future growth, Silow said the firm remains focused on having a national reach. There have been some discussions about whether Fox Rothschild should add offices outside the U.S., he said, but the conclusion so far has always been not to do so—at least not right now.

As Fox Rothschild prepares to cross the 900-lawyer mark, Silow said the firm is most focused on adding to the offices it already has, particularly in locations like Miami, Delaware, Dallas and Las Vegas.

As for new markets, he said, “we'll reach a limit of cities we need to be in. We're not there yet, but we're close.” Still, he noted, Fox Rothschild is open to opportunities in a few U.S. cities, particularly Boston.

“We are dedicated to being a national firm,” he said.

Jonathan Ringel of the Daily Report contributed to this article, the first version of which ran in The Legal Intelligencer.

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