2013: The Year of the Law Firm Merger

Published: Nov 26, 2013

Topics: Law

Citing irresolvable conflicts of interests between their respective government clients, yesterday Orrick (#37 in the Vault Law 100) and Pillsbury (Vault Law #60) called off their anticipated mega-merger that would have created one of the 10 largest U.S. law firms. The commitment-phobia must have been contagious: less than 24 hours later, Dentons (Vault Law #93) and McKenna Long & Aldridge called off a tie-up that would have created one of the three biggest law firms by headcount worldwide. Both failed agreements would have added to the growing list of law firm mergers in 2013. The number of U.S. mergers announced this year has already surpassed the record high of 70 set in 2008. Here are some of the notable unions that have been announced or completed in the past year:

In June 2013, Norton Rose Fulbright (Vault Law #48), a 3,800 mega-firm, was born of a merger between Houston firm Fulbright & Jaworski and U.K.-based Norton Rose. The combined firm has 54 offices across six continents.
Cooley (Vault Law #55) announced in October 2013 that it will acquire the Washington, DC office of Dow Lohnes. The deal will add 54 attorneys to Cooley’s roster and boost its DC headcount to over 200 lawyers, making it one of the largest firms in the Beltway.
Carlton Fields and class action defense boutique Jorden Burt announced in October 2013 that they will merge to create a 10-office, 370-attorney strong firm boasting robust class action and high-stakes litigation practices.
BakerHostetler (Vault Law #63) and intellectual property boutique Woodcock Washburn announced in November 2013 that they will merge. The tie-up will bring BakerHostetler’s offices to Atlanta, Philadelphia and Seattle for the first time and will double the size of its IP practice.
Hogan Lovells (Vault Law #40), itself a product of a mega-merger in 2010 between Hogan & Hartson and Lovells, announced this month that it will merge with South African firm Routledge Modise. The deal will add 140 attorneys to Hogan Lovells’ 2,500 headcount.

The merger craze has been fueled by an economic climate in which the demand for legal services has stayed flat. How can firms make up for lost business without hiring laterally and leasing space in new cities (both costly undertakings)? Mergers are an opportunity to gain new clients, reduce expenses by consolidating offices or renegotiating contracts with third-party vendors, and in some cases “trim fat” by saying farewell to staff and/or unproductive partners. Law firms that have expanded across the globe boast the ability to handle cases across multiple jurisdictions and provide a one-stop shopping experience for large corporations with a wide range of legal needs.

Most mergers announced in late 2013 are scheduled to take effect on January 1, 2014. Experts say that more announcements are on the horizon. A potential union is brewing between DC powerhouse Patton Boggs (Vault Law #71) and Dallas firm Locke Lord (Vault Law #92) amidst the former’s plan to restructure after a rough start to the year. Patton Boggs made two rounds of cuts in 2013, most recently laying off 10 lawyers and 30 staff in November after shedding 30 attorneys and 30 staff in March. The potential merger would boost both firms’ presence in New York and DC.

Is bigger really better? Not necessarily—and in the case of the failed Dentons merger, the number of McKenna Long partners who espoused that view prevailed. The Wall Street Journal reports that those partners did not believe it was “‘the culture of their firm’” to merge, and that Dentons’ verein structure turned them off. Under that structure, which is used by many behemoth firms including Hogan Lovells, Norton Rose Fullbright, and Baker & McKenzie (Vault Law #32), partners share a brand but maintain separate profit pools. A shift in company culture is a risk of expansion, and associates who take Vault’s survey often report dissatisfaction with management related to a recent merger. Firm policies change and associates often feel lost in the shuffle. But attorneys should get used to it, because the merger fad isn’t ending anytime soon. Is your firm the product of a merger? Tell us how it affected you in the Comments section below.

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