McGuireWoods is aggressively seeking a merger partner as the 189-year-old Richmond, Virginia law firm eyes growth in New York, Chicago, Atlanta, Texas and California.
“We are looking to grow and aggressively looking to talk to firms who are of the mindset,” firm chairman Jonathan Harmon said in an interview. “I believe that the market’s consolidating and that you’re going to have to have scale.”
McGuireWoods since 2019 has been talking with potential partners—Stroock & Stroock & Lavan reportedly among them—but the firm has yet to close a deal. Interest from among the 100 largest firms has increased, Harmon said.
“Finding the right firm to acquire, merge with, is hard,” he said. Years ago “we brought on some folks who weren’t culturally aligned with us, and it was a disaster,” so the firm plans to avoid repeating history, Harmon said.
Big Law merger interest is on the upswing as potential competition from non-lawyer owned businesses pushes firms to add scale. Large firm mergers, after dropping off during the early part of the pandemic, have grown to at least three so far this year, compared with just two in all of 2022, according to Fairfax Associates.
The 2023 mergers include Orrick’s acquisition of financial services boutique Buckley; Holland & Knight’s combination with Waller Lansden Dortch & Davis; and Smith Gambrell & Russell’s tie-up with Freeborn & Peters.
McGuireWoods was among firms Stroock & Stroock & Lavan had spoken with about a possible merger, the American Lawyer reported earlier this year. Harmon declined to discuss any potential suitors.
The firm aims to marry its growth goal in the five states with getting bigger in five practice areas—private equity, health care, energy, high-stakes investigations and litigation, and financial institutions and alternative lenders, according to Harmon.
McGuireWoods’s gross revenues in 2022 rose 2.5% to $977 million from 2021, according to the firm. Over the last five years, revenues have risen by 16%, according to American Lawyer survey figures.
Profits per equity partner have risen steadily since 2019, though from 2021 to last year they dipped by 4.7% to just under $2 million, according to American Lawyer. The drop occurred in part because the firm’s equity partnership tier recently grew by about 10%, according to McGuireWoods.
Firms are considering mergers as they face potential new competition from non-traditional operations. Arizona and Utah have permitted non-attorneys to own law firms in an experiment to make legal services more affordable for low-income residents.
Other states are weighing similar moves. Harmon and other law firm leaders worry that the Big Four accountancies could join the mix.
Harmon acknowledged he’s more public about seeking a partner than rivals who often won’t confirm they’re looking around.
“I’m more frank about it,” he said. “If you’re coy and you’re pretending ‘Hey, I don’t want to date,’ you may not get one.”
Harmon, 57, joined the firm in 1995 and has been a litigation partner since 2001. His clients have included Yahoo Inc. and International Paper Co.
He helped win about $20 million on behalf of the Commonwealth of Virginia, and for Virginia Tech, from insurance carriers that the state claimed were engaging in student health care fraud.
Soon after Harmon took the reins at the firm in late 2017, he said he was told he was the only Black chair among AmLaw 100 firms.
“That can’t be right,” he said then, according to Harmon. “I was stunned.”
Since that time, Harmon—a West Point graduate who served as an Army first lieutenant during Operation Desert Storm—has made diversity and inclusion issues a priority.
More than five years into his term as chair, 62% of the members of the firm’s executive committee are women or lawyers of color, Harmon said. Within the firm’s 24-member board of partners, that figure is 54%, he said.
Putting diverse leaders in leadership positions has been part of the firm’s strategic plan, Harmon said.
“We believe that matters,” he said. “The people who are running the firm and leading the firm, what do they look like?”
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