Orrick, Herrington & Sutcliffe’s planned combination with Buckley shows that Big Law firms are again turning to mergers as a way to further their growth ambitions after a pandemic-induced stall in the activity.
Actions are moving beyond regional operations as the nation’s top law firms look at combining with peers for a competitive advantage, said Lisa Smith, a law firm consultant at Fairfax Associates, who were involved in the Orrick merger talks.
The Orrick merger is “part of a bigger trend, and it’s one that we’ve been seeing glimmers of for some time,” Smith said in an interview. “We are seeing, and are going to see, more mergers among some of the top firms.”
After roughly six months of talks, San Francisco-founded Orrick is poised to acquire Washington-based financial services boutique Buckley in a deal expected to close at the end of the month. The merger will create a firm of more than 1,000 lawyers with a revenue of more than $1.46 billion.
Orrick through the merger is growing its team in New York, Santa Monica and San Francisco, and it’s adding a new office in Chicago. It is also doubling the size of its Washington office to 180 lawyers, including 75 partners, as regulators under President Joe Biden increase their scrutiny of industry.
“We went about it very deliberately and carefully,” Orrick chair Mitch Zuklie said of the merger. “We wanted to make sure that we were really finding similarities and that we would both make each other stronger, and that the combined firm would be better than its twin parts, and we’re quite optimistic that’s the case.”
Merger activity among law firms, which slowed as the coronavirus pandemic took hold in 2020, has since been rising, with 46 completed deals in 2022, according to a report by Fairfax Associates.
In the first weeks of 2023, Morrison & Foerster announced its merger with litigation boutique Durie Tangri, while Holland & Knight is merging with Nashville-founded Waller Lansden Dortch & Davis. Alabama-based Maynard Cooper & Gale is tying up with Carolinas-based Nexsen Pruet, and New York-founded Shearman & Sterling is reported to be in early-stage merger talks with firms.
“Almost all firms are striving to grow larger and more profitable simultaneously,” said Kent Zimmermann, a consultant for law firm management at The Zeughauser Group. “To do that, a firm generally has to extend its existing strengths and grow in areas that command its rates, and this deal allows for Orrick to do that.”
More and more firms are putting all options on the table as to how to achieve their longer-term aspirations, benefit from scale, and to be more distinctive by having a deeper bench of quality strategic areas of focus, Zimmermann said.
“At some point, the dam is going to break and there’s going be a lot more” mergers, he said. “We’ll see if that’s this year.”
Smith said that growing via lateral hiring is difficult, as the people that are added are typically equaled out by those that leave or retire. “It’s almost just a break even,” she said.
Orrick, while working with clients in the technology, energy and finance sectors, saw a growing push from regulators at the intersection of tech and finance and wanted to build its regulatory offering, Zuklie said.
“We’ve been growing it through individual lateral acquisitions but recognizing that the demand seemed to outstrip our ability to provide world-class advice,” he said.
So when he took a phone call in the summer of 2022 from Buckley partner and former Orrick attorney Preston Burton, it became clear Buckley had “a depth and sophistication” where Orrick had been looking, Zuklie said.
Buckley was also going through its own process. The financial services boutique was born from Big Law refugees in the early 2000s and grew to a more than 100-lawyer firm with some of the nation’s largest banks as its clients, including Morgan Stanley, Bank of America and J.P. Morgan Chase.
For years other firms had approached the firm, but it never considered a merger or a combination, said Clint Rockwell, Buckley’s co-managing partner. “We were pretty fiercely independent.”
But as the convergence between technology and finance required advice beyond what the firm was able to provide, the firm became interested in a combination that would give it full-service offerings, he said.
Buckley also faced internal pressure from a changing marketplace as partners departed for other Big Law firms. Early last year, Cooley hired a three-partner team from Buckley in Chicago, while in June, four of its financial services partners jumped to Paul Hastings.
“What we were hearing from the departed partners was they were really enticed by a larger platform,” Rockwell said. “It made us more open when the connection with Orrick was made to really look at it and really consider it.”