Big Law Mergers Pop as Firms Hit Gas in Industry’s Race to Scale

A Philadelphia law firm picked up a Seattle-based competitor. A Southeast-founded firm gobbled up a Southwest operation. And two firms voted to create a new, 1,600-lawyer mammoth expected to be among the country’s 30 largest.

Mergers have taken center stage with news of Big Law partners voting to approve three tie-ups of large firms in the span of six days. Consolidation is accelerating as competitors seek scale to bolster credentials, access clients and talent in new markets, and spread the growing costs of running law firms over more lawyers.

“More and more firms are appreciating the benefits of scale and recognizing that it’s hard to build enough scale with one-offs, laterals, and an occasional group hire,” said Kent Zimmermann, a principal at Zeughauser Group who advises on law firm mergers. “So they’re pursuing mergers and acquisitions, and that’s true for a large and growing group of firms.”

Many are repeat customers: Four of the six firms in the latest mergers are the product of previous combinations.

Merger talks are on the rise but a combination is not a cure-all. Plenty have ended with regret on both sides. Firm finances and cultures can be hard to mesh, and partners often depart due to conflicts, redundancies, or perceived snubs. Large firms historically have sought merger saviors after falling behind financially, rather than joining up in a position of strength.

The new mergers highlight various strategies.

Regional firms are looking to access broader platforms that provide their clients a wider set of practice groups. Top 200 firms want to enter new geographic locations, selling their services to a fresh batch of companies. Even Top 100 firms are seeking to crack the top end of the market that has grown revenue and profitability faster than the rest.

There’s also a strong push from clients who increasingly see value in sending more work to fewer firms.

“The smaller firms are having a much more difficult time recruiting and retaining talent,” said Howard Cohl, a Los Angeles-based recruiter at Major Lindsey & Africa. “And client demands are driving this, too.”

Whirlwind Week

The merger cycle kicked off last week with the news that partners at Troutman Pepper and Locke Lord voted to finalize their tie-up.

The deal creates a firm that, combined, would have done more than $1.5 billion in revenue last year. Troutman Pepper Locke will formally launch at the start of next year. The firms’ leaders stressed the expanded footprint would help compete on transactional, litigation, and regulatory matters.

On Monday, Philadelphia-founded Ballard Spahr announced it will merge with Seattle’s Lane Powell, creating a 750-lawyer firm with offices in 18 US cities. Ballard Spahr’s leader Peter Michaud said locations in the Pacific Northwest give the firm access to a new set of companies.

A day later, Womble Bond Dickinson said it agreed to combine with Lewis Roca, a west coast-focused firm that reported more than $171 million in revenue last year, to form an entity with 1,300 lawyers in the US and UK. Merrick Benn, Womble Bond’s chair and CEO-elect, said both firms recognized a need to build scale to service their clients.

Womble Bond is a firm with Southeast roots that merged with a UK firm in 2017. Troutman Pepper, Locke Lord, and Lewis Roca also were created by previous mergers. So, too, was Lathrop GPM, which announced last month it would acquire Silicon Valley-based Hopkins Carley on Oct. 1.

Cameron Garrison, Lathrop GPM’s managing partner, said the success of the 2020 merger that created the firm “reinforces” its approach to law firm tie-ups.

“We realized all the things we wanted to out of that combination,” Garrison said. “When something goes that well, it makes you excited to go for new opportunities and it also sets the bar really high.”

Client Demands

Companies have become increasingly sophisticated in how they select outside counsel, said Lisa Smith, a principal at Fairfax Advisors who advises on mergers. Many have become “pickier” about working with a smaller pool of firms with broad expertise.

“They’re looking for the sort of range of specialty practices with depth,” said Smith. Fairfax Advisors worked on the Ballard Spahr and Womble Bond deals, but Smith said she was speaking generally about industry trends. “Clients definitely are the main part of this. Firms are having to respond to what they’re seeing in terms of client demand.”

Mergers can also help smaller firms struggling with the rising costs of associate salaries and increasingly expensive technologies, such as privacy protections or investing in new generative artificial intelligence tools, recruiters and advisers said.

Michael Heller, chairman and CEO of Cozen O’Connor, said he expects more top 200 law firms to merge with top 100 firms. Competing against firms with a thousand or more lawyers is increasingly difficult for those with a footprint of a few hundred lawyers, he said.

“The fight for talent, the tech investment just require more resources today than those regional firms have,” Heller said.

WATCH: On May 28, 2012, Dewey & LeBoeuf, the product of a merger between two storied New York law firms, filed for bankruptcy. Ten years later, our mini-documentary revisited Dewey’s downfall to understand why the firm failed.

Associates are seen as an “increasingly costly resource,” said Marcie Borgan Shunk, president and founder of the Tilt Institute. They require business generators to keep them busy, retain profits, and invest in growth, she said.

“Economies of scale help create broader platforms,” Shunk said.

Post-Merger Headaches

Still, mergers are no panacea.

Last week, A&O Shearman, the product of a transatlantic merger finalized in May, said it would slash its global partner count by 10%, close its Johannesburg office, and shut down a consulting business. A&O Shearman has around 800 partners globally.

Mergers can take months or years to finalize and are difficult to negotiate. Firms must find a peer with similar practices, economics, and cultures. And after a deal is announced, mergers often lead to partner departures—either due to conflicts or redundancies.

There is a long list of mergers that failed to justify all the optimism and excitement firms project onto the news of finding a new business partner.

“With any of these combinations, like in any sector, if there are practice areas that are no longer strategically on point, they will be removed. If there are underperforming partners, they may be downshifted as well,” said Major Lindsey & Africa’s Cohl.

“It becomes about how you define success going forward,” he said.