Law firm mergers fell 43% last year as partners grappled with financial uncertainties brought on by the coronavirus pandemic, according to an Altman Weil MergerLine report released Tuesday.
Deal activity declined sharply starting in March of last year as the pandemic set in, leading to only 65 combinations in 2020, down from the record 115 the previous year, the report found.
“We don’t expect to return to 2019 levels immediately, but we see a pent-up appetite for growth that should drive deal volume up in 2021,” Tom Clay, a firm principal and merger adviser, said in a statement.
The report is consistent with the findings of legal consultancy Fairfax Associates, which found that 2020 had the fewest number of legal industry mergers since 2010. “We expect the downturn in completed mergers to be a one-time aberration,” Fairfax said in December.
Last year’s largest deal was announced in January, before the pandemic took hold, when the 650-lawyer Troutman Sanders firm based in Atlanta agreed to combine with 450-lawyer Pepper Hamilton in Philadelphia. The combination was finalized in July after the pandemic pushed back the original April date.
It was the only deal in 2020 involving two firms each with more than 100 lawyers.
In another pre-pandemic combination, Philadelphia-based Duane Morris acquired Satterlee Stephens in New York City, adding 65 lawyers to its 800-lawyer roster.
Global firm Dentons announced four acquisitions between August and December, including firms in Salt Lake City, Birmingham, Alabama and Des Moines, as well as adding a firm based in Tanzania.
Another major firm, Littler Mendelson, acquired three European labor and employment boutiques in 2020.
Mountain West law firm Fennemore Craig acquired 46-lawyer, Fresno-based Dowling Aaron with its four California offices. And, as the year came to an end, Philadelphia-based Fox Rothschild announced in December that it intended to combine with 21-lawyer Greene Radovsky in San Francisco.
The frequency of such activities will increase this year, Clay said.
“As their financial positions have stabilized, firms have begun to re-engage.”