The year has gotten off to a roaring start for law firm mergers, with 27 firms combining in the first three months of 2019, according to new data from legal consultancy Altman Weil.
This rapid rate of consolidations so far in 2019 appears to be in line with last year’s pace. In 2018, the industry saw a record-setting 106 law firm mergers.
The combinations so far this year have been acquisitions of small law firms with fewer than 20 lawyers, according to the data, which was gathered by Altman Weil’s Mergerline service.
Combining large firms can be fraught with complications in areas such as compensation, client conflicts and leadership responsibilities, but smaller firm acquisitions can sidestep some of these problems.
Eric Seeger, a principal at Altman Weil, said there are advantages to picking up a smaller firm as they “usually provide a high value return on investment.”
“We’ll continue to see the occasional ‘large plus large’ merger,” said Seeger, “but most of our large law firm clients are pursuing serial acquisition strategies rather than big, identity-changing mergers.”
“Unlike a lateral group that may not successfully retain their full complement of clients after a move, a whole-firm pick up is more of a sure bet for the acquirer,” he continued. “A well-branded boutique firm can also effectively open doors for the acquirer in a competitive practice or geographic market.”
So far in 2019, the largest acquisition was made by Porter Wright, a 200-lawyer firm based in Columbus, Ohio, which added 19-lawyer Butler Rubin Saltarelli & Boyd to enter the Chicago market.
San Francisco-based labor and employment giant Littler Mendelson continued its European expansion with the acquisition of 12-lawyer Homble Olsby in Oslo. Detroit-based Clark Hill acquired nine-lawyer O’Gradys Solicitors in Dublin.
Other acquisitions included Smith Gambrell’s acquisition of Mazursky Constantine, a 12-lawyer employee benefits specialty firm, to add to their Atlanta office. Washington-based Arent Fox added San Francisco firm Kay & Merkle, with seven lawyers. Fisher Phillips brought aboard six-lawyer Farrington Law in Bethesda, Maryland.
Two large firms bolstered their health care practices through acquisitions. Bradley Arant, a regional law firm in the South, acquired two-lawyer Rogaliner Firm in Dallas; and, Buchalter expanded in Sacramento by adding two-lawyer Koenig Caprile & Berk.
Most of the acquiring firms employ fewer than 100 lawyers, and most of the combinations were in the same states in the Middle Atlantic, Midwest or Southern U.S.
“A lot of small, local combinations arise because of the retirement of a founder or major originator,” said Seeger. “For a small firm, a merger is often the best succession strategy.”