Law firm mergers picked up over the summer after cooling during the early months of the pandemic and the outlook is for more deals, but it appears the yearly total will fall far short of a record 2019.
Firms registered 20 combinations from July through September, up from a near-decade low of seven in the second quarter.
“I think you’ll see additional engagement once firms are past their budgeting for next year, and decide if, and how long, they will stay remote,” said Tom Clay, an Altman Weil principal who tracks mergers. “The pandemic put the brakes on but midsize and larger firms are beginning to reengage in strategies to acquire smaller firms.”
Despite the third quarter uptick that also was smaller than recorded in the year-ago period, it appears that the overall pace of mergers and acquisitions for 2020 won’t come close to matching last year when 115 combinations were recorded. There have been 44 so far this year.
It took a while for firms to adjust to the business realities of Covid. “Once firms got through relocating their staff and lawyers and felt comfortable that they could continue to practice law, they began thinking again about their strategy to strengthen themselves,” Clay said.
Acquiring smaller firms has been the theme since Altman Weil began tracking deals in 2007. At first, consolidations were in the dozens but things began to shoot up in 2013 as more firms looked for ways to bolster their business after the Great Recession.
Global firm Dentons chalked up the biggest deal of the third quarter, announcing a combination with 96-lawyer Durham Jones & Pinegar, in Salt Lake City. It is part of Denton’s “golden spike” strategy to create an alliance of law firms around the country.
Dentons also spearheaded the only international deal by joining with 18-lawyer East African Law Chamber, in Dar es Salaam, Tanzania.
In the U.S., Fennemore Craig, a 124-lawyer firm with offices in Arizona, Colorado and Nevada, added Dowling Aaron, a 46-lawyer firm with four offices in California.
Three large law firms made more typical acquisitions in adding smaller firms for practice expertise.
K&L Gates picked up three-lawyer firm Richards Patent Law, in Chicago. Bond Schoeneck added The Wolford Law Firm, a three-lawyer litigation boutique in Rochester, N.Y. Miles & Stockbridge acquired Taylor & Ryan, a two-lawyer immigration firm in Pikesville, Md.