Another active year for U.S. Law firms combinations

There were 82 law firm combinations announced in the United States in 2014 according to Altman Weil MergerLine. Although down 7% from last year's record-setting mark of 88, this is the second highest annual total recorded in the eight years MergerLine has been compiling data.

"We expect this pace of law firm combinations to continue into 2015," says Altman Weil principal Tom Clay. "Whether a firm is proactively buying into a hot geographic market or a new practice area or defensively consolidating against the threat of new competition, a strategic combination can offer a good solution."

There was only one big law firm merger announced in the U.S. legal market 2014. The combination of AmLaw 100 law firms Locke Lord (625 lawyers) and Edwards Wildman (425 lawyers) added a new thou.s.and-lawyer law firm to the U.S. league tables.

The largest acquisition of 2014 was Squire Sanders' pick up of 280-lawyer, DC-based, public policy firm Patton Boggs. The new Squire Patton Boggs has over 1,500 lawyers. Buchanan Ingersoll & Rooney also made a sizeable deal in spring 2014, acquiring 92-lawyer Florida law firm Fowler, White, & Boggs.

However, large deals are not the norm in the current U.S. legal market. Of the 82 law firm combinations reported in 2014, 59% were acquisitions of firms with between 2 and 5 lawyers, a dramatic jump from 2013 when only 36% of acquired firms fell into that size category. An additional 28% of acquisitions were of firms with between 6 and 20 lawyers. Overall 87% of 2014 combinations were acquisitions of law firms with 20 or fewer lawyers.

"Small firm acquisitions are a good, manageable option for most firms, but they're not foolproof," says Clay.

'"As in the lateral market, there can be some buyer's remorse if a deal hasn't been properly vetted."

Geographically, law firms in the western and southern United States were the targets of over half of all acquisitions in 2014, with a particular focu.s. on California and Texas. Mid-sized and large regional law firms were active acquirers in these areas.

Chicago-based Hinshaw & Culbertson passed the 500 lawyer mark by acquiring 45-lawyer Barger & Wolen in Los Angeles. Wilson Elser added 8-lawyer Hake Law in San Francisco; Venable acquired 7-lawyer Los Angeles firm, Weingarten Brown; and Robins Kaplan also picked up a 7-lawyer Los Angeles firm, Peitzman Weg.

Three AmLaw firms entered the Texas legal market in 2014. LeClairRyan opened in Hou.s.ton by acquiring 19-lawyer Hays, McConn, Rice, & Pickering. Fox Rothschild added 18-lawyer Dallas firm, David & Goodman. Quinn Emanuel acquired five-lawyer Hou.s.ton litigation boutique, Gerger & Clarke.

There were eight cross border acquisitions in 2014, 10% of all deals announced last year. Large global firms dominate this category as acquirers.

In the year's biggest international move, Hogan Lovells acquired 66-lawyer Barrera Siqueiros y Torres Landa in Mexico City. DLA Piper also added a Mexico City firm in 2014, and made a second overseas deal acquiring a law firm in Prague. Baker & McKenzie and Dentons both picked up South African law firms in 2014. Littler continued its Latin American expansion with the addition of a firm in Lima, Peru.

The complete list of 2014 law firm mergers and acquisitions as well as an archive from prior years and an eight-year trend summary are available online at www.altmanweil.com/MergerLine.

Published: Tue, Jan 27, 2015