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Law Firm Mergers continue upward trend in 2009

Hildebrandt

According to Hildebrandt, leading consultants to the legal industry, law firm merger activity continued at an active pace in 2008, with a total of 55 completed mergers and acquisitions involving U.S. law firms, up from 54 in 2007. This continues the trend of the past several years, with 59 completed mergers in 2006, 52 in 2005 and 49 in 2004. We expect merger activity in 2009 to be at a more active pace than 2008, with 20 mergers already completed in 2009 and more in the works. Lisa Smith, head of Hildebrandt's Law Firm Strategy and Merger Practice, said, "We expect the current economic cycle will accelerate the pace of consolidation in the legal industry. Merger activity has picked up in recent months as firms look to diversify their client base, geography and practice mix."

Following typical patterns, the busiest quarter in 2008 was the first quarter with 22 mergers, followed by 14 in the second quarter, 15 in the third quarter and four in the fourth quarter.

The largest merger of 2008 (based on the size of the smaller firm) was the merger between Blackwell Sanders and Husch & Eppenberger to form Husch Blackwell Sanders. The second largest merger of 2008 was Mayer Brown with Hong Kong's Johnson Stokes & Master (JSM). Other top mergers were K&L Gates with Kennedy Covington Lobdell & Hickman, and also with Hughes & Luce; McGuireWoods with Helms Mulliss & Wicker; and Reed Smith with Richards Butler Hong Kong.

The number of cross-border mergers with U.S. firms increased from five in 2007 to seven in 2008. The largest of these were two combinations with Hong Kong firms: Mayer Brown with Johnson Stokes & Master (JSM), and Reed Smith with Richards Butler Hong Kong. There were also two mergers between U.S. and German law firms: Orrick, Herrington & Sutcliffe with Holters & Elsing; and Paul, Hastings, Janofsky & Walker with Smeets Haas Wolff. Other cross-border mergers included Howrey with Martinez Lage in Spain; K&L Gates with J&J Attorneys-at-Law in Taiwan; and Edwards Angell Palmer & Dodge with Kendall Freeman in London.

Domestically, the mergers covered a diverse set of cities. Los Angeles was the leading destination, with five inbound mergers in 2008. Other strong destinations included Philadelphia with four inbound mergers and Chicago; Washington, D.C.; Charlotte; Mobile; and Indianapolis with two each. Texas had four mergers: two in Dallas and one each in Houston and Austin.

To date, there have been 22 U.S. mergers scheduled for the first quarter of 2009, with 20 of these already completed. The largest of these was between Bryan Cave and Powell Goldstein, followed by the merger between Bradley Arant Rose & White and Boult, Cummings, Conners & Berry, and the combinations of Troutman Sanders and Ross, Dixon & Bell; and Frost Brown Todd and Locke Reynolds.

In addition to tracking mergers and acquisitions among law firms, Hildebrandt also tracks office openings around the globe. During 2008, we tracked 244 new branch office openings; 120 of which were in the U.S., and 124 were outside the US. The Middle East and Asia continue to be dominant locations, with 30 and 36 openings, respectively. Other strong locations included Germany and London, with seven office openings each, and Brazil and Switzerland, with five openings apiece. In the U.S., the top area was California, with a total of 16 office openings in San Francisco/Silicon Valley, six in Los Angeles, two in San Diego and one in Ventura. Other popular cities included Washington, D.C., and New York, with seven openings each; Chicago (six openings); Houston (five openings); and Seattle, Boston and Las Vegas with four openings each.

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PLEASE NOTE: MERGERWATCH collects data from published reports, press releases and direct reports from law firms. We include all mergers where the acquired firm has five or more lawyers. Upon routine verification of the data, some historical numbers have been updated since previously issued reports, and the number of mergers contained herein may change as additional mergers are announced

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