A Lull In Law Merger Activity
In the evolving landscape of legal practice consolidation, the first half of 2024 has witnessed a subtle yet notable shift in merger dynamics among law firms. While the overall number of completed mergers has marginally increased, the landscape for large-scale combinations remains relatively quiescent.
According to recent data from Fairfax Associates, a legal industry consultancy, 29 law firm mergers were finalized in the initial six months of 2024. This figure represents a slight uptick from the 28 deals recorded in the same period of 2023, and a more significant increase from the 25 mergers observed in both 2022 and 2021.
The most significant merger of 2024 thus far has been the creation of A&O Shearman, resulting from the combination of London-based Allen & Overy and New York-founded Shearman & Sterling.
The merger, effective May 1, has produced a global legal powerhouse boasting nearly 4,000 attorneys and 3,000 support staff across 47 offices worldwide.
In the domestic arena, the merger between Midwest firms Ulmer & Berne and Greensfelder, Hemker & Gale, effective February 1, formed UB Greensfelder, a 275-lawyer entity.
These two mergers, while notable, were both announced in the previous year.
Large Law Mergers
Interestingly, no new large-scale mergers have been announced in 2024, despite ongoing discussions between some major players. Troutman Pepper Hamilton Sanders and Locke Lord, for instance, publicly acknowledged merger talks in April, but have yet to formalize any agreement.
Mention of a merger involving Dentons has also seen publicity lately.
Legal industry experts posit that the dearth of large firm combinations stems from various factors. Lisa Smith, a principal at Fairfax Associates, notes that profitability disparities and incompatible rate structures between firms are increasingly common obstacles.
Kent Zimmermann of Zeughauser Group adds that the dual imperatives of enhancing both profitability and size can complicate merger negotiations.
Despite the current lull in announcements, industry insiders suggest that merger discussions continue behind closed doors.
Zimmermann reports advising on several progressing large-scale mergers, including both domestic and transatlantic deals, emphasizing that the absence of public announcements does not necessarily indicate a lack of interest or activity.
Industry experts anticipate that merger activity will continue to increase throughout 2024 and into 2025. Lisa Smith, a principal at Fairfax Associates, expects the total number of mergers in 2024 to surpass the 48 combinations recorded in 2023.
Moving into the latter half of 2024 will see the legal community watching closely to see if any of these ongoing discussions materialize into concrete mergers.
In the UK, economic factors and competition from US firms are driving merger discussions too and merger announcements are a sure bet going forward. Mid-tier UK firms are also exploring mergers to compete more effectively with larger international firms
While the pace of smaller combinations may continue, the realization of large-scale mergers will likely depend on firms’ abilities to navigate complex financial and structural challenges.
The evolving merger landscape underscores the importance of staying attuned to market dynamics and potential shifts in the competitive landscape.
As firms continue to seek strategic growth and enhanced market positioning, the potential for further consolidation remains a key consideration for law firm leaders and individual practitioners alike.
