Cross-border Mergers Continue Strong Pace In 2017
Partner Compensation to Incentivize Collaboration and Client Profitability
WASHINGTON, D.C., June 30, 2017 – Law firm mergers in the first half of 2017 were on par when compared with merger activity in the first six months of 2016, according to the merger research team at Fairfax Associates. Cross-border combinations continue to drive merger activity, a trend we have seen since last year.
In the second quarter of 2017, we tracked 13 completed mergers (meaning the effective date of the merger occurred during the second quarter of 2017) for a total of 35 completed mergers in the first half of 2017. This is equal to the 35 mergers in the first half of 2016, but is higher than the first half historical average of 31 mergers when analyzing our data over the last 10 years (from 2007 to 2016).
Seven of the mergers in the second quarter – just over half – were cross-border combinations, for a total of 12 in the first half of 2017. Last year there were 13 cross-border mergers for the entire year, up from just five in all of 2015.
The cross-border mergers in the second quarter were: Norton Rose Fulbright with Chadbourne & Parke (300 lawyers); DLA Piper with LETT in Copenhagen (150 lawyers); Eversheds Sutherland (itself a product of a cross-border merger in the first quarter of this year) with Singapore’s Harry Elias Partnership (90 lawyers); UK-based Kennedys with Carroll McNulty & Kull in Basking Ridge, New Jersey (88 lawyers); Dentons combinations with Boekkel in Amsterdam (70 lawyers) and Livingstons Legal in Myanmar (5 lawyers); and Littler Mendelson with GQ Employment Law in London (16 lawyers).
A primary driver for the uptick in cross-border law firm mergers is increased demand from clients for legal services relating to cross-border transactions and business interests. Many US firms still have limited international capabilities, and are seeking to compete more directly for work from their clients with international requirements. In some instances, this is a next round of national or regional US firms expanding outside of the country, and in other instances it is global firms building out their existing platform.
Unlike recent merger activity which has been dominated by small combinations, only 38 percent of the mergers in the second quarter were in the 5 to 20 lawyer range. The largest mergers were all cross-border combinations, led by the combination of Norton Rose Fulbright with Chadbourne & Parke, followed by the DLA Piper and LETT combination, Eversheds Sutherland combination with Harry Elias Partnership, and Kennedys with Carroll McNulty.
California led the way in terms of in-bound (the location of the smaller firm) merger activity, with two mergers in Los Angeles. These included Boies Schiller & Flexner with Caldwell Leslie & Proctor (26 lawyers) and Freeman Mathis & Gary with Gilbert, Kelly, Crowley & Jennett (33 lawyers). Markets with one merger each included Florida, Michigan, New Jersey, New York, Washington and Wisconsin.
Looking forward to the second half of 2017, two large combinations have already been announced for completion later in the year: Womble Carlyle with UK-based Bond Dickinson (580 lawyers) and Norton Rose Fulbright with Henry Davis York in Australia (179 lawyers). Philadelphia-based Saul Ewing and Chicago’s Arnstein & Lehr (139 lawyers) have also confirmed that they are in merger discussions.
Fairfax Associates collects data from published reports, press releases and direct reports from law firms. Mergers are reported where the acquired firm has five or more lawyers. Upon routine verification of the data, some historical numbers may 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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About Fairfax Associates
Fairfax is a specialist firm of highly experienced consultants focused on serving clients in professional services, and in particular, law firms. Our services and areas of focus include merger strategy and search, merger integration, strategic planning, partnership issues including partner compensation, and governance and organization. We work with the largest international and national law firms and leading firms of all sizes.
Lisa Smith Kristin Stark