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Number of US law firm mergers rockets

Posted by: Laurence Simons 14/10/15

A recent announcement from legal consultancy, Altman Weil, revealed that in the nine months from January to September 2015, 68 mergers occurred in the US. In the third quarter alone, there were 20. This is a huge number – in fact the biggest since records began nine years ago – but why are so many firms going down this route?

There is an array of motives for US firms looking to secure mergers. The general consensus suggests that perhaps the most popular are the poaching of members from other teams, or flights to safety in challenging and competitive markets. There is another, more strategic view that in this uncertain business climate, “big is best” in terms of client attraction – and acquiring small yet whole firms that wouldn’t survive on their own is an effective way of expanding their own organisation’s reach.

Altman Weil’s principal, Eric Seeger, commented on the issue that: “Large and mid-sized law firms continue to cherry-pick desirable small firms based on practice specialty or geography. We’re also seeing same-city or same-state tie-ups between smaller firms that are joining forces in an attempt to strengthen their relative market positions.”

Many of the biggest merger announcements took place earlier in the year, yet of the deals that happened in July, August and September, all of the combinations were with 35 lawyers or fewer. Altman Weil’s report explained that this was because intellectual property boutiques have become prime targets for the larger law firms, and are currently being targeted by larger firms looking to expand their knowledge bases rather than just their practices.

So what does this mean for lawyers themselves? Could this be part of a growing US trend which will limit opportunities for legal professionals to work within smaller scale organisations? And if so, maybe we will see a growth in demand for enhanced business and/or management skills at senior levels.