Tag Archives: mergers

The Shrinking Pack of BigLaw Front Runners

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As we enter the final ten of days of calendar year 2017 and contemplate resolutions and goals for the coming year, we take a moment to shift our focus and glance into the rear view mirror at the twelve months we are soon to leave in our wake.   From the perspective of this market observer, BigLaw 2017 looks like mile 17 of a marathon, with a handful of firms racing neck and neck, leading a pack of elite runners which is growing smaller mile by mile.

In terms of strategy, dominance for law firms can theoretically be attained by organic growth, individual attorney or group lateral acquisitions, smaller firm acquisitions or the rare merger-of-equals, but with the race for global market dominance among the few remaining elite-of-the-elite international firms only gaining intensity and more major-city markets being effectively closed to potential late-comers, law firm mergers and acquisitions have increasingly been defining competitive strategy over the last two decades, with 2017 being a record-setting year with about 100 law firm acquisitions tracked.  See  https://biglawbusiness.com/law-firm-mergers-on-record-breaking-pace-in-2017/.

The venerable London based firm of Norton Rose is a case in point, its 2017 acquisition of former AmLaw 100 stalwart Chadbourne representing only a piece of their current merger plans and recent merger history.  See  http://www.legalweek.com/sites/legalweek/2017/06/30/chadbourne-name-disappears-as-norton-rose-merger-goes-live:  “Norton Rose, the product of a 2013 mega-merger between Houston-based Fulbright & Jaworski and London-based Norton Rose, has expansion plans beyond Chadbourne.  Since the February merger announcement with Chadbourne, the Swiss verein announced plans to unite with Australia’s Henry Davis York … Norton Rose has been through a succession of major mergers.  It merged with Australian firm Deacons in 2010, then in 2011 with Canadian firm Ogilvy Renault and leading South African firm Deneys Reitz. These were followed by a second Canadian merger with Calgary’s Macleod Dixon in 2012, while legacy Norton Rose’s union with US firm Fulbright & Jaworski went live in summer 2013. The firm also inked a deal with Vancouver-based firm Bull Housser & Tupper in September 2016.”

With AmLaw100 firms disappearing at the rate of about one every year and a half, the question of which among them will be the next to fade away is fodder for odd makers.   But look to 2018 to see more BigLaw acquisitions and consolidations than ever before as the leading pack in the race for global dominance continues to shrink and the rest of the market grinds to remain viable.

The Ever-Contracting Landscape of BigLaw

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Chadbourne’s February 2017 melting into Norton Rose Fulbright continues the trend of AmLaw 100 firms dissolving or being acquired or absorbed by larger, stronger players at the rate of one every year or so since 1999, starting that year with Brobeck and since followed by other now fallen but once-titans Coudert Brothers, Rogers & Wells, Rosenman & Colin, Kronish Lieb, Brown Raysman, Thelen, Thacher Profitt, Howrey, McKee Nelson, Dreier, Heller Ehrman, Wolf Block, Dickstein Shapiro, Dewey & LeBoeuf and Bingham.   Current firm rankings thus inevitably cause BigLaw market observers to ponder which are the currently rising or waning power-players therein, which is the next to be doomed to the in-memoriam list, and which three in all likelihood before the end of this decade.  Who are the great sharks in the ocean of BigLaw and who are their likely prey?

It is no secret that not only the biggest and strongest U.S. based firms have an increasingly whetted appetite for smaller firms which will enable them to enhance their global major market presence, but their London-based competitors are particularly hungry as well (see, for example “British Firms Still Trying to Conquer New York“, and “Are we about to see more UK-US law firm mergers?”).   Law firm sharks generally first seek prey not only with compatible and ideally complimentary practice areas, profitability and billing rates, but also displaying signs of weakness.   We refer our readers to our earlier post entitled  37 Signs That Your Firm May Be Sinking for indicators as to when a firm may become an especially attractive potential acquisition candidate.

In the meantime, our smaller and weaker players are increasingly frenzied to overcome the threat of falling victim to the hunt generally by one or a combination of several means:  merger with a relative equal in stature and profitability, see, for example, “Law Firm Mergers Off To Hot Start In 2017” ; “Law Firm Merger Mania Continues in First Quarter of 2017“;  “Law Firm Mergers Keep Pace with 2015’s Record”);  so called “one-off” individual lawyer or practice group lateral acquisitions, see, for example, The Lateral Report: Moves Hit a Post-Recession High;  Lateral Love: A Near-Record Year for Lateral Hires” or developing or enhancing a special niche or other competitive advantage.  See, for example,  “5 Reasons Large Companies Are Turning To Boutique Firms“;  “Boutique Law Firms: The Future of the Legal Profession?

In short, in the ever-increasingly treacherous ocean of BigLaw, it’s now more than ever be or be eaten.  Our consultants at Hanover Legal remain on call to assist all our clients in assessing how not only to survive, but grow faster, more efficient and thrive.

One-Stop Shopping and the BigLaw Balloon

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We are quickly approaching the end of Q2 2014 and heading into summer, but the open sky in which BigLaw flies is not likely to provide much rest and relaxation during the warmer months ahead. Relentless market winds offer constant opportunity to our stronger firms to increasingly distance themselves from their less healthy competitors, in particular those simply getting bigger.

A cursory comparison of the AmFlawed 100 ranking chart of America’s top-grossing law firms for the years 2009 and 2013 shows that while only two firms in 2009 exceeded gross revenue of $2 billion (Baker & McKenzie at $2,112,000,000 followed closely by Skadden at $2,100,000,000), five firms surpassed the $2 billion gross revenue mark in 2013: DLA at $2,481,000,000, followed by Baker & McKenzie at $2,419,000,000, Latham at $2,285,000,000, Skadden at $2,235,000,000 and Kirkland & Ellis at $2,016,000,000 — DLA’s jump to the lead of the pack in 2013 representing a more than doubling of their 2009 13th place finish of $1,014,500,000. Moreover, while in 2009 a total of 13 firms enjoyed gross revenue in excess of $1 billion, by 2013 almost double that number or 23 firms had surpassed the $1 billion barrier.

These gross revenue figures indicate an unabated urge to grow bigger presumably based on the premise that one-stop global shopping is an attractive marketing tool in the increasingly interconnected global business environment. While that may be true, big of course is not necessarily strong or healthy; the five most productive firms based on purported revenue-per-lawyer figures ranking only between 13th and 54th on the gross revenue chart, namely: 1) Wachtell, first in RPL at $2,310,000 but only 54th in gross revenue at $601,000,000; 2) Sullivan & Cromwell, second in RPL at $1,590,000 but 13th in gross revenue at $1,278,000,000; 3) Quinn Emanuel, third in RPL at $1,445,000 but 26th in gross revenue at $972,5000,000; 4) Cravath, fourth in RPL at $1,430,000 but only 52nd in gross revenue at $614,000,000; and 5) Simpson Thacher, fifth in RPL at $1,350,000 but 20th in gross revenue at $1,128,500,000.   While the saga of Dewey & LeBoeuf – which ranked towards the top of the AmFlawed chart in all categories across the board the very year they collapsed – dictates that the chart need be taken with salt, it also evidences the fact that big sometimes means dangerously obese but never in and of itself healthy.

That said, we at Hanover Legal always caution our candidates considering a new firm to focus on its health – not its rankings on the AmFlawed 100 chart.