04 December 2012

Mergers in the legal sector

There has been a spate of international consolidation among law firms as legal services providers turn to mergers in an attempt to regain and expand their global footprint in a somewhat sluggish market. According to Zephyr, the M&A database, a total of 136 deals have been announced or completed involving the acquisition or merger of law firms in the year to date.

A couple of mega-deals have been unveiled in recent weeks, notably Norton Rose of the UK, which made a US breakthrough by convincing Fulbright & Jaworski to team up as a new global energy legal powerhouse under the banner of Norton Rose Fulbright. News of the tie-up was announced mid-November, revealing the new entity is set to be a top 10 global legal practice based on gross revenue of USD 2,000 million and 3,800 lawyers. While the group will have a significant international presence with 55 offices across Europe, Asia, Africa, the Middle East and Latin America, its US resources comprise close to 800 lawyers in 11 bureaux across cities such as Dallas, Los Angeles, New York and Washington DC.

Just two weeks later, SNR Denton, itself a product of a cross-Atlantic tie-up in 2010, hit the headlines after confirming it is entering into a rare three way merger with Salans of France and smaller Canadian player Fraser Milner Casgrain under a Verein structure to create the seventh largest law firm in the world, as measured by number of lawyers and professionals. Operating under the Dentons name, the enlarged practice is expected to have 2,500 employees in 79 outposts in 52 countries across Africa, Asia Pacific, North America, Europe and Central Asia and the Middle East. The tie-up, which is setting up a legal giant with a reported USD 1,300 million of combined revenues, is being billed as the first combination involving a leading Canadian firm and a company with a substantial US presence.

Shifting focus to Asia Pacific, K&L Gates of the US has made a splash, confirming yesterday it is taking over mid-tier Middletons of Australia, which is involved in litigation, regulatory, energy and sports work, to create a law firm with more than 2,000 lawyers in 46 offices across five continents. The company added the deal gives it access to a country in which direct US investment totalled more than USD 500.00 billion since 2005. On the flip-side, the union enables Middletons to have a more global footprint with an entry into the US, European and Asian markets.

The deal is being billed as the first between a large US firm and an Australian outfit, with K&L following in the footsteps of UK-based law groups which have already tested the overseas merger waters. Herbert Smith amalgamated with Freehills in October, Ashurst combined with legacy Blake Dawson in March 2012 to become Ashurst Australia while DLA Piper shored up its overseas presence by fully integrating with DLA Phillips Fox in May 2011.

© Zephyr