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The legal industry has observed a modest increase in the number of law firm mergers in the first half of 2024. According to data released by Fairfax Associates, 29 mergers were completed, compared to 28 in the same period in 2023, and 25 in both 2022 and 2021. Despite this uptick, the outlook for new mergers involving large firms remains subdued.
Significant Mergers in 2024
Among the finalized mergers, the combination of London-based Allen & Overy with New York-based Shearman & Sterling stands out. This merger, effective from May 1, created A&O Shearman, a global firm with nearly 4,000 lawyers and 3,000 other employees across 47 offices worldwide. Another notable merger was between Midwest firms Ulmer & Berne and Greensfelder, Hemker & Gale, resulting in UB Greensfelder, a firm with 275 lawyers.
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Challenges Facing Large Firm Mergers
Fairfax Associates tracks mergers by their effective date and classifies large mergers as those where both firms have at least 100 lawyers. While the A&O Shearman and UB Greensfelder mergers were significant, no other large law firm combinations have been announced this year. Discussions between Troutman Pepper Hamilton Sanders and Locke Lord are ongoing, but no agreement has been reached yet.
Factors Affecting Merger Completion
Lisa Smith, a principal at Fairfax, anticipates continued merger activity through the rest of 2024 but expects fewer large firm mergers. She noted that several potential large combinations had been called off recently due to profitability gaps and mismatched rate structures. Kent Zimmermann of Zeughauser Group highlighted the increasing difficulty in achieving successful mergers due to firms’ growing imperatives to boost profitability and size.
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Future Outlook
Despite the lack of large merger announcements, interest remains high. Firms often prefer to keep merger talks private, and several large mergers are reportedly progressing, including both domestic and transatlantic deals. However, the complexities of aligning financial structures and client bases continue to pose significant challenges for large firm mergers.
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