By Andrew Maloney for Law.com
Law firm mergers and acquisition talks are revving up, observers and analysts say, with a bevy of deals potentially coming down in 2021.
A move this week in the Midwest could be a harbinger. Detroit-based Dickinson Wright announced this week that it’s acquired Stahl Cowen Crowley Addis, a 12-lawyer firm in Chicago.
“It’s frenetic right now. It’s very busy,” said Kent Zimmermann, a law firm management consultant at Zeughauser Group, about law firm M&A talks. Aside from some of the most profitable firms, “most firms have either put the combination option on the table or are thinking about doing that. … And so I think that drives a lot of activity right now.”
A report from Citi Private Bank Law Firm Group and Hildebrandt Consulting this week agreed that more consolidation was in the works. Citing increased segmentation between top performers and everyone else, the Citi and Hildebrandt analysts wrote that they “anticipate lateral poaching to continue, if not accelerate,” and that they “also expect more consolidation through mergers between firms of a similar size and acquisitions of smaller firms.”
Firms in strong positions will likely use that leverage to increase the performance gap, the report stated. On the other hand, firms that haven’t been as resilient during the pandemic may now be putting the option on the table when they otherwise wouldn’t have, said Zimmermann.
Throw in deals that were already in the works, but had to be paused earlier this year, and the M&A noise seems to be getting louder.
Pat Whalen, chair and managing partner of Am Law 200 firm Spencer Fane, said his firm is committed to a seven-year strategic plan, and that although the pandemic called for some caution, his firm didn’t want to pass up on growth opportunities this year. He said heading into next year, the firm is expecting “significant talent additions” and is likely to enter into “a new market or two.”
“I think it’s fair to say we’ve got a more robust pipeline and more aggressive plans in the first quarter of 2021 than any year we’ve entered in the past eight years,” Whalen said about the firm’s growth.
At Dickinson Wright, which just acquired the Chicago boutique, the firm’s CEO said the move into Chicago was a natural step. The attorneys there represent clients in banking, manufacturing, real estate, title insurance, agriculture, health care, private equity, technology and transportation, the firm said.
Dickinson has more than 475 attorneys and 17 offices across the United States, six of which are in Michigan. It also has an office in Toronto.
“Dickinson Wright’s entry into the major money market of Chicago is a natural progression of our national strategic approach,” said Michael Hammer, the firm’s CEO, in a statement, adding the firm looks forward to “continuing to expand our offerings to our clients from around the U.S.”
Law firm combinations in 2020 are slowly returning after a dismal second quarter. According to an Altman Weil report in October, the third quarter saw 20 law firm merger announcements, a sharp increase from the seven mergers that took place in the second quarter, and a slight one compared to the 17 combinations in the first.
While the pandemic threw some wrenches into M&A activity, law firm leaders have tried as much as possible to stick to the playbook that was drawn up prior to 2020. Stu Ingis, chairman of Venable, which also announced a new Chicago office this week, said the firm “has continued to really run our business for the short, medium and long-term.
“Frankly doing anything in a non-pandemic time is preferable,” he said during an interview after announcing the firm had snagged a 12-lawyer construction law group from Schiff Hardin. “But the practice of law continues to move forward.”