Market News

Arent Fox and Schiff Hardin to Merge, Creating a New Am Law 100 Powerhouse

By Bruce Love for The American Lawyer

The merger of two storied Am Law 200 firms is creating a new major player that will instantly be propelled into the Am Law 100 list of the nation’s biggest firms.

Washington-based Arent Fox and Chicago-headquartered Schiff Hardin have signed a formal agreement to merge, effective March 1, 2022, forming ArentFox Schiff.

With gross revenues of around $333.6 million, Arent Fox was ranked 107th in the Am Law 200, while Schiff Hardin was ranked 163rd with total revenues exceeding $173.9 million. Based on this year’s Am Law rankings, those figures, which total more than $509 million, would propel the firm into the Am Law 100 at No. 77, just below Crowell & Moring and above Barnes & Thornburg.

Leading ArentFox Schiff are chair Anthony Lupo and co-firmwide managing partners Cristina Carvalho and Joseph Krasovec.

Lupo currently serves as chair of Arent Fox, with Carvalho as its firmwide managing partner. Krasovec is currently Schiff Hardin’s managing partner.

Lupo said the deal, which was brokered amid a global pandemic, brings together two firms that have been having their most profitable years.

“It’s a compelling deal. I was most impressed with how complementary our practices are,” Lupo said in an exclusive interview with The American Lawyer, explaining as an example that while Arent Fox is strong in retail, Schiff brings strength in consumer products, and Schiff’s environmental strengths complement Arent’s agricultural tech offerings. “There were so many areas that we were lined up right next to each other. We were both in the same industry, but we weren’t competing with each other. It was a very robust combination.”

Krasovec said he found “the cultural fit to be strong, right off the bat.”

“Even when our partners first started meeting over Zoom, the connections were apparent immediately,” said Krasovec, citing especially the “level of professionalism and client service both firms are committed to” as well as the two firms’ commitment to community service.

The new firm will be home to more than 600 lawyers and policy professionals with offices in seven U.S. markets: D.C., Chicago, New York, Los Angeles, Boston, San Francisco, and Ann Arbor, Michigan.

Arent Fox is renowned for its regulatory prowess and industry-focused legal services, while Schiff Hardin has built a strong financial services business as well as a full-service legal offering.

In New York, ArentFox Schiff immediately becomes a power player, said Carvalho, noting that the combination builds an office of almost 140 lawyers with strong real estate and private equity offerings backed by strong regulatory and industry-specific expertise.

“The ability of the combined firm to use its regulatory and industry expertise in the transactional and litigation spaces is really distinguishable from what you see out there at other firms of the comparable size,” Carvalho said.

As the firms combine, Carvalho said many of the major practice areas will be headed by co-chairs from both Arent and Schiff, and the new firm will populate committees with lawyers from both firms.

Lupo said ArentFox Schiff will also be looking to develop new or bigger industry groups, such as AI and clean energy.

“At Arent, we were incubating ideas like this but with the combination with Schiff—and the expertise it brings—we have the leadership and expertise to deepen these benches,” he said.

The merger market has been relatively quiet in 2021. While more law firms merged in the third quarter than during the same period in 2020, the overall pace of mergers in 2021 has lagged behind pre-pandemic levels. Mergers of particular note this year include Washington-based Crowell & Moring’s 584 lawyers combining with Chicago-based intellectual property boutique Brinks Gilson Lione’s 61 lawyers, while 375-strong St. Louis-based Thompson Coburn merged with 44-lawyer New York-based Hahn & Hessen. The biggest merger so far this year has been Miami-based Holland & Knight and Dallas-based Thompson & Knight, announced in April. That combination made a firm of roughly 1,500 attorneys, retaining the moniker Holland & Knight.

Founded in 1942, Arent Fox is bringing more than 430 lawyers and professionals to the new firm, while Schiff Hardin, founded in 1866, brings more than 225 attorneys.

“In most firms, there is huge pressure to grow. Most firms want to be a stronger version of themselves. They want to be better known for particular practices, like M&A and private equity, or bigger in particular cities, like New York or Washington. And growing organically with lateral moves won’t do it,” said Kent Zimmermann, a principal at the Zeughauser Group, who advised Schiff Hardin on the deal. “This deal is transformative. The new firm has a much larger profit pool and is in a better position of scale from which to compete in the war for talent. This deal for both firms puts them in a more competitive position.”

Zimmermann said before the deal, the two teams both had strategic priorities to grow their transactional practices and grow in certain geographies.

“By doing this deal, they have doubled their corporate practice and finance practice and nearly doubled their litigation practice,” he said. “The deal has made them leapfrog many of their competitors in both size and quality of bench in high-quality practice areas.”

Zimmermann added that the deal gives the new firm a “more balanced portfolio of practices.” between corporate, regulatory and litigation.

Arent Fox currently has a presence in Washington, Boston, Los Angeles, New York and San Francisco, while Schiff lists as its locations Chicago, New York, Washington, Ann Arbor, San Francisco, Newport Beach, California, and Lake Forest, Illinois.

The combination was passed by a vote of equity partners at the two firms Tuesday, and the new management team said the vote was overwhelmingly supportive of the deal at both firms.