Business of Law
Do law firm mergers make sense? Not always, legal recruiter says
Posted Jan 7, 2014 6:45 AM CDT
By Debra Cassens Weiss
The year 2013 set a record for law firm mergers, with the announcement of 87 tie-ups during that time.
Ward Bower, a principal of legal consulting firm Altman Weil, which keeps track of the merger announcements, expects the pace will continue in 2014, Bloomberg Businessweek reports. He says a surging economy will fuel the mergers as law firms seek new clients and markets.
But a report issued on Thursday by legal search consultants Major, Lindsey & Africa says some mergers will produce few benefits.
“In our view,” the report said, “the combination of two firms, both of which are struggling to survive, will yield little synergy. Furthermore, while some of these combinations are being classified as mergers, the reality is that in many cases the firms being acquired stand little chance of surviving absent being acquired, so one has to wonder what the benefit will be to the acquiring firm. Nonetheless, we believe this merger mania will continue unabated into the New Year.”
The report by Major, Lindsey & Africa warns BigLaw that it is time “to adapt or die.” Unproductive equity partners will need to be cut, the search firm says. The report also notes that law firms are making changes to their capital structure by asking partners to contribute more money, or by doing away with the two-tier partnership structure.