Merger activity among law firms increased in the third quarter, according to a report by Altman Weil, but with just 44 deals announced so far this year, 2020 is mirroring the Great Recession rather than the explosive growth experienced in recent years.
The months of July, August and September brought an uptick in law firm combinations, with 20 deals being announced. This is an increase from the seven announced in the second quarter and 17 announced in the first quarter.
However, the total year-to-date merger and acquisition count just tops half of the 85 combinations announced in the opening three quarters of 2019. The merger market had been shattering records with 102 and 106 combinations announced in 2017 and 2018. Last year, the activity accelerated with 115 deals announced.
During the Great Recession, law firm combinations fell to 39 in 2010 then rose to 60 in both 2011 and 2012.
“Law firm merger activity is starting to bounce back,” Altman Weil principal Tom Clay said in a news release. “Most deals are between smaller firms seeking to fortify themselves in a COVID-weakened legal market, but midsize and larger law firms are beginning to reengage in strategies to acquire smaller firms.”
As in previous years, the merger market in the third quarter of 2020 was driven by small firm acquisitions. Altman Weil found 90% of all third quarter deals involved acquisitions of firms with 20 or fewer attorneys. Also, 65% were small same-state combinations
Although not included in Altman Weil’s count, Indiana firms have been combining in 2020. Most notably, Katz Korin Cunningham LLP in Indianapolis joined with Cantrell & Mehringer LLP, and Clendening Johnson & Bohrer in Bloomington merged with Hehner & Associates LLP in Indianapolis.
Also, the combination of Dentons with Utah-based Durham Jones & Pinegar provided some of the momentum for the third quarter of 2020. This continued the Dentons “Golden Spike” initiative, which was developed and launched in 2019 by the merger with Bingham Greenebaum Doll and Pittsburgh-based Cohen & Grisby.