Strategic Moves Ahead: Key Trends in Law Firm M&A Entering Q4 2024

The legal industry has seen a notable uptick in mergers and acquisitions (M&A) among law firms in recent years, with 2024 emerging as a significant year for deal discussions. As firms navigate a competitive landscape marked by evolving client demands, economic and political pressures, pending succession, and ongoing lateral movement, strategic mergers are becoming a common path to growth, enhanced service offerings, and strategic planning. But when is the right time to act if you are considering M&A as part of your strategic plan? The answer is simple; now.

Surge in M&A Activity

Navigate to any legal publication’s website and you will easily find details related to a recently announced or closed law firm combination. The data suggests a growing urgency among firms to consolidate resources and capabilities to better serve their clients. Law.com reported that with some deals already announced for 2025, analysts expect an even higher rate of M&A activity next year. And PwC’s noted that “firms are already starting to look at tactical acquisitions with 62% of respondents considering new practice areas and 55% looking at new geographies.” Furthermore, according to research conducted by UK publication The Law Society Gazette, 83% of top law firms think a merger is likely in the next two or three years.

With respect to intellectual property (IP) related combinations, recent changes to the Unified Patent Court (UPC) may further stimulate M&A activity, particularly among IP prosecution firms seeking to bolster their litigation capabilities. As the UPC streamlines the enforcement of patent rights across participating European countries, firms will increasingly recognize the need for a robust litigation arm to navigate the complexities of this new legal landscape. Consequently, IP prosecution firms may look to acquire or merge with established litigation practices to ensure they can offer comprehensive services that include not just prosecution but also effective enforcement strategies. This shift could drive an uptick in targeted mergers aimed at creating well-rounded firms capable of meeting clients’ evolving intellectual property needs.

From Major and PE-Backed to Boutique and Specialized IP – Select Deals in 2024   

Several transactions exemplify the current M&A landscape which is coming in all shapes and sizes and across geographies. Details are publicly available and summarized from various sources and publications below:

• Allen & Overy (A&O) and Shearman & Sterling: This high-profile merger, which closed earlier this year, creates a powerhouse. With a combined revenue projected to exceed $3 billion, this deal not only signifies a strategic expansion, but is hopeful of significant projected gains. “This merger is a strategic alignment that will enhance our global capabilities and better serve our clients in a rapidly evolving market.” Link: A&O and Shearman Merger Press Release
• Spencer Fane and Holley Driggs: This mid-market deal is another example of how firms of many sizes are capitalizing on merger opportunities. “Combining forces with Holley Driggs allows us to deepen our client relationships and expand our reach in key markets.” Link: Spencer Fane and Holley Driggs Press Release
• Fennemore Craig and Lucent Law: This combination announced on 1 Oct. marks a strategic move to “revolutionize legal services through the integration of artificial intelligence (AI), automation, and flat- and alternative-fee pricing” through Lucent Law’s unique capabilities. “Our partnership with Lucent Law reflects our commitment to innovation and delivering exceptional legal services to our clients.” Link: Fennemore Craig and Lucent Law Press Release
• IPH (Smart & Biggar) and Bereskin & Parr: This acquisition by Australia-based listed company IPH strengthens its presence in the North American market. “The acquisition further embeds IPH as one of the world’s largest IP services groups in secondary markets” Link: IPH and Bereskin & Parr Acquisition Press Release
• Bryan Cave Leighton Paisner and Harrigan Leyh Farmer & Thomsen: This merger unites a large, well-established international firm with a boutique litigation practice in Seattle. “This merger enhances our litigation capabilities and positions us to better meet the diverse needs of our clients.” Link: Bryan Cave and Harrigan Leyh Press Release
• Lippes Mathias and CCB Law: The merger between Buffalo-based Lippes Mathias and Syracuse-based healthcare boutique CCB Law reflects a growing trend toward specialization. “By merging with CCB Law, we are strengthening our healthcare practice and expanding our service offerings to better serve clients in this critical sector.” Link: Lippes Mathias and CCB Law Press Release
• Bleger-Rhein-Poupon and Plasseraud IP: The French firm Bleger-Rhein-Poupon has joined the France-based Plasseraud IP group, enhancing their collective capabilities in intellectual property services. “This integration allows us to offer a broader range of services and strengthens our position in the French market.” Link: Bleger-Rhein-Poupon and Plasseraud IP Integration Press Release
• Solaris Law and Shoosmiths’ B2B Recoveries Division: In January 2024, Solaris Law, owned by Elliott Management, acquired Shoosmiths’ business-to-business recoveries division, strengthening its position in the commercial recoveries sector. “This acquisition enhances our capabilities in business recoveries and allows us to serve our clients more effectively.” Link: Solaris Law and Shoosmiths Acquisition Press Release
• Kostelanetz LLP and Welty PC: This combination sees New York-based Kostelanetz LLP join forces with Atlanta’s Welty PC. “Joining forces with Welty PC enhances our tax law capabilities and allows us to offer a more comprehensive suite of services.” Link: Kostelanetz and Welty Press Release
• Mette, Evans & Woodside, and Skarlatos Zonarich: In Pennsylvania, the combination of these Harrisburg-based firms enhances their collective capabilities. “The merger positions us to provide enhanced legal services across Pennsylvania, leveraging our combined strengths.” Link: Mette, Evans & Woodside and Skarlatos Press Release
• Freeman Mathis & Gary and Klein Park & Lowe: This merger allows Atlanta-based Freeman Mathis & Gary to deepen its reach. “This strategic combination allows us to deepen our footprint in Florida and better serve our clients in the region.” Link: Freeman Mathis and Klein Park Press Release
• Ogletree Deakins and Raimondo Miller: The merger underscores the continued demand for specialized labour law services. “Merging with Raimondo Miller enables us to bolster our labour and employment practice and enhance our service delivery.” Link: Ogletree Deakins and Raimondo Miller Press Release
• Fletchers Group and Serious Injury Law: In February 2024, Fletchers Group, owned by Sun European Partners, acquired Serious Injury Law. “This acquisition allows us to expand our expertise in serious injury claims and provide better support for our clients.” Link: Fletchers Group and Serious Injury Law Acquisition As Reported in Solicitors Journal

The Merger Timeline

Despite the differences in deal size and objectives, the process of merging or acquiring law firms can be intricate and lengthy. Typically, the timeline from initial discussions to closing can span 6 to 18 months, depending on a variety of factors. During this period, firms will navigate due diligence, regulatory approval, cultural alignment, operational integration, and the potential restructuring of services and their workforce. And though deals may seem promising, navigating client conflicts and retention concerns, financial and compensation discrepancies, and differences in governance or partnership agreements can be tricky. And this timeline does not even include the search and identification of potential pairings or the strategic planning necessary to ensure organizational alignment and your target firm’s “must-have” characteristics. However, when completed with the appropriate support from your advisors, these opportunities can be managed as efficiently and effectively as possible.

Why Act Now?

Firms looking to realize their strategic objectives in 2025 or 2026 must start this process now to allow adequate time to navigate these critical elements. However, the urgency for managing partners considering a merger further increases due to several factors. We highlight six of the top factors below.

• Client Expectations: As clients increasingly look for comprehensive, multidisciplinary legal services, firms that consolidate their capabilities will be better positioned to meet these demands. Even the world’s biggest law firms with comprehensive services offerings already have an eye on growth, making competition fierce for firms of all sizes looking to serve clients across practice areas. Delaying merger discussions could lead to missed opportunities to enhance service offerings that do not meet evolving client needs.
• Competitive Advantage: In a climate where larger firms are expanding aggressively, smaller, and mid-sized firms risk losing market share. By merging now, firms can achieve economies of scale, diversify their practices, and enhance their appeal to potential clients. The recent implementation of the UPC, previously noted, further emphasizes this need; firms that integrate litigation capabilities into their portfolios will be better equipped to navigate the complexities of patent enforcement across Europe.
• Futureproofing: With predicted economic shifts in 2025, firms that successfully merge will be more resilient, better positioned to weather downturns, and able to invest in technology and talent. According to PwC’s most recent Law Firms’ Survey, “44% of Top 100 firms report falling profits.” M&A can be an initiative-taking approach that will allow firms to adapt to market changes more effectively.
• Rising Costs: Firms must also contend with increasing operational costs in today’s complex legal environment. These costs arise from compliance requirements, technology investments, and overhead expenses that can strain smaller firms. In a recent article published by PwC, the firm notes that law firms can also expect rising staff costs of 12 – 14 percent. Merging enables firms to use shared resources and expertise, allowing for a more efficient allocation of expenses across a larger partnership.
• Administrative Efficiency: The way firms operate today differs significantly from previous years. Combining offices and administrative functions can dramatically reduce overhead costs, allowing firms to distribute more budget towards talent acquisition and development, thereby improving client service and overall satisfaction.
• Succession Planning: The aging leadership within many law firms presents a critical challenge that requires immediate attention. As senior partners prepare for retirement, firms must proactively address succession planning to ensure a smooth transition of leadership. Mergers can facilitate this by providing access to a broader talent pool and new leadership opportunities. By integrating fresh perspectives and innovative ideas from younger professionals, firms can revitalize their cultures and strategic direction, ensuring continuity and growth. Addressing succession issues now will position firms for long-term success and sustainability in a competitive landscape.

Conclusion

The current landscape of law firm M&A underscores a dynamic shift in the legal sector. As evidenced by significant cross-border deals like A&O Shearman as well as mid-market US consolidations such as Spencer Fane and Holley Driggs, firms are proactively seeking growth through strategic opportunities that can take many forms. With merger activity up and the potential benefits within reach in 2025, now is the time for managing partners to consider their options seriously. Acting promptly can yield long-term advantages in an increasingly competitive marketplace.

Contact Milli Bouri today to discuss how we can support you as you contemplate these strategically important and impactful decisions.