First quarter activity hints at rebound of law firm mergers

With the merger of Indiana’s Wooden McLaughlin and Dinsmore Shohl leading the more than two dozen law firm combinations that were announced in the first quarter of 2021, the new year is expected to bring a return of robust consolidation activity in the legal market.

The COVID-19 global pandemic dampened law firm combinations with just 65 being announced in 2020, according to Altman Weil MergerLine. Comparatively, the number of combinations had topped 100 since 2017 and hit a record 115 in 2019.

Through the 2021 opening quarter, 26 law firms have announced plans to combine.

Altman Weil noted the deal size grew in the first quarter with 27% of the acquired firms having 21 to 100 attorneys. This is a 14% increase in that size category from all of last year. Also, the broad geographic distribution of deal activity signals a healthy resurgence of law firm combinations across all U.S. regional markets.

“Law firm leaders are returning to a longer-term, strategic focus after a year of crisis management and tactical triage,” said Tom Clay, Altman Weil principal. “We wouldn’t be surprised to see law firm merger and acquisitions totals back over 100 by year-end.”

The combination of Wooden McLaughlin and Dinsmore was the largest in the first quarter. In scooping up Wooden McLauglin’s 47 attorneys and three offices in Indianapolis, Bloomington and Evansville, Dinsmore was able to enter the Indiana market. The firm now has 725 attorneys in 29 cities across the country.

Also, Indiana was the spot for one the smaller firm combinations at the start of 2021. The four-attorney shop of Tate Bowen Funk & Spandau acquired its Indianapolis neighbor, the two-lawyer house of Waldron Law.

Overall, law firm merger and acquisition activity dropped 43% in 2020 compared to 2019. However, Altman Weil noted an uptick in the second half of the last year.

Also, the combinations that did occur in 2020 continued the trend of small firms being gobbled up by large firms, many with a national footprint. On average, the firms being acquired last year had 18 attorneys, the same as the acquired firms in 2019.

Dentons US, which was launched at the start of 2020 with the merged firms of Dentons Bingham Greenebaum in Indiana and Dentons Cohen & Grigsby in Pennsylvania, continued to feed its appetite for expansion. In 2020, Dentons announced combinations with Sirote & Permutt in Birmingham, Alabama; Durham Jones & Pinegar in Salt Lake City, Utah; and Davis Brown in Des Moines, Iowa.

In addition, firms within the Hoosier state combined last year. The Indianapolis firms of Katz Korin Cunningham and Cantrell & Mehringer joined while Clendening Johnson & Bohrer in Bloomington merged with Hehner & Associates in Indianapolis.