Law firms' quest for market share drives New Year's merger wave

By Sara Merken

Dec 30 (Reuters) - The new year will usher in a slate of major law firm mergers across the United States, bringing more consolidation to the legal industry in 2025.

Among the notable mergers set to take effect on Jan. 1, Troutman Pepper Hamilton Sanders and Locke Lord are combining to form a new firm, Troutman Pepper Locke, with 1,600 attorneys in 35 offices.

Troutman Pepper generated about $1.08 billion in gross revenue in 2023, while Locke Lord brought in about $497.6 million in revenue last year, according to figures published by the American Lawyer.

Womble Bond Dickinson, which has nearly 1,100 lawyers, and Phoenix-based, 220-lawyer Lewis Roca Rothgerber Christie will merge under Womble’s name. The firms said they had combined gross revenue of more than $742 million last year.

Taft Stettinius & Hollister is set to combine with much smaller Denver-founded firm Sherman & Howard. The firms said Cincinnati-founded Taft’s projected 2024 revenues after the deal are $810 million and that the combined firm will have more than 1,000 lawyers.

Philadelphia-founded Ballard Spahr and Seattle-founded Lane Powell will create a firm with 750 lawyers in 18 U.S. offices, operating as Ballard Spahr.

There were 41 completed law firm mergers in the first nine months of 2024, on par with 2023, according to figures released earlier this fall by legal industry consultancy Fairfax Associates. The pipeline of deals going into 2025 and ongoing merger talks suggest next year will also be a busy one for law firm combinations, Fairfax said.

In part, law firms are responding to client preferences for larger firms with broader capabilities, said law firm consultant Bruce MacEwen of Adam Smith Esq. Companies are "migrating towards shorter preferred provider lists," he said.

Other legal consultants also predicted continued law firm consolidation in 2025. A client advisory from Citigroup's Citi Global Wealth at Work Law Firm Group and Hildebrandt Consulting said that some firms, particularly midsize and smaller firms, would likely seek mergers to fast-track growth and access more clients and geographic markets.

The most profitable law firms may rely on hires or promotions more than mergers, the December report said. The 50 top highest-grossing U.S. firms have outperformed other segments of the market, making them less reliant on mergers for growth, the analysts said.

Expense pressures from higher salaries and adoption of generative artificial intelligence, which will require investment to implement, may also drive consolidation, the report said.

U.K. law firms are also making inroads in the United States through mergers. Earlier this year, London-founded firm Allen & Overy merged with New York's Shearman & Sterling in a major transatlantic deal, creating A&O Shearman.

New York-founded Kramer Levin Naftalis & Frankel and global legal giant Herbert Smith Freehills said in November that they plan to merge to create a firm with more than 2,700 lawyers. The firm would operate globally as Herbert Smith Freehills Kramer, and in the United States as HSF Kramer. Partnership votes on the merger are planned for mid-February, spokespeople said.

More than 50 lawyers from Kramer Levin's Paris office, which is not part of the merger, are slated to join Morgan, Lewis & Bockius on Jan. 1.

(Reporting by Sara Merken)

((Sara.Merken@thomsonreuters.com;))