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Even Small Firms Are Jumping on the Merger Bandwagon

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By Casey C. Sullivan, Esq. on March 09, 2016 11:57 AM

If there was one major trend in big law firms in 2015, it was mergers. BigLaw spent 2015 getting even bigger, largely by absorbing its competitors. Last year saw more than 91 large law firm mergers, according to Altman Weil. That's the most ever recorded.

And now, it seems, that trend is trickling down, as more moderately sized law offices have begun merging with increased frequency.

Big Eats Middle, Middle Eats Small

Pressure to grow is nothing new. And pre-recession, many firms grew by bringing on new hires. That's not the main strategy anymore. The new orthodoxy is that absorbing established firms can allow a law office to grow with a lower level of risk. You're not moving out into an unpredictable, new market or practice area, you're simply taking on an already successful firm in that space.

In 2015, much of that growth was through large firms absorbing slightly smaller firms. Take, for example, Dentons. Now the largest firm in the world, Dentons was itself formed through the merger of three large firms. And it spent last year growing still, sucking up smaller large firms like McKenna Long & Aldridge, which had 575 attorneys to Dentons' 7,000 or so.

Now, midsized and small firms are following suit. According to Crain's Cleveland Business, midsize firms are looking to expand outward via mergers, with an eye on new geographic locations and practice areas.

Ralph Cascarilla, managing partner at Cleveland's Walter Haverfield, told Crain's the firm is "very much in the acquisitive mode in terms of trying to find and identify potential firms and groups of lawyers that could support our growth as we continue to expand our footprint."

Is Bigger Better?

If you're a small or midsized firm considering a merger, there are some upsides. A larger organization can more easily compete for major clients, offer expanded reach, and provide more in-house resources. Merging, instead of growing through new hires, can also help reduce attorney workload and office overhead.

But not every small practitioner is excited by the prospect of a merger. Mergers can bring new turf wars, especially when a larger firm gobbles up a smaller one, and lead to increased client conflicts, with some attorneys potentially losing business as a result.

Those drawbacks aren't stopping many small firms from growing via merger, however. But some are trying to stay true to their solo or small firm roots even as they expand.

"We saw the opportunity to bring a lot of smart people to us with good practices, and that enables us also to use some of our practice areas for their clients," Jim Vail, managing partner of the newly merged Schneider Smeltz Spieth Bell firm, told Crain's. "But I envision we will continue to stay relatively small. We have no aspirations to become a large law firm."

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