12 Apr Mergers & Acquisitions – Latest Trends (Legal Market)

Over the past few months, the legal industry has seen a wave of mergers and acquisitions. Large firms have been consolidating their market share and increasing business through these M&As, but why is this trend happening? There are multiple factors that play into M&A mania, and it does not look to slow down in the upcoming months.

Some Background – The Big Names

Those involved in the legal industry are familiar with the UK’s Magic Circle firms and the prestige that they have. However, as the world becomes smaller and globalisation rages on, an increasing number of firms aim to grow their practices to an international level. There have been several transatlantic mergers done in the name of establishing reputable firms into new markets. While firms theoretically could build their international presence on their own, this process carries an immense cost and significant investment in business development. By partnering with equally established firms, both sides can reap the benefits of accessing new markets and expanding their business. Some major international firms that have been active include Dentons and Hogan Lovells, who have increased expansion to the Caribbean and Europe respectively.

Internationalisation is a Global Trend

The internationalisation of firms is a global trend. Both US and UK firms are racing to spread their practices, and present unique opportunities for their firms. As US and UK firms expand into each other’s territories, competition is skyrocketing. Now, instead of taking clients away from one another, US and UK firms are combining to protect their market position while simultaneously benefiting from their international presence. The previous merger of the UK’s Clifford Chance and US’s Rogers & Wells shows this benefit, as the firm in total had revenues of £1.803 billion in 2019-20.

Furthermore, M&As can allow firms to take control of a practice area and geographic location. Firms like Shakespeare Martineau, through mergers, have expanded throughout the Midlands to become the dominant force in the area. This strategy can be incredibly effective for firms that excel and specialise in a specific practice. Being the “go-to” firm for Commercial Litigation in a specific city is a great advantage; expanding that reputation to an entire region can be quite profitable as well.

Job Losses? Not Necessarily…

A common idea associated with M&A is that of job losses, however this is not always the case- especially in the current state of the industry. Lockdowns caused firms to run lean for the past few years, and these firms are now in need of quality talent and proven headcount. Mergers, as we’ve seen recently, can be seen as the pursuit of experienced attorneys. Additionally, post-merger firms tend to have further vacancies. Looking at firms who have just completed a merger is a great opportunity for entrance into growing markets. With expansion comes a need for additional manpower.

Moreover, the leanness of firms has created a financial incentive for firms to merge. Professional Indemnity Insurance costs continue to rise annually. This insurance is required for all practicing firms with the renewal date in October, which unofficially kicks off the M&A season. Firms like to merge and combine their PII to avoid excess cost from renewal. However, with the post-covid boom in the legal industry, M&A season has spilled over into 2022 and is forecasted to continue.

Who Are the Players?

It is pertinent to highlight the distinguishable players in the M&A market. So far in 2022, Knights have acquired Langleys, Weightmans has acquired RadcliffesLeBrasseur, and Shakespeare Martineau have acquired Mayo Wynne Baxter. Firms actively seeking transatlantic mergers include Simmons & Simmons and Mayer Brown. Finally, firms that intend to remain staunchly independent include Slaughter and May, Travers Smith, and Memery Crystal.

A Summary

In summation, the trend of M&A in the legal industry stem from firms aiming to grow their clientele and boost revenues. Globally, the legal industry pulled in an all-time peak of 1.12 trillion GBP in Q3 of 2021. All aspects of the industry are booming, and this creates a plethora of vacancies at top firms. The iron is hot, making it the perfect time to strike for both junior and experienced lawyers. At Wicker Hamilton we specialise in pairing people with top tier firms that suit their needs, we can assist and relieve pressure from the stressful process of finding a new job. Get in touch to learn how we can support you.