As market pressures abound, Biglaw firms continue to have the urge to merge. Kent Zimmerman, a veteran law firm mergers consultant, recently said, “The dominoes have been dropping in New York. First was Stroock, then Shearman, then Kramer Levin, and now Schulte. Makes you wonder who is next?”
Who, indeed, could be the next firm to make a major combination announcement?
Patrick Smith of the American Lawyer conducted some analysis to find out the answer to that important question. Here are some additional details:
Looking at the New York market, industry consultants and observers have previously said that law firms under $1 billion in revenue and in the 500-lawyer head count range or smaller may be more inclined to entertain a merger, especially if their profitability hasn’t grown as much as peers.
In addition, Zimmermann said high-profile departures of people considered leaders, formal or informal, in addition to the potential financial losses, can create a “crisis of confidence in leadership,” he said. “That can cause more people to take calls from recruiters,” he said. “And potentially create a run on the bank scenario.”
Several legacy New York firms fit the parameters of under $1 billion in revenue and under 600 employees in their latest count, including Cahill and Cadwalader, Wickersham & Taft, as well as Hughes Hubbard & Reed.
Although the firm didn’t comment on its merger prospects, thanks to Cadwalader’s deal with Trump, just about everyone knows about the “crisis” that’s happening there. Would a merger help wash off the taint of capitulation? Would any other firm even deign to involve itself with such a firm? The word is still out on that one.
Hughes Hubbard & Reed, which has considered entering merger talks in the past, doesn’t seem to be entertaining such ideas at the moment. Neil Oxford, the firm’s chair, said in a statement that HHR’s “independence is [its] strength.” He continued, saying, “We cherish our independence, which has worked well for us for 137 years and continues to be the foundation of our success today.”
Cahill, which fell out of the Am Law 100 two years ago, still remains profitable, but would the firm be amenable to a merger? According to a statement from Herb Washer, the firm’s chair, it seems unlikely. “We have not previously considered a merger, and our stance remains unchanged,” he said.
But just because these firms claim to be uninterested in a merger, that doesn’t mean it’s actually true.
Ed Estrada, managing partner at Gradient Legal Consulting, said he sees a “wave of consolidation” coming, and he believes there will be more New York firms on the merger market.
“If you have a few hundred lawyers in New York and you have multibillion-dollar law firms around you trying to poach your talent,” it becomes harder to defend against that each year, he said. “The right to remain elite at that [head count] is remaining harder and harder at each passing year.” …
Estrada said he believes there will be more New York firms on the merger market. “There are a lot of firms that have said they either wouldn’t merge or wouldn’t consider but are actively considering it,” he said.
So, which New York firm will be the next to succumb to a merger? Stay tuned….
Big Law Merger Pressure’s On in New York. Who’s Next? [American Lawyer]
Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Bluesky, X/Twitter, and Threads, or connect with her on LinkedIn.
