New York alive with the sound of movement.
Last week the merger rumour mill surrounding US firms went into overdrive. Topping the list was the frenzied gossip about Heller Ehrman and its ever-changing roster of merger candidates, with the number one suitor now widely thought to be Baker & McKenzie.
As one former Heller partner tells The Lawyer: “I’ve heard there’s going to be a deal within the next one to two weeks.”
Elsewhere, Alston & Bird’s ambitions to strengthen its West Coast operations also leaked out last week. The firm is believed to be in talks with Los Angeles-based Weston Benshoof – a deal that would give Alston 80 lawyers on the West Coast focused on litigation, real estate and environmental law.
Then, adding more fuel to the fire, word began to spread on legal market blogs about a potential link-up between Pillsbury Winthrop Shaw Pittman and Nixon Peabody.
Pillsbury New York head Steve Huttler has been quick to kill this latter thread, saying: “There’s absolutely no truth to the rumours. We’ve never spoken with Nixon Peabody. It just demonstrates the unreliability of the blog method of communication.”
Despite the apparent lack of substance to the rumours, the continuing speculation is contributing to the growing sense in the US that the current market turbulence is creating significant opportunities for acquisitive firms – not just in firmwide deals, but also for individuals.
Certainly, the leading London-based firms in New York have rarely enjoyed a better position in the recruitment market than they do right now. The financial strength of firms such as Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters, coupled with the global platforms they have built over the past decade, is beginning to prove an irresistible combination for potential laterals with itchy feet.
As John Christian, the personnel committee chair for Clifford Chance in the Americas, puts it: “We’ve seen a huge uptick in interest lately. Since last year we’ve hired six lateral partners in the US and we receive résumés almost every day from lawyers who want to come here.
“Higher profits have certainly helped, but the lockstep culture and global reach are also important. I don’t believe any US firm can match our global footprint and collaborative approach.”
Individual lateral moves aside, there is growing evidence that the pace of consolidation in the US legal market is hotting up. Earlier this month US legal market consultant Altman Weil published data that confirmed the widely held impression that the pace of law firm mergers was accelerating. The company’s online tracking service highlighted 26 new mergers and acquisitions between US law firms in April, May and June 2008 – eight more than in the same period in 2007.
“Even in a deteriorating economy law firms continue to pursue a growth strategy via merger and acquisition,” Altman Weil principal Tom Clay says. “And based on our conversations with law firm leaders, we think the pace is unlikely to slow.”
The largest merger in the second quarter of 2008 was that of K&L Gates and Kennedy Covington Lobdell & Hickman, a 175-lawyer firm in Charlotte, North Carolina. Banking centre Charlotte, home to Bank of America and Wachovia, is rapidly becoming one of the favourite destinations for acquisitive law firms.
Indeed, the K&L Gates deal was the second major merger this year involving a Charlotte firm. In March Charlotte-based Helms Mulliss & Wicker was acquired by McGuireWoods, the largest combination in the first quarter of the year.
Clay confirms that Charlotte continues to be a target market for expansionist national firms, despite the market turbulence that has seen banks such as Wachovia rocked by the downturn in the real estate market. However, he adds that it is the West Coast, and in particular California, that remains the biggest prize for most major national firms.
“But there have been no deals of any size since Kirkpatrick & Lockhart acquired Seattle-based Preston Gates at the end of 2006,” says Clay.
Not yet, anyway. Alston & Bird looks set to usurp K&L Gates and add another notch to Altman Weil’s merger-tracking data.