"We've now seen nine straight quarters of steady deal-making since the legal industry shook off the worst effects of the recession," said Ward Bower, an analyst at Altman Weil.
On its face, the merger market suggests some level of recovery in the legal industry, Bower said. But it also illustrates ongoing economic pressures that are likely to intensify.
Some firms merge for strategic reasons, acquiring or merging with a firm in another city where the acquiring firm already has clients. Others are simply looking to grow, and in an anemic economy, there simply isn't enough new business for that, absent a merger or an acquisition.
This is all reflective of a larger-scale retrenchment, Bower said. He said he expects smaller law school classes, a trend already well under way, and the likely disappearance of some law schools as firms continue to grapple with an oversupply of lawyers.
Yet, within that overall shrinkage, some firms are growing through mergers because it represents good economic sense.
Such was the case with the Center City construction firm of Cohen Seglias Pallas Greenhall & Furman P.C., which merged with a six-lawyer construction firm in Manhattan, effective Jan. 1.
Partner Edward Seglias said the merger opportunity resulted from a call from a recruiter. The senior partner of the New York firm, Georgoulis & Associates P.L.L.C., had been hoping that a merger with a larger firm would relieve him of his firm's administrative and managerial burdens.
Cohen Seglias, for its part, wanted an office in New York, where many of its lawyers practiced and where some of its Philadelphia-region clients did business. The firms' practices matched each other well, Seglias said, and the merger was pulled off in a matter of months.
But, he said, the legal marketplace remains relatively weak.
"People will do projects as they need to do them," Seglias said. "I don't know that anyone is sticking their neck out."
The Altman Weil survey included a handful of mega mergers, including the acquisition by Pittsburgh-based K&L Gates L.L.C. of Middletons, a 300-lawyer firm headquartered in Australia. The merger pushes the number of lawyers at K&L Gates to more than 2,000.
The majority of the mergers and acquisitions in 2012 involved firms with 20 or fewer lawyers, Altman Weil said. Nearly a third of the mergers took place in the fourth quarter.
Contact Chris Mondics at email@example.com or at 215-313-3022.