Regional Firms Seek Mergers to 'Stay Relevant' as Big Law Swarms - Bloomberg Law
Small and regional law firms are looking to mergers to ward off competition from larger rivals, as a new tie-up in Virginia shows.
Woods Rogers and Vandeventer Black are merging to create a regional firm of 130 lawyers in five Virginia offices. The combination is a response to a changing competitive landscape across the state.
“We’ve seen more of the bigger firms trying to reach into other parts of Virginia over the last couple of years,” Daniel Summerlin, president of Woods Rogers, said in an interview. “We needed to make sure we’re doing what we needed to do to make ourselves unique and relevant and be mindful of the competition that was trying to come into the space.”
The merger reflects an uptick in interest in combinations after the Covid-19 pandemic slowed the pace of tie-ups. Although tie-ups slowed in the last quarter, multiple Am Law 50 firms are talking to each other about merging, as are many Am Law 100 and 200 firms, said Kent Zimmermann, a consultant for law firm management at The Zeughauser Group.
“Our merger practice is busier than it’s been in 20 years by about four times,” Zimmermann said. “As a large group of firms have grown extensively and got more profitable, their historic peers don’t want to be left behind and want to hit the accelerator on growth.”
The largest firms are talking to small boutiques and other small firms, and firms from outside the U.S. are reaching out to those within the country, he said.
‘Better Opportunity’
The two Virginia firms, both founded more than a century ago, have been discussing a tie-up for more than two years. The combination creates a larger platform for their lawyers, said Woods Rogers chair Victor Cardwell.
“We are looking to diversify and be a destination for young lawyers,” Cardwell said, adding that the combined operation offers “an opportunity that can be different than any of the ‘mega firms’ that are out there.”
Summerlin will become president of the new firm, Woods Rogers Vandeventer Black, while Cardwell will continue as chair of the combined firm.
Vandeventer Black executive board member Deborah Casey will become vice-chair, and Woods Rogers chief financial officer Autumn Visser will serve as the new firm’s CFO.
“Clients really want to see depth in certain areas,” Summerlin said. “They want to see specialty areas because the laws become very specialized.”
Woods Rogers was the local counsel in a $26 million lawsuit against the organizers of the 2017 Unite the Right rally in Charlottesville. Partner J. Benjamin Rottenborn is representing model Amber Heard in a Fairfax County, Va. court in the defamation lawsuit by actor Johnny Depp over her Washington Post op-ed accusing Depp of abuse.
Vandeventer Black obtained a multimillion-dollar jury verdict last year for Lynchburg, Va.-based contractor, W.C. English Inc.
Commonalities
The combination between the two Virginia firms is consistent with what is happening more broadly in the market, said Lisa Smith, a law firm consultant at Fairfax Associates.
Combinations can help backfill or provide more depth in some core areas or specialty practices, Smith said.
In regional markets, such as the Midwest or Southeast, there are fewer barriers to merging because firms are more likely to have client and cultural commonalities and be an economic fit for one another, she said.
Law firm mergers were down in the first quarter of 2022, according to a Fairfax report. There were 13 mergers, down from 17 in the first quarter of 2021, according to the report, which counts completed combinations rather than those announced.
The largest merger of the quarter was the tie-up between Washington-based Arent Fox and Chicago-based Schiff Hardin. Most were small and involved at least one law firm with between five and 20 lawyers, the report stated.
Firms look to mergers to accelerate growth in areas that they’ve chosen to build, whether that is practices, cities, sectors or at the intersection of those, Zimmermann said.
Most firms also feel increasingly exposed to poaching, he said. By combining, they feel they can make themselves more resilient, Zimmermann said.
To contact the reporter on this story: Meghan Tribe in New York at [email protected]
To contact the editor responsible for this story: Chris Opfer at [email protected]; John Hughes at [email protected]
source: https://news.bloomberglaw.com/us-law-week/regional-firms-seek-mergers-to-stay-relevant-as-big-law-swarms
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