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The legal industry has witnessed a significant increase in mergers during 2023, driven by the desire of law firms to tackle their biggest rivals head-on. Legal experts predict that this trend of consolidation will continue as both large and middle-sized players express concerns about losing market share to industry giants. One prominent example of this is the recent planned merger between Allen & Overy and Shearman & Sterling.
The London-based law firm Allen & Overy announced its intention to merge with New York-based Shearman & Sterling. If the merger happens it’ll create one of the largest law firm with a combined revenue of $3.4 billion. The merger comprises over 800 partners across 49 offices worldwide.
The move exemplifies the deliberate response of law firms to bolster their capabilities and resources by competing with the industry's giants.
The merger between Allen & Overy and Shearman & Sterling represents just one instance of a broader trend of legal mergers in 2023. Based on Fairfax Associates, at least five mergers involving firms with a minimum of 100 lawyers have taken place this year, compared to only two in 2022. These mergers include notable combinations such as Orrick Herrington Sutcliffe's acquisition of financial services boutique Buckley, and the merger between Smith Gambrell & Russell in Atlanta with Freeborn & Peters in Chicago.
Various motivations encourage the merger. Firstly, merging with a compatible firm allows them to pool resources, expand their geographical reach, and diversify their practice areas. By joining forces, law firms can leverage their combined expertise, talent, and client networks to enhance their competitive edge in the market. Additionally, mergers can offer increased economies of scale, cost efficiencies, and improved technological capabilities, enabling firms to deliver value to their clients.
Mergers and joint ventures between law firms are a way to expand their capabilities. By joining hands through mergers, law firms can leverage their collective strengths, expand their reach, and improve their competitive edge. The increasing consolidation within the legal sector is expected to continue as firms seek to navigate the evolving market landscape and secure their positions in the face of fierce competition.
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