Is Bigger Better for Law Firms Focused on M&A?

A pedestrian carrying an umbrella passes a U.S. flag on Wall Street in front of the exterior of the New York Stock Exchange (NYSE) in New York, U.S. Photographer: Scott Eells/Bloomberg

It pays to be big if you’re a law firm advising on mergers and acquisitions.

That’s according to a recent study conducted by CounselLink, a Raleigh, N.C.-based data information company. It reviewed seven million law firm invoices processed in 2017, totaling more than $30 billion.

Large law firms—firms with more than 750 lawyers—generated 68 percent of the M&A billing last year, and their billing rates were the highest of all law firms, the company said.

Some of these big firms are now looking to expand their M&A ranks even further. Billing rates increased more for M&A than all other practice areas except for intellectual property in 2017, according to the study.

Billing rates for M&A work rose 7 percent; general corporate and tax work billing increased by 3 percent. IP – including trademark and patent work – saw a 9 percent uptick.

The average billing rate of M&A partners was $678 per hour. Although the billing rates for IP work rose more, M&A billable hours remained the highest of all 12 practice areas analyzed by CounselLink.

The large law firms known for handling premium M&A work include Skadden, Arps, Slate, Meagher & Flom; Kirkland & Ellis; Shearman & Sterling; and Sullivan & Cromwell.

Last year there were 18,433 M&A deals, valued at $3.15 trillion.

To keep up with expansion in the M&A field, some of the biggest law firms have been steadily bolstering their M&A benches.

For instance, Sherman & Sterling last year hired Brien Wassner, an M&A partner who had worked at Milbank, Tweed, Hadley & McCloy.

Wassner was brought aboard to help Shearman steer clients through “their most complex M&A transactions,” said George Casey, the global head of the firm’s M&A Group. Wassner is the firm’s seventh M&A lateral partner hire in the past three years.

Casey said he expected the number of M&A transactions to be up this year, perhaps with a lower value. He said the firm anticipated being involved in a large number of sectors including chemicals, health care, and telecoms.

“I expect M&A will continue to be one of the main business drivers for the firm,” he said.

Other firms such as Kirkland & Ellis and Paul Weiss have been adding M&A talent, including from the smaller but elite Wall Street law firm Cravath Swaine & Moore.

“Most firms want work where the rate environment allows them to be more profitable, and now that is corporate work as opposed to litigation,” said Kent Zimmermann, a law firm industry consultant with Zeughauser Group.

“And as the profits grow larger, firms prioritize growth and place a premium, including hiring of high quality lawyers, on areas like M&A.”

Though the M&A flow seems to have favored large law firms, there is also a consolidation of work. The most premium deals go to just a few firms.

And while the deal flow narrows, the larger firms are capitalizing by hiking their rates.

According to CounselLink’s director of strategic consulting, Kris Satkunas, nearly two thirds of corporate clients in its study had billed 10 or fewer firms for at least 80 percent of fees they paid to outside law firms.

And large law firms raised rates to a point where they are 45 percent higher than their smaller competitors.

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To contact the editor on this story: Casey Sullivan at