Smaller Law Firms Merging

Mergers of law firms in the United States are up compared to 2003.



Through the first three quarters of 2004 there have been 44 mergers completed. Last year there were only 35 mergers for the entire year. This information comes via Mergerwatch, a service of Hildebrandt International.



At the same time, the average size of the smaller law firm involved in a merger is getting smaller.



One thing this signifies to me is that more smaller firms are merging. I think they have to. It's just getting tougher to compete with larger firms for clients.



The practice of law has become so complex that no one attorney can be well-versed in all the areas necessary to serve a client. That's especially true for business clients. Smaller law firms can't staff with enough legal specialists to address in depth such varied needs as trademarks, commercial law, litigation, antitrust, labor law, patents, tax law, intellectual property, creditors' rights, etc.



As a result smaller firms may lose existing clients as those clients grow larger and their legal needs grow more complex. And the ability of smaller law firms to attract new clients can also be limited by their small size. Business clients want to know that a firm can bring in several attorneys across practice areas when needed on a complicated issue.



As this story puts it, when a smaller firm merges with a larger one, it gets more "giddyap". It can offer more to clients.



The majority of law firms are still relatively small, however -- just look in the Yellow Pages and you'll see what I mean. Small firms are not going away overnight. But look for them to gradually grow larger as the practice of law becomes more complex.