A poll conducted by Australasian Lawyer
has found 59% of respondents believe there will 'definitely' be more mid-tier firms merging this year. A total of 81% of respondents either 'definitely' thought there would be mergers, or otherwise thought 'It's possible'.
This year has already seen one major merger, with Thomsons Lawyers and Herbert Geer announcing in February they would combine forces, to become an 80-partner, $120m revenue mid-tier firm.
Mid-tier managing partners are backing the Australasian Lawyer
poll results, with expectations that intense local competition is likely to push more mid-tier firms into each others' arms.
However, while Mills Oakley
Lawyers CEO John Nerurker agrees the liklihood of mergers is high, he said firms are looking at organic and lateral hire-sourced growth, as well as mergers.
"All astute firms will be exploring each of those avenues,” Nerurker told Australasian Lawyer
Mills Oakley last week announced expansion ambitions of its own by hiring five new partners for its Sydney offices and declaring it was looking to expand its presence in Brisbane later this year.
Nerurker said that while his firm hasn’t merged in the last decade, it has nevertheless experienced double-digit growth over the same period. The firm grew from 49 partners at the end of the FY2012 to 58 partners in FY2013, and achieved almost 20% revenue growth over the same period.
“We are working feverishly hard to position ourselves as a leading domestic law firm and when I look at the firms currently occupying that space, they are all larger than Mills Oakley. We need to invest in our scale, depth and breadth of our expertise,” Nerurker said.
Many of the fastest growing Australian firms over the last 12 months were all outside the top 10 firms by revenue. They have included Colin Biggers and Paisley, with revenue growth of 26% from 2012 to 2013 year-on-year, as well as Curwoods, with 52% growth. Larger firms have at times gone backwards, with Minter Ellison's revenue remaining stagnant and King & Wood Mallesons' dropping by over 3% in the tough 2012-2013 period for firms.
Mid-tier firms are expected to benefit from the trend towards more segmentation of external legal spend by corporate clients, Nerurker said.
“The right reason for merging is if it better serves your clients,” Nerurker said. “Our expansion is needs driven and we’re starting to pick up more corporate advisory work and work from clients in financial services. We needed to adjust our scale to take on the larger and more complex work,” Nerurker added.
Want more on this?
Read our coverage of Mills Oakley's recent 'hiring spree': Firm snares five partners in self-proclaimed 'hiring spree'
Law firms across Australia are expecting to see further market-changing mid-tier mergers in 2014, as these firms 'feverishly' muscle up to compete with larger national and international competitors.