New York’s legal landscape witnessed transformative shifts in 2023, as some of the city’s oldest law firms grappled with challenges and set the stage for what’s to come in 2024.
In a notable turn of events, two venerable law firms, Stroock & Stroock & Lavan and Shearman & Sterling, both established in the late 1800s, faced significant changes. Stroock & Stroock & Lavan, founded in 1876, is in the process of dissolution, while Shearman & Sterling, formed in 1873, is set to merge with the globally renowned Allen & Overy in the coming year.
Despite distinct circumstances leading to their fates, both firms experienced partner exits that triggered subsequent departures, propelling them into the quest for mergers. Unfortunately, the search for a merger partner proved unsuccessful for Stroock & Stroock & Lavan.
These transformations unfolded against the backdrop of a challenging environment for New York law firms and the broader legal industry. Factors such as intense competition for partner talent, variable client demand, and a sluggish global mergers-and-acquisitions market, which hit a decade-low, contributed to the headwinds faced by law firms.
In the face of these challenges, Shearman & Sterling’s decision to merge with Allen & Overy was not an isolated event. The legal landscape in 2023 witnessed several consolidation moves, reflecting a broader trend of firms seeking mergers to navigate a fiercely competitive market. Notable combinations included Maynard Cooper & Gale and Nexsen Pruet, Holland & Knight and Waller Lansden Dortch & Davis, and Ulmer & Berne and Greensfelder, Hemker & Gale. The Shearman and Allen & Overy transaction is anticipated to conclude by May.
According to consultancy Fairfax Associates, the first three quarters of 2023 saw 41 completed law firm combinations, surpassing the 37 recorded during the same period in 2022. This consolidation trend highlights law firms’ strategic approach to achieving growth amid increasing competition, setting the stage for an intriguing legal landscape in the year ahead.