Source: Bloomberg BNA Big Law Business
On December 16, 2016, partners from UK firm Eversheds LLP and Atlanta-based Sutherland, Asbill & Brennan voted to merge to create a 2,300 person global firm to be named Eversheds Sutherland. The merger comes on the heels of a 2015 merger between Dentons – the largest law firm in the world – and Atlanta-based McKenna Long & Aldridge, and adds to a decade-long trend of law firm growth and consolidation in Atlanta. Though significant in their own right, these mergers are an indicator of something more significant. Atlanta is emerging as a prominent market on the national and international legal landscape. Naturally, law firms are eager to capitalize on the Atlanta market and gain a foothold in this developing market, and here's why.
Strong Corporate Environment
Part of the attraction to the city is Atlanta's large corporate presence, giving firms plenty of work to go after. Atlanta is home to more than 15 Fortune 500 companies: Coca-Cola, Delta Airlines, UPS and Home Depot are just a few of the companies headquartered in the city. That number increases to nearly 30 when considering Fortune 1000 companies. Most recently, in January 2015, Mercedes Benz announced that it would relocate its North American headquarters from Montvale, NJ to Atlanta, citing a lower cost of doing business and more favorable tax environment. With these companies spanning a variety of industries, firms have abundant opportunities to serve corporate clients in all facets of sophisticated legal work, including M&A, securities, construction, regulatory, environmental, intellectual property, litigation and real estate.
Strong Legal Talent
The Atlanta legal market has shown a strong commitment to attract and retain very talented attorneys. Rising compensation provides further evidence of Atlanta's changing legal industry and demonstrates the strength of this market within the national industry. For partners, the market has demonstrated a consistent compensation growth trajectory. Major, Lindsey & Africa's 2016 Partner Compensation Survey revealed a significant jump in compensation for partners in Atlanta from an average of $701,000 in 2014 to $850,000 in 2016.
Partners are not the only attorneys who have seen increases in pay. Atlanta's largest firms raised associate salaries following the 2016 wave of increases set off by Cravath, Swaine & Moore. This past summer, several of the top Atlanta-based firms, including King & Spalding and Alston & Bird, raised their starting salaries to $155,000. Some firms, such as the Atlanta offices of Jones Day and Paul Hastings, met the $180,000 base salary of the highest paying firms in the country. These associate salary increases prove that the city's firms are prepared to remain competitive with larger markets to attract top talent.
Approved just two weeks before the start of 2017, the Eversheds and Sutherland merger will continue to influence the Atlanta legal industry into the beginning of the year and beyond. While its impact is not yet certain, law firms in Atlanta will surely continue to be aggressive and seek out growth as a result. Mergers ramp up the intensity of competition, so firms of all sizes in Atlanta will strive to expand their offerings to compete with larger consolidated firms.
For boutique and smaller firms, though, this increased pressure can prove to be both a challenge to compete with larger full service firms and an opportunity to acquire specialized practitioners who desire a smaller, more focused practice and rate flexibility.
While the Eversheds Sutherland merger reflects industry-wide increased consolidation as clients' demand for fewer firms with larger practices increases, it is clear that Atlanta will remain very relevant on the national and international legal scene. As global companies continue to thrive in the fertile and corporate-friendly Southeast region of the United States, its largest legal market will continue to draw the interest of outside firms seeking to land new clients by offering their expertise and attract talented lawyers who are capable of delivering high quality legal work.
This article was featured on Bloomberg Big Law Business on January 9, 2017.
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W. DeVane Tidwell is a Director in Major, Lindsey & Africa's Partner Practice Group, based in Atlanta. In this role, DeVane focuses on representing individual law firm partners and partner groups in the lateral market throughout the southeast United States.