Two mighty regional law firms merge; Philly’s Pepper Hamilton combines with Atlanta’s Troutman Sanders
The firms have some overlap in litigation, transactions, and intellectual property. But Pepper's Tom Gallagher, who will remain based in Philadelphia, does not foresee any layoffs.
After months of talks, Philadelphia-based Pepper Hamilton LLP said Thursday that it would combine forces with Atlanta’s Troutman Sanders LLP to become one of the biggest law firms in the country.
When the merger is effective on April 1, the newly minted Troutman Pepper will field 1,100 lawyers in 23 offices across the country.
“Why now?” said Pepper’s current chairman, Thomas M. Gallagher. “Because now we have the right partner. Because now we are positioned well to do what both firms really treasure, which is providing excellent client service.”
Pepper Hamilton has long specialized in pharma clients and medical device manufacturers. Along with the health sciences industry, Pepper also represents technology and “middle-market corporate entities,” Gallagher said.
Troutman Sanders is a powerhouse in the energy sector and financial services. “They’re well-known and well-positioned in the Southeast as we are in the Northeast,” Gallagher said.
Key practices in both firms include corporate law, litigation, intellectual property, tax, and bankruptcy.
Only three geographic areas overlap: Washington, New York City, and Orange County, Calif. Troutman Pepper will have offices in eight of the 10 largest U.S. markets.
Gallagher said he did not foresee any reductions in the number of lawyers.
“Every existing office will come together and serve clients,” Gallagher said. “There is so much work to do that the plan is to integrate it all. Over the next year, we’ll be evaluating the best way to bring the teams together.”
In 2016, Pepper Hamilton had been in talks to merge with Reed Smith LLP, a global law behemoth based in Pittsburgh.
Last year was a record-breaker for U.S. law firm mergers, according to analysts at Altman Weil Inc., the legal industry consultants based in Newtown Square. At least 115 mergers were recorded, up from 106 in 2018.
The splashiest marriage announcement occurred in December, as Philly’s Drinker Biddle & Reath rocketed into Big Law’s Top 50 in a “merger of equals” with Midwestern powerhouse Faegre Baker Daniels. The combination, now named Faegre Drinker, will go into effect Feb. 1 and will field a legal team of 1,300 lawyers.
The big national mergers represent “a push to scale,” said Lisa Smith, a principal at Fairfax Associates, the international legal management consultants based in Washington.
“There are benefits that come with size, especially for firms that want to have a national platform,” Smith said. “There are costs of doing business that are easier to absorb for bigger firms, especially within the realms of data security, privacy issues, and technology. Those alone don’t drive mergers, but they are things that mid-sized firms struggle with.”
As in the Faegre Drinker merger, the Troutman Pepper combination will not favor any one city.
“Nobody really talks about a headquarters anymore,” Gallagher said. “But of course, the two biggest offices will be in Atlanta and Philadelphia.”
Gallagher will be vice chairman of Troutman Pepper. Steve Lewis, currently the managing partner of Troutman Sanders, will be chair and CEO of the combined firm.
Asked why Troutman is getting first billing in the new moniker, Gallagher said the decision was made with “a simple guiding principle.”
“Nobody was talking about which names should be considered first, second, or third,” Gallagher said. “The only thing that mattered was putting our clients first.”