DealLawyers.com Blog

June 8, 2016

Study: M&A Legal Bills

According to this “ELM Trends: 2015 Year-End Report,” the largest law firms continue to command the lion’s share of the market for high value M&A work – with M&A fees more than doubled in 2015 with year-over-year increases since 2012.

Here are highlights from the study:

– 99 percent of all M&A matters billed are by the hour. Of those, 72 percent were handled by a large firm. M&A work continues to be partner intensive with a quarter of all transactions handled by a partner since 2011.
– The overall blended rate on M&A matters ($450) is the highest among the study’s matter categories and exhibits one of the largest increases on a three-year basis. At the high end of the M&A billing scale, some partners increased rates by as much as 9% on a three-year CAGR basis.
– A majority of clients (56%) are forgoing hiring outside firms for their legal work. For M&A work just 31 percent of corporate clients willing to hire a new firm for this type of work.
– By contrast, clients are willing to hire new outside firms for just two specific types of legal work—litigation and corporate:
o 57% of companies with significant litigation hired a new firm in 2015 and used more law firms (between five and 27), to handle their litigation matters than any other type of work.
o 46% of companies with significant corporate work also hired new outside firms.
– While AFA use continues to grow modestly, AFAs for commodity work such as Employment and Labor grew from 14.1% to 17.3%.
– Three major cities, in particular, show rate growth of more than 4.0% both over the last year and year-over-year: Boston (8% YOY), Chicago (5.5% YOY and Washington, D.C. (4.3% (YOY).