The last year has seen a flurry of major law firm mergers and acquisitions—and market conditions may be ripe for an even more robust round of firm combinations in 2026.
Already, Winston & Strawn and Taylor Wessing, and Perkins Coie and Ashurst, have announced that they are hoping to finalize transatlantic mergers in the coming year. And a new forecast from Citi Hildebrandt on the law firm market in 2026 reports that 1 in 5 large firms considers some form of acquisition likely.
“In 2026, there is an anticipation for broader market consolidation, with the most profitable firms continuing to pursue a strong growth mindset, capturing a greater share of market,” Citi said.
Consolidation may help firms balance expense growth that is outpacing demand, Citi posits. And with greater scale, firms may be able to accelerate investments in technology, expand into new markets and compete more effectively for talent.
That may—or may not—be music to the ears of partners. The larger firms become, the more likely they are to adopt a top-down management structure, a development that can sow tension among individual partners accustomed to having a voice in the decision-making process.
Mergers on the Rise
Firms completed 47 mergers through the first three quarters of 2025, according to data from law firm consultant Fairfax Associates. The figure represents a 9.3% increase in merger activity over the first three quarters of 2024.
There were eight completed mergers (i.e., the effective date of the merger occurred during Q3) in the third quarter alone, Fairfax reported. The biggest of those combinations brought together 1,336-lawyer McDermott Will & Emery and 363-lawyer Schulte Roth & Zabel.
Announced in the previous quarter and completed in August, the merger creates a firm with nearly $2.8 billion in revenue and that will likely rank in the top 20 among U.S. firms. The merger with Schulte gives McDermott a much stronger foothold in New York and in the hedge fund and private capital markets.
Indianapolis-based Taft Stettinius & Hollister, which reports 1,050 lawyers, also announced that it will merge with Atlanta’s 120-lawyer Morris Manning & Martin. The merger is set to close on Dec. 31.
Taft has been on something of an acquisition spree of late. In June, the firm finalized its merger with Mracheck Law, an 18-lawyer litigation boutique, based in Florida. On Jan. 1, the firm completed its merger with Sherman & Howard, a 125-attorney, Denver-based firm that helps Taft expand its footprint in the Mountain West.
Taft has completed seven other mergers during the last 17 years and has said its growth strategy is designed to create “a new, super middle-market firm.”
Transatlantic Combinations
International expansion by U.S. and U.K. firms remains a key merger driver, as well. In the last two years, U.K.-based Herbert Smith Freehills merged with Kramer Levin Naftalis & Frankel, a New York litigation powerhouse, and Shearman & Sterling merged with Allen & Overy to create A&O Shearman.
The transatlantic theme is continuing into 2026. In its report, Citi said it expects “to see more U.K. firms seeking a major U.S. presence, possibly resulting in more transatlantic merger activity.”
If all goes as planned, Winston’s merger with Taylor Wessing will be completed by May 2026. The new firm will be known as Winston Taylor and will have combined revenues of $1.63 billion and employ more than 1,400 lawyers, according to estimates by Law.com. Partners are voting on the combination in January.
The merger gives both firms greater entrée into key markets and a series of complementary practice areas. For instance, the firms see the merger as a chance to “achieve the preeminent international IP litigation practice,” one consultant told Law.com.
A Partner for Perkins
Seattle-based Perkins Coie’s merger with U.K.-based Ashurst will create a 3,000-lawyer firm with combined revenues of around $2.6 billion. The decision to merge comes after a period of upheaval for Perkins. The firm was one of those targeted for retribution by President Donald Trump, who attempted to cut off the firm’s access to the federal government because of its work on behalf of Democratic Party causes.
Perkins won a permanent injunction overturning Trump’s executive order. But The American Lawyer reported in November that Perkins still faced client concerns about its “ability to interact with regulators.” In June, the firm laid off 5% of its U.S.-based professional staff. This follows a previous layoff of business staff in 2023 and a decision at that time to defer start dates for new associates.
The merger gives Perkins far greater international scale and vastly expands Ashurst’s reach into the United States. For both, the merger may enhance their ability to compete for top-tier clients at premium rates. As one law firm consultant familiar with Perkins told The American Lawyer, “They want to play with the big boys and have the high rates and compete for the biggest work, but I think that was a struggle. This, I think, will change that.”
Muted Demand
Other major firms are also said to be looking for merger partners. Cadwalader Wickersham & Taft is in talks with three potential merger partners, including Atlanta-founded Alston & Bird, Law.com reported.
Citi said in its report that many firms are looking to merge because they are seeing modest growth in demand for legal services at a moment when they are experiencing significant increases in expenses, “particularly in the wake of Gen AI adoption.” These factors “will drive the need for greater scale,” Citi said.
Indeed, Citi reported that demand growth was up just 1.9% in the first nine months of 2025. After a slow start, firms saw demand gain momentum throughout the year, thanks to litigation, large mergers and acquisitions, funds and investment management activity, and private equity, private credit, bankruptcy and real estate work. Transactional activity, however, was muted, “particularly in the middle market,” Citi said.
“Market volatility, driven by tariff announcements, trade wars and uncertainty around the timing of interest rate cuts, delayed the much-anticipated rebound in transactional activity. In addition, the presence and threat of executive orders targeting law firms, alongside EEOC focus on the industry, contributed to a challenging environment in the early part of the year,” Citi wrote.
Rising Expenses
Even as they faced these challenges, law firms were spending more. Expenses were up 9.1% from January through September, Citi said. The increase was driven by a rise in salaried lawyer headcount, a continuing shift to a “more expensive leverage model,” and a sharp increase in operating expenses, especially for items like technology.
Firms are also spending on the “continued upskilling of the professional staff leverage model,” Citi said, and are adding technology, business development and billing and collections expertise. As a result, they are also seeing increased professional staff salaries.
Real estate costs are also on the rise. Firms took on millions of additional square feet during 2025 in prime locations across the country. Many rolled back pandemic-era remote work options, announcing more stringent return-to-office mandates and requiring most lawyers to spend a greater share of their time on site.
Scaling Up
The saving grace for firms—at least in the short term? Rate increases. Firms boosted rates 9.6% during the first nine months of 2025, fueling an overall 11.3% increase in gross revenue.
Whether that model is sustainable long-term is another story. Greater scale through mergers and acquisitions may help them better weather economic turmoil and afford to compete for talent, fully integrate AI into practices and expand to critical new markets.
“When you’re operating in a modest demand growth environment overall—meanwhile, the cost of running these very sophisticated businesses is increasing—we will see continued consolidation occurring,” through lateral hiring or combinations, Gretta Rusanow, managing director and head of advisory services at Citi’s Law Firm Group, said in an interview with Bloomberg.
In its report, Citi predicted that mergers of equals—like the Ashurst and Perkins combination—may not occur very often in the year ahead, but smaller deals should be relatively common. “While mergers of equals are less likely, we expect to see firms achieve that scale through promotions, laterals and the acquisition of smaller and mid-size firms by larger firms,” Citi said.
A Management Challenge
How will merger activity affect the way firms are managed? Mergers between large law firms are accelerating an “industry shift toward centralized decision-making,” Law.com recently noted.
In the Perkins and Ashurst deal, partners “were only made aware that the two law firms were in merger discussions moments before news broke of the merger last month,” Law.com reported, adding that the same was true when Allen & Overy and Shearman, and Herbert Smith and Kramer Levin announced their mergers.
A more corporate, top-down structure can help firm leaders move quickly to make critical business decisions that might get bogged down if put to the entire partnership. As one law firm CEO told Law.com, the approach can help a leader avoid “paralysis by analysis” and to make decisions that align with the “on-the-ground realities a firm with multiple offices in different geographies faces.”
Still, firms may face dissension in the ranks if partners feel disenfranchised. At a moment when keeping talent on board is a priority for most firms, unilateral decisions by a firm leader on major business issues can “result in departures from other leaders who felt there wasn’t the appropriate consensus-building,” one legal recruiter said in an interview with Law.com.
It's a problem firms must confront soon. The law firm merger market is likely to remain active for some time to come. As Peter Zeughauser, a consultant and founder of Zeughauser Group, recently told Law.com, "we’ve seen a number of important combinations, more than usual, and I think the combination of all of them…will accelerate momentum for more combinations.”
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David L. Brown is a legal affairs writer and consultant, who has served as head of editorial at ALM Media, editor-in-chief of The National Law Journal and Legal Times, and executive editor of The American Lawyer. He consults on thought leadership strategy and creates in-depth content for legal industry clients and works closely with Best Law Firms as senior content consultant.
