Wachtell, Lipton, Rosen & Katz, the most profitable law firm in the country, is facing challenges in reclaiming its top spot among M&A dealmakers. The firm, which has cemented itself as an elite corporate adviser by keeping its focus narrow, is currently in seventh place in the Big Law rankings for mergers and acquisitions work through three quarters this year. This is down from the second spot, which Wachtell has held on Bloomberg Law’s league tables in each of the last three years.
Experts suggest that the firm may need to expand its relationships with new money to remain competitive in the M&A market. Law firm adviser Peter Zeughauser noted that “What may be threatening to them is not having relationships with new money. That’s what they need to crack—maybe that’s through laterals or through a more proactive relationship in the financial community.”
Kirkland & Ellis, the private equity deals behemoth that’s pushed Big Law’s race to scale, is on track to rank No. 1 in M&A transactions. That would be the third time Kirkland has topped the list in the last four years since overtaking Wachtell. Wall Street’s Simpson Thacher & Bartlett was the lead M&A adviser in 2022, before Kirkland regained the first spot last year.
Wachtell has remained conservative with its geographic footprint, even as it has won some mega energy transactions from afar. The firm has added a total of 12 lawyers to its partnership since 2002, according to data from The American Lawyer. Its relatively small roster for a firm that works on massive deals has helped make Wachtell the country’s most profitable firm in nine of the last 10 years.
While Wachtell is unlikely to make a major pivot, its drop in the rankings “may call into question their historical preeminence, unless they change some of what they’re doing,” Zeughauser said.
The current surge in M&A transactions is partly due to a rise in take-private transactions and wide availability of private credit to finance deals. However, deal volumes may slow down in the fourth quarter as companies pause to account for the uncertainty of the November election, lawyers say.
Kirkland advised on $297.1 billion in transactions through the first three quarters, ahead of $274.1 billion by Skadden, Arps, Slate, Meagher & Flom and $250.9 billion by Latham. Wachtell advised on $169 billion in the same period.
Without installing new pay structures, catching the likes of Kirkland in total deals work based on value could prove challenging. Even the top firms might need to make changes to stay on top, according to law firm consultant and business adviser Krystal Champlin-Gerage. She noted that “You’re starting to see second tier firms capture work that was once reserved for only elite firms. Seeing what some firms have done in terms of adding a non-equity partnership—they’re starting to realize that they have to be competitive now in terms of talent.”
Read more: