The legal market in The Second City is in solid shape, due in large part to deal making and transactional work for the area's deep bench of top public companies and some newer players.
"The traditional corporate and mergers and acquisitions practices are running at a very brisk pace this year," said Larry Barden, a Chicago corporate partner who chairs Sidley Austin's management committee.
The transactional upswing is also giving other practices a shot in the arm, Barden said. "You see a pickup in related transactional practices. Real estate, employee benefits and tax [work that] also has a transactional orientation are up significantly," he said.
A diverse corporate base in and near the Windy City gives law firms a big variety of companies to service. Strong sectors include financial services, food processing, manufacturing and transportation, and distribution. The area is home to numerous top public companies, including Boeing Co. and Walgreens Boots Alliance Inc. of Deerfield, Ill. And major technology companies are a growing segment, including Groupon Inc., Motorola Mobility Holdings LLC, and Takeda Pharmaceuticals USA Inc.
The strong corporate scene is spawning larger size deals, according to The Mergermarket Group. In the first half of the year, total deal value in Illinois spiked 95 percent to $121 billion, compared with the first half of 2014. That boost was spread over 22 fewer deals in the first six months of the year, or 93 compared with 115 in the same period in 2014.
Kent Zimmermann, a management consultant with the Zeughauser Group, points to the city's population growth and concentration of huge companies, as tracked by consulting giant McKinsey & Co. Inc. A 2012 McKinsey report predicted that Chicago would be the only city in the developed world to newly exceed the 10 million population mark by 2025. According to a 2013 McKinsey report, Chicago and New York were the only two U.S. cities among the top 10 host cities for global headquarters of companies with more than $1 billion in annual revenue.The population growth is an indicator of the city's economic output, he said.
"Wealth is building more quickly [there]," Zimmermann said.
Legal consultant Joel Henning of Joel Henning & Associates also notes a robust corporate scene. "The important, high-profit end of corporate mergers and acquisitions and so on is looking much more active in Chicago than it has been," Henning said.
Katten Muchin Rosenman chairman Vincent Sergi said all kinds of transactions are up, including corporate and real estate, plus structured finance work. "It's a hot deal market right now in Chicago," Sergi said.
Life sciences and health care companies are creating some of the deal work, plus patent and trademark work and litigation, said Rebecca Eisner, partner-in-charge of Mayer Brown's Chicago office.
Eisner also said the food and agriculture sector continues to be strong, and the burgeoning cybersecurity field creates more opportunities for specialized advice.
"We have clients in the Chicago area asking, 'What should I be talking to my board about' [concerning cybersecurity]", Eisner said.
Jones Day's Tina Tabacchi, partner-in-charge of the firm's Chicago office, said there's a lot of real estate financing activity, driven in part by corporations moving their headquarters downtown or opening satellite offices. "That's been exciting to see," Tabacchi said.
In the Chicago industrial market, the 6.7 percent availability rate for this year's second quarter is the lowest in 19 years, according to CBRE Group Inc. of Los Angeles.
Real estate lawyers are back to doing traditional real estate work versus non-traditional workouts, said Mitchell Roth, managing partner of Chicago-based Much Shelist.
On the flipside, "litigation is flat to down," he said. "Corporate clients have less of an appetite to fight or sue or use the court system to deal with disputes."
New regional and national firms have also edged into the market by gobbling boutiques, including some that touted their local and independent status for years.
In February, Nixon Peabody merged with Ungaretti & Harris. The following month, Shook, Hardy & Bacon of Kansas City, Missouri, folded in complex commercial litigation boutique Grippo & Elden. Two June deals also followed the pattern. Cozen O'Connor of Philadephia added 58 lawyers from Meckler Bulger Tilson Marick & Pearson. And Honigman Miller Schwartz and Cohn of Detroit absorbed litigation firm Schopf & Weiss.
Reprinted with permission from the August 24, 2015 edition of The National Law Journal © 2015 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.