Aon | Professional Services Practice
Law Firm M&A – Some Risk Considerations
Release Date: October 2025Law firm mergers and acquisitions (M&A) require careful consideration for several factors, including risk management. Law firms contemplating such strategic moves should address several crucial risk areas to ensure successful integration and to minimize potential liabilities.
Key Takeaways
- When law firms merge, they should carefully consider the risk management implications of the transaction
- Firms should specifically review and compare their lawyer’s professional indemnity, management liability, employment practices and cyber coverages
- Law firms can effectively navigate the complexities of M&A by continuous risk analysis and the refinement of risk financing strategies
When law firms merge, professional liability insurance is the most important risk transfer consideration.
Firms must evaluate options for covering prior acts exposure, such as purchasing separate tail policies for incoming attorneys. This approach can help quantify and silo prior acts exposures, protecting the combined firm's ongoing policy from liabilities over which they had no control. It is also important to evaluate the claim history of the merging firms to assess whether the new firm’s practice groups represent higher or lower risks, to inform ongoing risk management strategies and to plan for future insurance premiums.
Given the urgency of the risk, cyber coverage must also be considered.
In Aon’s 2023 Global Risk Management Survey, professional service firms ranked cyber-attack or data breach as their top risk. It is important to ensure the safe transfer of data between the networks of both firms following the closure of a merger transaction. The strength of the cyber security posture of each firm leading up to a combination must be considered, as any threats left undetected prior to a merger could compromise the security of the combined firm’s network.
Another concern is management liability exposure.
Acquiring groups of attorneys – or entire firms – can lead to allegations of aiding and abetting, breaches of fiduciary duty or tortious interference with business relationships being made against the newly-combined firm. These risks necessitate a thorough review of the management liability policies to ensure adequate coverage and protection against such claims.
Employment practices liability (EPL) is another area of concern.
Mergers often involve staff changes, which can lead to EPL claims if employees feel they have been treated unfairly. It is vital to ensure that partners are contemplated within the scope of the firm’s EPL policy and that coverage includes defense against breach of contract claims, particularly for contract partners. Additionally, firms should assess the potential for WARN Act violations if the merger results in office closures.
Continuous risk analysis and the refinement of risk financing strategies are essential to address these challenges effectively. By addressing these areas, law firms can navigate the complexities inherent to combinations and position themselves for long-term success in an increasingly competitive legal landscape.
Contact
The Professional Services Practice at Aon values your feedback. To discuss any of the topics raised in this article, please contact Alex Jenks and Chester White.
Alex Jenks
Vice President and Director
New York
Chester White
Senior Vice President and Executive Director
New York
About Aon
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