By ELLEN JENSEN
Kansas City Business Journals

Kansas City-area mergers-and-acquisitions law practices have taken a hit during the recession and are making adjustments to weather the storm.

Through the third quarter of 2008 to the first quarter in 2010, M&A transactions have been down 10 percent to 15 percent, said Gary Gilson, chairman of the security and M&A departments at Husch Blackwell Sanders LLP.

"Before 2009, we averaged $10 billion a year of transactional work," Gilson said. "We are off from that in 2009."

As a reflection of this downturn, Gilson said the lawyer count has been down slightly. In addition, the hiring pipeline of summer associates who are tabbed to come on board in this area has been reduced significantly.

"Fewer summer associates in the M&A practice not only reflects the downturn in mergers and acquisitions but also a growing trend among clients to prefer the services of more experienced attorneys on transactional work," Gilson said.

Stinson Morrison Hecker LLP also has seen a lower deal flow compared with the boom a couple of years ago, but the firm hasn't reduced its number of M&A lawyers, said Victoria Westerhaus, M&A practice leader.

"As a firm, we try to keep attorneys busy as we move through the peaks and valleys," Westerhaus said. "If there's a downturn in M&A, our attorneys help out temporarily in other areas that are busy and need help, such as the environmental group."

The reduced amount of M&A work has caused a work-flow change at Husch Blackwell Sanders. The M&A lawyers spend less time on financed acquisitions because there have been few of those and more time on joint venture transactions and capital formation work, Gilson said.

Likewise, Art Fillmore, a partner at Levy & Craig PC who specializes in M&A work, has spent more time on real estate law, as well as banking. He said that from the fourth quarter of 2008 through the first half of 2009, the firm's M&A work was down 50 percent to 75 percent. It since has increased and is now down about 33 percent from where it was two years ago.

M&A deals are starting to increase, and the lawyers are cautiously optimistic about the outlook.

"It's still difficult for people to get financing for startups, but we're starting to see more people with funds available looking for good deals, strategic fits and taking advantage of opportunities," Westerhaus said.

Fillmore said that he has deals in the pipeline that will close in the second and third quarters of this year and that he thinks his practice will be restored by the end of the year.

Gilson said that Husch Blackwell Sanders is receiving more inquiries about how to structure various types of acquisitions and that the level of interest in planning and structuring has picked up in the past couple of months.

"With the loosening of commercial credit for acquisitions starting to happen, we think all of the pieces of the puzzle should be there for the second half of the year," Gilson said. "Banks now have more money to lend and a greater willingness to lend it. There is a pent-up supply of companies that would normally have tried to sell or shift focus but couldn't, and they are ready."