By doing this deal FNF gets a much greater % of LFG's customers than they would if they just watched LFG fail. Also, owning LFG allows FNF to close the offices, ether their own or LFG's, that would be most beneficial to them.
I think this deal is really positive for FNF (even though LFG is kind of a horrible company, which gives me some concern). FNF is both increasing its economies of scale and taking out capacity in the industry on their terms, both of which are really good. In the long-term FNF can be scaled to the size of the real estate industry, so unless the industry keeps shrinking forever, at some point FNF should be appropriately sized and start making money again, and if real estate transactions ever make a come back FNF should print money and run into regulatory problems all over (oh how I long to see that day).