Tag: legal mergers

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Herbert Smith Freehills set for $2bn transatlantic merger with Kramer Levin

Following this May’s A&O Shearman merger, there had been no shortage of market speculation about which transatlantic duo would be next to tie the knot.

However, few would have predicted today’s news that Herbert Smith Freehills is set to combine with New York’s Kramer Levin, a deal which will create a new $2bn, 2,700-lawyer firm.

The proposed tie-up, which the firms announced in a joint statement, remains subject to a partner vote at both firms, but if confirmed, is set to go live on 1 May next year.

The combined firm will be known as Herbert Smith Freehills Kramer – operating as HSF Kramer in the US – and will operate with one single global profit pool, following in the footsteps of A&O Shearman, which also eschewed the verein model.

While HSF is the much larger of the two firms, with 23 offices across Europe, Asia-Pacific, the Middle East, New York and South Africa, Kramer Levin is the more profitable, with 2023 profit per equity partner of $2.41m (£1.87m), according to law.com, compared to HSF’s 2023-24 figure of £1.315m.

HSF’s revenues of £1.3bn will be boosted by around £330m by the deal, pushing it past the $2bn mark and placing it on the fringes of the world’s 25 largest law firms.

While HSF has had a New York base since 2012 – the same year of the merger of the UK’s Herbert Smith with Australia’s Freehills – it has long harboured ambitions to bulk up in the States. In a statement, HSF chair and senior partner Rebecca Maslen-Stannage (pictured) described the deal as ‘transformational’.

‘We have long been committed to expanding our offering in the US and Kramer Levin is the perfect fit,’ she said. ‘The combination delivers immediate growth for both firms from day one.’ Global CEO Justin D’Agostino added that the deal was ‘just the beginning… an excellent long-term, strategic move.’

Kramer Levin is led by co-managing partners Howard Spilko and Paul Schoeman, who described the deal as ‘a one-of-a-kind opportunity’, while also citing the firms’ cultural alignment.

In addition to its three US offices in New York, Washington DC and Silicon Valley, Kramer Levin also has a well-established Paris base, which has been in operation. since 1999.

In terms of practice strength, Kramer Levin has five top-tier Legal 500 rankings, for advertising and marketing litigation; immigration; land use/zoning and both corporate and municipal restructuring.

The US firm also has rankings for commercial disputes, employment litigation and appellate work, adding heft to HSF’s traditional disputes credentials, as well as transactional capabilities in mid-market M&A and private equity.

In the announcement of the deal, the firms cited shared strengths in private capital, M&A, restructuring, securitisation, real estate, white collar corporate crime and investigations, class actions, IP, and arbitration.

This story first appeared on Legal Business.

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It’s a ‘yes’ from them – A&O and Shearman partners vote through landmark $3.5bn transatlantic deal

Allen & Overy (A&O) and Shearman & Sterling are set to go ahead with their transatlantic merger, after partners at both firms voted overwhelmingly in favour of the union, with support from more than 99% of votes cast at each firm.

The pair is expected to combine as A&O Shearman from May 2024 at the latest – creating ‘the first fully integrated global elite law firm’, with nearly 4,000 lawyers across 48 offices and 29 countries.

With combined revenue of roughly $3.5bn, the merged firm will sit comfortably within the top five of the LB global 100 – behind Kirkland & Ellis, Latham & Watkins and DLA Piper.

Partner voting on the combination kicked off on 28 September, and was scheduled to run until 13 October, with the firms needing to secure the approval of 75% of partners to get the deal over the line.

Announcing the move, A&O senior partner Wim Dejonghe (pictured) said: ‘This is a historic moment for both firms and our profession. We are delighted that our partners have voted so resoundingly in favour of this merger, which is a transformational step for the legal industry. We have long admired Shearman & Sterling for its outstanding reputation, talent, and client base, and we are confident that together we will create a truly exceptional global firm that will serve our clients’ needs in an increasingly complex and dynamic world.’

Shearman senior partner Adam Hakki added: ‘Our partners have recognized and welcomed this unparalleled opportunity to combine our individual market leadership and brands to serve clients as an integrated global law firm, preeminent in all our markets. A&O Shearman will be a firm unlike any other in the world, built to achieve exceptional outcomes for our clients through an intentional focus on quality, excellence, and collaboration. We are creating a new industry leader, with truly global capabilities, and we are excited for what is to come.’

The firms announced they were in merger discussions in May this year and the deal had been widely expected to go ahead, with management at both firms embarking on a series of roadshows around the world over the summer to shore up support.

The combination marks the first transatlantic merger involving a Magic Circle firm since Clifford Chance’s ill-fated union with Rogers & Wells in 2000 and comes after A&O held unsuccessful talks with O’Melveny & Myers in 2019.

Shearman, meanwhile, was engaged in talks with Hogan Lovells as recently as this year, with the pair announcing the end of discussions in March. The firm has struggled to keep pace with New York rivals in recent years. With its traditional banking client-base, it has not made the same push into private equity as its rivals, something management at the combined firm is keen to rectify.

Shearman has also been hit by partner exits around the world, including finance partners Philip Stopford and Korey Fevzi, who left in March this year to launch the English-law offering at Cravath, Swaine & Moore in London. The firm named respected litigator Adam Hakki as the senior partner successor to David Beveridge the same month.

Market reaction to the deal has been largely positive. Jomati founder Tony Williams, who was previously managing partner at CC before its US merger, commented: ‘A&O was lucky. The previous discussions with O’Melveny made partners understand how difficult getting a US deal is. The partners were more amenable to compromise on issues that, if not for that experience, might have been sticking points.’

Another commentator noted: ‘It’s been handled extremely well. Both firms have had failed merger attempts recently. Both sides understood the importance of managing communications – even simple things like who gets informed in what order. Communications strategy is crucial and has been really well handled. The whole thing was presented as a proper corporate deal.’

The deal will heap pressure on the remaining magic circle firms to come up with credible offerings of their own in the US. There has not been a significant UK/US merger since 2018, when BCLP was created. This deal came after Eversheds Sutherland was formed in 2017, while Norton Rose Fulbright happened in 2013 and Hogan Lovells in 2010.

As Williams commented: ‘It’s transformative in one key respect: it is a fundamental shift in what the top UK firms have been able to achieve in the United States.’

‘You’ve now got one more 64,000lb gorilla, with a unique capability that doesn’t really exist elsewhere’ adds a former UK firm head. ‘A&O Shearman now has a capability that the other Magic Circle firms don’t have. These things don’t change overnight – no one will be out of business all of a sudden. But over time, over around 10 years, it could be transformative. It’s like a snowball. It gathers momentum. It’s really a challenge for the [rest of the] Magic Circle.’

Maurice Allen, founder of legal consultancy LTN & Partners, argued that in addition to the direct benefits from the merger itself, the merged firm will also be a more attractive proposition for other lawyers, potentially making it easier to further build on the corporate side: ‘It’s a big leg up for clients and for recruitment. There’s no doubt A&O is more attractive now.

‘For people sitting in London, either at a US firm where they’re not enjoying life, or at a UK firm where they feel they aren’t reacting to the challenge of the US firms, A&O Shearman starts to look very attractive.’

This story first appeared on Legal Business.

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Allen & Overy and Shearman & Sterling announce merger

In what the firms describe as ‘the first fully integrated global elite law firm’ Allen & Overy and Shearman & Sterling have announced a planned merger to create a ‘unique global law firm’ named Allen Overy Shearman Sterling – A&O Shearman for short.

In a statement, the firms said: ‘This merger will combine two of the world’s most prestigious law firms, leaders in their respective markets, to create an integrated global elite firm.

‘Together A&O Shearman will have  3,900 lawyers and 800 Partners across 49 offices. Allen & Overy and Shearman & Sterling have 250 years of combined experience and some of the greatest legal talent in the world. A&O Shearman will be the only global firm with US law, English law, and local law capabilities in equal measure. This merger is driven by clients’ needs for a seamless global offering of the highest quality and depth to support them in navigating an increasingly complex legal, regulatory, and geopolitical environment.

‘Allen & Overy and Shearman & Sterling are complementary with distinct market leadership, and between them they have huge strength in the US, UK, and markets all across the globe. This merger will transform their offering to clients: Shearman & Sterling will gain access to a dramatically expanded ‘rest of the world’ offering across practice areas, and Allen & Overy will benefit from increased board-level recognition and expanded access to a corporate client base in the US. The combined firm will be perfectly positioned to capitalise on global macro trends including energy transition, technology, and private capital.’

Wim Dejonghe, senior partner at Allen & Overy, said: ‘This combination of two great firms is such an exciting step for us. Both firms have a history of excellence, and together we think A&O Shearman will be a firm unlike any other in the world. We have listened to our clients and their requests for the highest quality advice to help navigate the demands they face, and to do so in an integrated and globally consistent way. We, A&O Shearman, will do this by accelerating our ability to bring the best of both firms, regardless of geography.

‘Shearman & Sterling is an incredible group of legal minds; a firm built on integrity and excellence, founded like us in a premier global financial capital and with an extraordinary group of longstanding clients. What excites me about this merger is the complementary cultures of our two firms. We have striking similarities across the board, and I believe we are going to be wonderful partners to one another on this journey.’

Adam Hakki, senior partner at Shearman & Sterling, said: ‘Client need for global elite firms has never been greater. They are calling for integrated global legal solutions and advice: merging with Allen & Overy will dramatically accelerate our ability to meet their needs in an increasingly complex environment. Allen & Overy is an outstanding firm whose work we have long admired and thought of as a kindred spirit. We have both always placed great emphasis on attracting and retaining top talent, were early to globalise, and are relentlessly focused on quality, excellence, and collaboration.

‘This is truly a game-changing moment for both firms that will create an unparalleled offering for our clients. It is also a fantastic opportunity for our people to be part of a transformative transaction and an institution of such significance, and we look forward to recruiting even more stellar talent in the coming years.’

Lazard is serving as financial adviser and Simpson Thacher & Bartlett is serving as legal counsel to A&O,  while Davis Polk & Wardwell is advising Shearman.

The proposed merger is subject to customary closing conditions, including a vote of the partners of each of the respective firms.

More detail can be found on www.announcingaoss.com, a site set up by the firms.

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This article first appeared on Legal Business

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End of the road for Womble Bond Dickinson merger talks with BDB Pitmans

Merger talks between Womble Bond Dickinson (WBD) and BDB Pitmans have been called off, the firms announced on Wednesday (1 February) in a joint statement.

Talks of a combination first became public in October 2022, when a story on RollOnFriday prompted WBD and BDB Pitmans to confirm that they were in discussions around a potential merger, albeit early stage.

In the new statement, the firms said: ‘Womble Bond Dickinson and BDB Pitmans announce today that they have decided not to proceed further with their proposed merger. After extensive discussions on the combined proposition, both firms have decided that the best path forward is to remain independent of each other. Excellent relationships have been established and the firms will continue to work closely together in the future.’

No details were given as to why the talks fell over.

As Legal 500 data from late last year revealed, the two firms complemented each other in some notable ways. A combination offered Pitmans access to the US market, while WBD would have expanded its offering in the UK. In particular, WBD has little presence in the southeast and east of the country, while Pitmans is active in Southampton, Reading, and, since acquiring King & Wood Mallesons (KWM)’s office there in 2017, in Cambridge. The two firms also share strengths in real estate, particularly planning, and in private client work.

But, as with any proposed merger, there were always going to be disparities. First, while WBD has offices in the UK and the US, Pitmans has no presence outside the UK. Second, and more significant, there is a gulf between the two firms in terms of both headcount and turnover. WBD employs 888 lawyers, including 218 equity partners and 171 non-equity partners, with a total revenue in 2021-22 of £379m. Pitmans, by contrast, posted revenues of £53.3m, and is home to 235 lawyers, with 50 equity partners and 20 non-equity partners. Moreover, Pitmans’ revenues slumped 3% in the 2021-22 financial year, while WBD’s increased by 2%.

All this means that the proposed merger made sense: a combination firm would have had a top line of over £430m, and over £160m in the UK alone. But it also highlights that any eventual union would not have been one of equals.

A merger is, of course, a major upheaval for both firms involved. Even early-stage talks can be all it takes to upset the applecart and send partners searching for pastures new. A case in point is the ongoing exodus from Shearman & Sterling amid rumours of an upcoming tie-up with Hogan Lovells. Neither WBD nor Pitmans is a stranger to this process. WBD was established in 2017 when US firm Womble Carlyle Sandridge & Rice joined with UK-based Bond Dickinson, and Pitmans in its current form is the product of the 2018 union of Bircham Dyson Bell and Pitmans. But it may be that, especially in the context of reduced dealmaking on both sides of the Atlantic, both firms opted for the stability of the known over the risks of the unknown.

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This story first appeared on Legal Business

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‘A close-knit group’: Milbank acquires Dickson Minto’s seven-partner London office

One of 2022’s hottest merger rumours came to fruition on 13 December, as Milbank confirmed it was acquiring the London office of Anglo-Scottish firm Dickson Minto.

Legal Business first reported murmurings of a merger in the summer, when concerns were raised about matching Dickson Minto’s private equity specialism with Milbank’s bank-side lender practice. At the time, Dickson Minto had also being linked with Fried Frank, although sources claiming familiarity with the deal said those talks had collapsed.

In any case it will not be a wholesale merger, as Dickson Minto’s Edinburgh office will remain independent, with the London team joining Milbank early next year.

Dickson Minto’s London team comprises seven partners, 20 associates and ten business services professionals. Concerns over practice synergies aside, the buyout will add considerable depth to Milbank’s City outpost, which currently boasts 33 partners according to its website.

Milbank’s global head of corporate, Norbert Rieger, said: ‘The addition of this team will significantly add to our ability to act for clients around the globe on private equity related transactions. It is a logical next step after our expansion in the PE space in the US, Germany and Asia.’

Alastair Dickson, co-founder of Dickson Minto, paid tribute to the outgoing practice: ‘I am very pleased that the London private equity practice of Dickson Minto will join Milbank – the partners, lawyers and other staff have been a close-knit group for a long time and it’s extremely satisfying to see their desire to stick together and continue to grow as a group.

‘The move will benefit our longstanding clients who will continue to receive the same high level of service from the same people but now combined with Milbank’s M&A and private equity practice in other jurisdictions as well as with the added advantage of its global expertise in a whole host of adjacent practice areas.’

Dickson added he would be working with Milbank to achieve a ‘seamless transition’, and also confirmed that Dickson Minto would retain a ‘close working relationship’ with the departing team.

The acquisition compounds not only the continually rising prominence of US firms in London, but also the primacy of US firms when it comes to transatlantic tie-ups. For more on this subject, read our history of transatlantic mergers, State of the Union.

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This article first appeared on Legal Business

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Womble Bond Dickinson and BDB Pitmans table merger

Womble Bond Dickinson (WBD) and BDB Pitmans are continuing to pursue a strategy of development through consolidation, having confirmed they are in talks over a potential merger.

After RollOnFriday broke the news of the merger talks on 21 October, the firms said in a joint statement: ‘Leading transatlantic law firm Womble Bond Dickinson and leading UK firm BDB Pitmans confirm that they are in early discussions around a potential merger. Both firms regularly review opportunities to advance the best interests of their clients and their respective firms. Womble Bond Dickinson and BDB Pitmans are focused on where they see the greatest opportunities for a merged business, including those offered by complementary practice areas and office locations.

‘As discussions are ongoing, both firms have no further information to share at this time.’

Staff at both firms are well acquainted with the merger process, given their respective strategies in recent years. WBD in its current form was established in 2017, when national firm Bond Dickinson (itself the result of the 2013 union of Dickinson Dees and Bond Pearce) joined up with its US strategic ally Womble Carlyle Sandridge & Rice. A year later, partners of Bircham Dyson Bell and Pitmans voted for a £50m merger and move to an alternative business structure, establishing BDB Pitmans in its current form.

Any deal that is struck would not represent a merger of equals, given the disparity in size between the two firms. With offices both sides of the Atlantic, WBD’s latest revenue figure reached £379m after a 2% increase, while UK-only Pitmans’ came in at £53.3m following a 3% fall. The benefit to WBD is likely to come from the boost a tie-up would have on its UK business, which this year generated £113.8m. For Pitmans, a merger would grant access to a network of US offices previously unavailable to the national firm.

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This article first appeared on Legal Business.

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‘Buffeted from both sides’: City partners react as Clyde & Co and BLM finalise merger

With partners from Clyde & Co and BLM recently voting through their £700m merger, observers have offered conflicting views on what the tie-up means for the market.

Legal Business broke the news on 18 March that a partnership vote was imminent, and Clyde confirmed on 28 March that the vote had passed, with the combination to go live in July 2022.

In terms of the key stats, the merged firm, which will still be known as Clyde & Co, will comfortably break £700m in combined revenues, have an overall headcount of 5,000, and boast offices in more than 60 cities worldwide. As for fee-earners, post-merger, the firm will have around 2,600 lawyers and close to 500 equity partners.

A statement made it clear that the tie-up is an insurance play, which is no surprise. Clyde & Co has historically been strong in advisory and contentious insurance work, and BLM has a market-leading niche casualty insurance practice. The statement read: ‘The majority of [BLM’s] lawyers will join [Clyde & Co’s] casualty insurance practice, with other sizable groups joining the professional liability, healthcare and business advisory teams.’

James Cooper, partner and chair of the firm’s global insurance practice group, said: ‘We have long sought to increase the scale of our UK casualty insurance practice though a merger so we can provide the full scope of services, technology, data analytics and innovation that clients in this dynamic part of the market require. Once we started speaking to BLM, we quickly realised that we shared the same approach to client service, had a complementary client roster and similar ambitions in this space.

‘This combination will also boost our regional UK presence and strengthen our healthcare and professional liability offerings too.’ On the office front, the tie-up adds new outposts in Birmingham, Liverpool and Southampton to Clyde & Co’s UK coverage.

The move did not shock insurance partners at rival firms, with the tie-up having featured in market chatter for close to a year. Generally, the merger has been well-received, and viewed as symptomatic of a consolidating insurance market that has refined legal services to a binary between high-end advisory work and high-volume claims work. Typically, Clyde has embodied the former while BLM’s casualty practice fits into the latter.

A recent example, in January 2021 Kennedys opened in Leeds via the takeover of Langleys’ insurance team. The move gave Kennedys coverage in high-volume aspects of insurance, such as motor liability matters and a practice that provides pre-litigated claims handling services to insurers and self-retained corporations.

Richard Leedham, a litigation partner at Mishcon de Reya with extensive experience in the insurance market, told Legal Business: ‘We see consolidation on the defence side all the time, this is just the latest iteration of what firms such as Clyde and Kennedys have been doing. The merger doesn’t surprise me at all – it is likely driven by rates, economies of scale and keeping prices down for their insurer clients.’

Zulon Begum, a partnership law partner and specialist in law firm mergers at CM Murray, added: ‘Coming out of Covid, we are getting lots of enquiries from firms looking to merge or seek external investment. I predict there is going to be lots of activity this year in terms of mergers and IPOs.

‘It’s always the mid-market that you fear for, being buffeted from both sides by the big firms and boutiques. Then you have the likes of the Big Four accountancy firms, which can leverage their multidisciplinary experience and take work from the mid-market – they’re not going to compete with the likes of Slaughter and May and Linklaters, they’re going after the mid-market firms that don’t have the same brand power.’

However, a litigation partner at a leading insurance firm suggested the consolidation trend is phasing out: ‘I don’t sense there is a huge client push for further consolidation. Procurement has a heavy influence of course, but their sole objective is not necessarily to reduce panel sizes. They still need access to the right legal expertise and too few panel firms leaves them with conflict issues and, in the end, having to appoint more firms off panel.’

The merger is Clyde & Co’s biggest in terms of revenue and headcount since it merged with Barlow Lyde & Gilbert in 2011, which was the largest-ever merger of two UK law firms at the time. Since then, Clyde’s recent history has been peppered with tie-ups. In October 2015 it merged with Scottish residential property specialist Simpson & Marwick, adding 45 partners in the process. The following year, a combination was agreed in Sydney with Lee & Lyons, adding five partners and over 25 lawyers. In 2018, 15 partners and 65 other lawyers and staff were brought in via a merger with California firm Sedgwick, and in July last year, Clyde combined with Vancouver-based SHK Law Corporation, which brought six partners and 18 lawyers in total.

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This article first appeared on Legal Business

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Clyde & Co and BLM to merge with partner vote imminent

Clyde & Co and BLM are at an advanced stage of merger discussions, with both sets of partnerships due to vote on a tie-up before the end of March.

Legal Business understands that there is significant confidence that the deal will be green-lit.

According to the latest available LB100 data, the merger would create a £736m turnover firm with a combined headcount of over 2,500 lawyers and in excess of 450 equity partners.

It is understood that the merged entity will be known simply as ‘Clyde & Co’, a reflection of the respective sizes of the two firms. Clydes constitutes £640m of the combined revenue and 1,966 lawyers on its own. There are still details to be ironed out, particularly in relation to a combined leadership structure and what kind of roles BLM’s current managing and senior partners, Vivienne Williams and Matthew Harrington respectively, will be offered.

The combination has been in the offing since late 2019, when Clydes approached BLM and mooted a tie-up. It is a naturally attractive proposition for BLM, as one of many firms feeling the consolidation squeeze in the lower mid-market. In 2017, the firm slashed a considerable number of support staff as part of a wider restructuring effort.

Merger talks stalled as a result of the pandemic, before RollOnFriday broke the news in October 2021 that the two firms were in preliminary discussions.

There are obvious synergies between the two firms, with crossovers in areas such as insurance and professional indemnity. However, BLM will also bring Clydes access to established niche practices in casualty insurance and healthcare. Reflecting that strength, BLM has historically featured on NHS legal advice panels.

Neither firm is a stranger to mergers: In 2011 Clyde & Co combined with Barlow Lyde & Gilbert in a major deal, while BLM was born out of a merger between Berrymans and Lace Mawer. Prior to the Barlow tie-up, Clyde had scant regional UK coverage, but a BLM merger would extend its reach to new outposts in Birmingham, Liverpool and Southampton.

A Clydes spokesperson said: ‘We can confirm that Clyde & Co is in discussions about a merger with BLM. As the world’s leading insurance law firm, we are always looking to grow for the benefit of our clients. We have long sought to significantly increase the scale of our casualty insurance practice in the UK so that we can provide the full scope of services, technology, data analytics and innovation that clients in this dynamic part of the insurance market require.

‘We consider a merger such as this the best way to realise these ambitions. BLM is a firm we have long admired and we believe a merger can be formed on the basis of our complementary client rosters and our shared focus on quality.

‘As this merger is not yet finalised it would be inappropriate to comment further at this stage.’

A BLM spokesperson added: ‘Following detailed discussions and a period of due diligence, BLM and Clyde & Co partners will vote on a proposed merger of the two organisations. The Executive Board set strategic objectives around how best to grow the firm and secure our status as a market leading, innovative and full-service law firm across the UK, Ireland and internationally. We believe that a potential combination with Clyde & Co would provide us with the growth needed to develop our business.

‘The result of the vote will depend on whether, in the respective partner group’s view, combining the firms is in the best interests of our colleagues, clients and the wider businesses.

‘The strategic and commercial compatibility of the two firms is undeniable. We are both dominant in risk and insurance and our respective businesses complement each other. Whilst Clyde & Co is a global business, we both have an extremely strong presence in the insurance sector in the UK and Ireland. Clyde & Co also boasts a strong offering in business and advisory services.

‘More details will be provided as soon as the vote has taken place.’

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This story first appeared on Legal Business