Pursuing elite standing in the realm of legalities: A union of heavyweights in the law industry
In the dynamic world of law, elite English and Australian firms are making a significant push to establish a strong foothold in the United States. This strategic move comes as the legal market continues to grow, particularly due to an increase in law firm mergers.
One such merger that has made waves is the union between the Australian-British firm Herbert Smith Freehills and Kramer Levin. This merger, announced earlier this year, has created a £1.6bn "global legal powerhouse". The primary goal of this merger was to accelerate growth in the US, with the British firm aiming to particularly break into the American city of New York.
The merger made sense, according to Christopher Clark, director at Definitum Search, as it gave Herbert Smith Freehills a strong presence in the US, making it a truly global firm. However, as Nick Woolf, partner at Woolf&Co, notes, for a firm to be a global player, it must be strong in both the US and London.
Breaking through in New York is crucial for a firm's global success, as it is the most important market in the US. Another firm that recognizes this is McDermott Will & Emery, a Chicago-based firm. Last month, McDermott merged with New York-based Schulte Roth & Zabel, creating a $2.8bn law firm. This merger was driven by the private capital overlap between the two firms, with McDermott gaining a market-leading funds practice in London.
However, mergers come with their own set of challenges. Woolf stated that there is always fallout for a variety of reasons in law firm mergers, including individuals losing out on leadership positions or facing significant conflicts. The merger between Bryan Cave Leighton Paisner (BCLP), a 2018 merger of St. Louis-based Bryan Cave and London firm Berwin Leighton Paisner, experienced a loss of rainmakers and high turnover after leadership was shifted to Missouri following the merger.
In the competitive legal landscape, it's essential for firms to balance ambition with careful integration to ensure long-term stability. Maria Ward-Brennan, in her weekly column "Eyes on the Law," emphasized this point, stating that firms must consider the cultural fit and strategic alignment when merging.
The trend of merging with US firms is not limited to just two firms. Allen & Overy, a magic circle firm, merged with New York-based Shearman & Sterling to become A&O Shearman. Two other major firms have also recently merged with New York law firms, following A&O Shearman's lead.
As the legal market continues to evolve, it's clear that having a strong international brand and a significant presence in major global regions is key to being a global player. Firms that can navigate the challenges of mergers and maintain a strong cultural fit will undoubtedly reap the benefits of this global expansion.
In the race to become global powerhouses, it seems that the US market, and particularly New York, is the key to success. As the legal landscape continues to shift, it will be interesting to see which firms can maintain their dominance and which newcomers will rise to the top.
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