Partners at Hogan & Hartson and Lovells signed off on their megamerger in separate votes that ended at midnight on Monday. The move is one of the last big hurdles before the two firms officially set up shop, which is planned for May 1.
In spite of the vote, the two firms still have several issues to work out, including client conflicts, leadership details, and overlapping offices and practice areas. If successful, the merged firm will be called Hogan Lovells and with about 2,500 lawyers and roughly $1.9 billion in revenue will be just over the size of Skadden, Arps, Slate, Meagher & Flom and Jones Day.
"We're really excited. It's not often that I get to drink Dom Pérignon at 7:30 in the morning, but this is a great day for us," Hogan's chairman J. Warren Gorrell Jr. said Tuesday. "There is a lot of work ahead of us to put it together and make it work, but everybody at both firms is up for it." Gorrell would not say how many votes there were for or against the deal, but said the vote showed "overwhelming support."
In an interview Monday before the vote was finalized, Gorrell and Lovells' managing partner David Harris said they are confident that unresolved issues won't squelch the deal. The two firms share several clients, including J.P. Morgan Chase, Merrill Lynch & Co., Ford Motor Co., Barclays and Spanish energy company Iberdrola.
Harris said there are "remarkably few client conflicts, but there are some." He declined to name clients or groups involved. "For the individuals who are affected by the conflicts, we will be supportive of helping them restructure their practices," Harris said. Gorrell and Harris, will serve as co-chief executive officers of Hogan Lovells.
The new firm will have a 12-member board of directors and a 17-member supervisory committee that is evenly divided between partners from each firm. Claudette Christian, a member of Hogan's executive committee and its chief diversity officer, and Lovells' senior partner John Young will serve as co-chairs.
Both firms have offices in New York, London, Beijing, Shanghai, Brussels, Hong Kong, Moscow, Munich, Paris, Tokyo and Warsaw. Gorrell said that while the firm leaders have "spent a little time" figuring out how some of the overlapping offices in China and Europe will be combined, they "basically have deferred all key details until we know if this has been approved by both our partnerships. It wasn't critical to make those decisions yet."
The firm will have a 17-member international committee that will include practice leaders. Gorrell and Harris said the largest practices -- corporate, finance and litigation -- will likely have co-leaders. The two said the leadership of those groups are still being finalized, adding that the co-leaders will not necessarily include the lawyers currently running those practices at Hogan and Lovells.
Gorrell said the firms don't expect the deal to trigger antitrust scrutiny from the U.S. or European Union, but that it could require review in other countries. On the smaller side, the firm will also have to change its name and file paperwork with all local bar associations, he said.
Gorrell and Harris said they first began discussing the merger in the fall of 2008, and talks turned more serious in January 2009. Much of the talk has been about how a combined firm would be structured, both men said, and logistics, such as technology, where they said the firms seem compatible.
At a panel discussion hosted by The National Law Journal on Monday, Gorrell said Hogan has been traditionally opposed to mergers because "you often get things you don't want." But the ability to more than double its international presence in one move was too good to turn down. "This is one big exception," he said. "The marketplace is changing and there is a huge amount of demand for high-end, global capabilities. You couldn't get there fast enough by simply picking up lawyers in small groups."
Hogan Lovells will largely follow templates laid down by past international law firm mergers, such as the mergers that formed Reed Smith and DLA Piper. Hogan Lovells will have a U.S.-based partnership that works in the Americas and a partnership comprised of lawyers abroad. That said, Gorrell and Harris will share responsibility over the firm's combined operations.
"That's very important. We're not seeking to carry on two separate firms here," Harris said. Each partnership will have its own profit pool but Harris and Gorrell said partners in both groups will receive compensation based on the firm's performance as a whole. Both said the compensation system will continue Lovell's move away from the managed lockstep approach it currently uses.
Both partnerships will be under the umbrella of a Swiss verein, a legal structure used by decentralized international businesses to limit liability. The structure is used by other law firms, including DLA Piper and Baker McKenzie.
Gorrell and Harris said the reaction from their partners has been positive, though sprinkled with questions about how the merger will affect individual practices, groups and offices. Both also said they don't think the merged firm will need to shed practice groups or areas.
"We've actually told all of our partners that this is a great opportunity for them and we mean it," Gorrell said, pointing to the combined firm's expanded reach. Of course, he added, "that doesn't mean that someone may not conclude that this is not the right move for them."