Image: Getty Images
China's King & Wood and Australia's Mallesons Stephen Jaques on Thursday officially confirmed plans for a merger to create the largest law firm based in the Asia-Pacific region.
The long-anticipated deal will see the firms merge their Hong Kong offices and operate under a common King & Wood Mallesons brand. The two firms' mainland China and Australia offices will remain financially distinct and operate together a Swiss Verein structure. Both firms say over 95 percent of their respective partnerships voted in favor of the deal.
The combined firm will number some 1,800 lawyers, and is positioning itself clearly as an alternative in the region to the large U.S. and U.K. firms that have traditionally dominated major cross-border deals.
"The Wall Street and Magic Circle firms have strong practices out here but it's not their backyard," says Handel Lee, a King & Wood partner who is part of the committee driving the deal. "This is not where they live. They followed their clients here but this is not their main region. For Mallesons and King & Wood, we are here and this is our territory."
Robert Milliner, chief executive partner of Mallesons, agrees. "The market now has been driven by the Northern Hemisphere," he says. "And when you look at how Asia has played a role in the global economy, there really hasn't been a true presence of any substance in the market. And that is the space that we believe we've stepped into."
For King & Wood, the deal satisfies long-held global ambitions that have been stymied by a lack of cross-border experience. According to Lee, the two firms, which began discussions over a year ago, are already working together as a combined team and have recently won some major mandates in Australia, South Africa and Canada.
"If we weren't working closely with Mallesons, we probably wouldn't have these mandates," says Lee. "Chinese firms just don't have the level of expertise going outbound."
Lee says the Chinese firm will also be able to pick up upgraded internal management and technology from Mallesons.
Mallesons, which previously discussed a merger with U.K. legal giant Clifford Chance, has also long had international ambitions. Milliner says the combination will help the Australian firm grow at a faster rate than it could have on its own. More importantly, it also gives it ties to the Chinese banks and state-owned enterprises that have become big investors in the Australian economy.
Still, the merger will face significant challenges, as The Asian Lawyer explored in this November feature. For one thing, it is unclear how much the deal will expand the two firms' client bases, as King & Wood has thus far mainly serviced multinationals operating in China, and large SOEs have often shown a preference for hiring local rather than international firms. Also unknown are the potential cultural differences that may exist between an 18-year-old mainland Chinese firm and a 170-year Australian one.
King & Wood Chairman Wang Junfeng will chair the combined firm. Stuart Fuller, Mallesons' managing partner who will succeed Milliner in January next year, will move from Sydney to Hong Kong to take on his new role as global managing partner. Wang Ling will continue to manage the China offices while Tony O'Malley will oversee the practices in Australia.
The combined firm will put together committees to deal with integration issues related to client relationships, practice services and culture over the first couple of years. English has been selected to be the primary language but meetings will be conducted in simultaneous translations.