Partners at Allen & Overy and Shearman & Sterling voted in September to merge, but the work for approval by firm leaders was done months before, when Shearman pensioners were approached about a significant haircut.

One of the main hurdles for the large combination was Shearman’s pension, as Allen & Overy was facing the prospect of a large liability that would make the merger undesirable, according to sources who declined to be identified in order to speak candidly. However, Shearman made the merger more feasible when firm leadership approached more than 150 retired Shearman partners who had a pension to make adjustments, a source familiar with the process said.

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