Herbert Smith Freehills and New York-headquartered Kramer Levin Naftalis & Frankel have agreed to a trans-Atlantic merger that will create a $2 billion revenue firm with more than 2,700 lawyers, the firms said Monday.

The firms are to combine into one fully integrated organization known as Herbert Smith Freehills Kramer. In the U.S., it will be called HSF Kramer.

The combined firm will operate a single global profit pool and will host around 120 U.S. partners, which will “surpass international peers” in the region, the firms said in a joint statement to Law.com International, adding that the combination is subject to a vote of each firm’s partners. The partner vote is expected to come by February 2025, according to sources familiar with the process.

The joint firm, which would rank in the top 25 globally, will combine HSF’s sizeable presence in Europe and the Asia Pacific with Kramer Levin’s U.S. operations.

"This is transformational. We have long been committed to expanding our offering in the U.S., and Kramer Levin is the perfect fit,” said HSF’s chair and senior partner, Rebecca Maslen-Stannage. “The combination delivers immediate growth for both firms from day one."

The two firms said in their joint statement that their “close cultural alignment and shared vision for the future significantly bolsters the combined firm’s ability to attract and retain the very best talent.”

One person with knowledge of the firm told Law.com International that a U.S. merger has been a top priority for HSF this year and that the firm’s management had decided that a potential American candidate would preferably be of a smaller size, without a full-service focus. Another person said its aim was to be in the global top 10 by revenue.

The firms boasted that the combination will accelerate growth in the U.S. across sectors in which Herbert Smith Freehills has practices, such as energy, financial services, infrastructure, mining and technology. The combined firm “will also advance the next phase of growth in key practice areas to create an elite offering for clients,” including disputes and transactional expertise, the firms said.

HSF—itself the product of an Anglo-Australian tie-up—operates across 16 countries, which have very little overlap with Kramer Levin’s five offices. Kramer Levin has offices in New York, Washington D.C., and Silicon Valley, and only one office outside the U.S., in Paris, which was acquired in 1999 from legacy American firm Roger & Wells when it chose to break away from a merger with Clifford Chance.

Kramer Levin is currently 141st in the Global 200 and counts approximately 330 lawyers and 60 equity partners, according to ALM data, with gross revenue hitting $435 million in 2023 and profits per equity partner (PEP) standing at about $2.4 million.

That makes it much smaller but more profitable than HSF, which has over 2,300 lawyers, more than 300 equity partners, gross revenue of $1.6 billion and PEP of $1.6 million.

The revenue per lawyer (RPL) numbers are also substantially different. Kramer Levin’s RPL is $1.28 million, close to double that of HSF, which is just under $700,000.

But both firms have a similar practice mix. Like HSF, Kramer Levin focuses on finance and corporate but has a heavy litigation practice, with over 100 lawyers dedicated to that offering. 

"This is an excellent long-term, strategic move for our firms, our clients and our people—a bold opportunity to build an exciting international firm together, based on our strong cultures of collaboration, superb clients and people, and our existing areas of strength,” said HSF CEO Justin D’Agostine. “This is just the beginning."

Kramer Levin’s co-managing partner Howard T. Spilko said, “Joining forces with Herbert Smith Freehills is a one-of-a-kind opportunity that helps us achieve our vision and potential for strategic growth. The combination provides us with a significant competitive advantage by bolstering our destination practices with a deeper bench, broader geographic reach and sector expertise, while providing the opportunity to collaborate to achieve great outcomes for clients internationally.”

History of Mergers

Although smaller, Kramer Levin has also been involved with recent mergers. In 2022, the firm launched an office in Washington D.C. through a merger with litigation and appellate boutique Robbins, Russell, Englert, Orseck & Untereiner.

HSF’s Anglo-Australian merger was completed in 2012, driven by the robust M&A activity between Australia, China and the U.K. in the natural resources and energy space.

The merger gave U.K.-founded Herbert Smith its first presence in Australia with offices in Brisbane, Perth, Melbourne and Sydney. Freehills in turn gained a global platform. At that time, Freehills had just one international office in Singapore, which was fully integrated into the British firm when they combined.

British firms have invested heavily in building U.S. practices over the past few years. Freshfields Bruckhaus Deringer, Clifford Chance and Linklaters have all hired heavy-hitting teams for their U.S. offices. Allen & Overy made headlines earlier this year when it merged with Shearman & Sterling to create a $3.4 billion revenue-generating law firm, A&O Shearman.

The merger news comes less than two weeks after high-profile Manhattan litigator Barry Berke and four other partners left for Gibson Dunn & Crutcher—a big loss for Kramer Levin that left others wondering who would be the next group recruited.

Kramer Levin’s revenue and PEP peaked in 2021, reaching $449 million and $2.79 million, but the firm tumbled down 14.7% in PEP the following year, like others that bottomed out in 2022 financials. But the firm appeared to continue to lose profitability when net income for all equity partners fell 3.6% to $144.6 million in 2023. The firm’s PEP eked out a 1.2% increase to $2.4 million in 2023 amid the equity tier shrinking by 5%, down to 60 partners.

The firm has struggled to grow revenue as quickly as New York competitors in the Am Law 100. While it was in the top 100 law firms in the U.S. by revenue for several years up to 2021, it fell into the Am Law Second Hundred in the last two years.

HSF has continued to grow at a steady pace but has struggled to keep pace with its international rivals in recent years, slipping three places in the Global 200 rankings since 2020 to 34th.

With reporting by Krishnan Nair, Patrick Smith and Christine Simmons.