A combination between Atlanta’s McKenna Long & Aldridge and global mega-firm Dentons would enormously broaden the McKenna lawyers’ global reach and potential client base, but it remains to be seen what financial benefit they would gain.

McKenna and Dentons confirmed that they were talking to each other about a union in statements late Monday to a sibling publication, The Am Law Daily, but both said they didn’t have a relationship to announce.

A McKenna partner, speaking to the Daily Report on condition of anonymity, said the partnership will vote on the combination on Oct. 28.

A supermajority of two-thirds of the partners must approve the deal, which the partner thinks will go through. If approved, the combination would take effect at year-end.

The proposal was unveiled to McKenna’s partners at a firm retreat this past weekend, the McKenna partner said, adding that the two firms have been in talks for four or five months, which got serious about a month and a half ago.

Dentons is structured as a Swiss verein, an increasingly popular method for law firms to make cross-border tie ups. Vereins allow members to join forces yet retain their existing forms as distinct legal entities that are not financially integrated.

HOW THE FIRMS COMPARE

McKenna Long
& Aldridge
Dentons
575 lawyers/professionals 2,600
15 locations 79 locations
$930,000 PPP $785,000*
$680,000 RPL $650,000*
*2012 data for SNR Denton (U.S.), before 2013 merger with Salans and Fraser Milner Casgrain
Sources: Firm websites, statements, The American Lawyer data for 2012 profit per partner and revenue per lawyer


That aspect of the combination could ease any discomfort from McKenna partners, who make on average $145,000 more in profit than their counterparts in SNR Denton, Dentons’ predecessor firm.

The Dentons verein is made up of four firms that have linked over the last three years. It formed in March from the three-way combination of international firms SNR Denton, Salans and Canadian firm Fraser Milner Casgrain. SNR Denton was itself the product of a combination in late 2010 between London’s Denton Wilde Sapte and Chicago’s Sonnenschein Nath & Rosenthal.

The firm is decentralized and has no headquarters.

If the deal with McKenna goes through, Dentons would have about 3,100 lawyers and professionals—making it the third-largest law firm on the planet by head count.

With 2,600 lawyers and professionals, Dentons has 79 offices in 50 countries. McKenna has about 575 lawyers and professionals in 13 U.S. offices, plus outposts in Brussels and Seoul.

“If it happens, it’ll be big in terms of head count. Whether it is big in other ways remains to be seen,” said Tom Clay, a principal at law-firm consultancy Altman Weil. His focus is strategic planning and mergers.

“They get to be a whole lot larger and they get offices in a whole lot more places, so they can leverage clients and compete better,” Clay said of McKenna. “They gain the branding and global platform while the finances stay separate.”

Vereins have become an increasingly common way for firms to expand internationally without doing an actual merger. Profit pools, partner compensation, tax and accounting systems remain separate for each entity.

“They have come about in the last half-dozen years as a way to not have to fully merge. Each entity still has their own profit pools,” Clay said.

The verein structure is spurring the global consolidation of the legal industry. Seven of the top-grossing 50 global firms are vereins, including the two top-grossing firms: DLA Piper, with 2012 revenue of $2.441 billion, and Baker & McKenzie, with $2.419 billion, according to data from sibling publication The American Lawyer.

Five of those vereins were formed in the last three years: Hogan Lovells, King & Wood Mallesons, Squire Sanders, Norton Rose Fulbright—and Dentons.

While McKenna’s 2012 revenue per lawyer, $680,000, is commensurate with that of SNR Denton, which is $650,000, McKenna’s profit per partner was much higher. The Atlanta firm reported PPP of $930,000 compared with $785,000 for SNR Denton.

Whether McKenna would combine its U.S. profit pool with that of Dentons’ US entity if the two firms tied up is an open question.

According to The American Lawyer, SNR Denton reported 2012 revenue of $710.5 million, which put it at 48 on the list of top-grossing global firms.

McKenna’s 2012 revenue was $345 million. That was boosted by its merger last year with a 145-lawyer California firm, Luce, Forward, Hamilton & Scripps, which gave McKenna more lawyers in California than its historic bases in either Atlanta or Washington. The firm was formed in 2002 from the merger of Atlanta’s Long Aldridge & Norman and Washington’s McKenna & Cuneo.

Dentons said in its statement that the two firms are having discussions about “the future” but “do not have a relationship to announce.”

Dentons cited McKenna’s “industry-leading government contracts practice and premier insurance sector work,” as well as the firm’s “enhanced California team from legacy Luce Forward.”

“Since creating Dentons earlier this year, we have been very clear in our determination to always deepen our capabilities to serve clients in the U.S. and around the world. This has included discussions with firms and lawyers for whom we have great respect and share common goals. McKenna Long & Aldridge is one such firm, having built in the U.S., Europe and Asia a very admirable team of lawyers and professionals with whom many of our people have worked for years,” the statement said.

McKenna confirmed in its statement that it is talking with Dentons, but left it at that.

McKenna has ongoing discussions with firms and lawyers who fit its growth strategy, the statement said. “Dentons, with 75 locations in more than 50 countries and a commitment to delivering creative, dynamic business and legal solutions, is one such firm. While we continue to have discussions about the future, we do not have a relationship to announce.”

A union between the two firms would create dual offices in Washington, Los Angeles, San Francisco, New York, Miami and Brussels.

Dentons has a one-man Atlanta office, according to its website: David Klein, who practices hospitality law, at 3500 Riverwood Parkway, near Cumberland Mall. Klein did not return a call by press time.