X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
When it comes to law firms, Neil Sedaka was wrong. It’s getting together, not breaking up, that’s hard to do. On May 31 California’s Latham & Watkins and London’s Ashurst Morris Crisp announced they had called off their merger talks. Ashurst’s quest for a U.S. partner has surprised some of its rivals. Until recently, the firm had a drinking room and a cigarette allowance for partners, which, says a former partner, is “not very West Coast.” But the two teams did like each other; the deal foundered because of business reasons, rather than lifestyle differences. Ashurst’s managing partner, Ian Nisse, says that for a merger to work, both firms had to create something new, and this meant Latham accepting that the firm would operate differently in London and Europe. William Voge, co-head of Latham’s international practice group, says his firm was not trying to impose its own system, but adds, “The fact is that Latham and U.S. law firms in general have more sophisticated financial systems and more history of financial analysis of how to run a business.” Both men agree that the fundamental problem was bringing together two strong firms, with neither wanting to be taken over. Which makes all the more impressive the merger pulled off this summer by the U.K.’s Freshfields and Germany’s Bruckhaus Westrick Heller L�ber. The union brings together two of the elite firms in their respective markets and is Freshfields’ second German merger following its joining with ally Deringer Tessin Herrmann & Sedemund in January. But the Bruckhaus marriage wasn’t consummated without tears. When Bruckhaus partners first voted on the deal in April, they failed to produce a big enough majority in favor. Both firms had to go back to the drawing board. Freshfields’s Alan Peck, chief executive of the new firm, Freshfields Bruckhaus Deringer, says the firms “rushed it a bit” at first, and Bruckhaus needed reassurance that it would not be swallowed up by Freshfields. “There were slightly insensitive things like not using the Bruckhaus name worldwide. … We have had to face what they didn’t like, and we’ve changed their minds.” As part of the deal, Freshfields has changed its lockstep compensation system so that junior partners will make less than they do now, allowing Bruckhaus lawyers to continue to make partner after five years. What does this say about the differing ability of U.S. and U.K. firms to do international mergers? “It’s difficult not to sound pompous about this,” says Peck, “but, with the exception of very few American firms, we have probably had more practice at bringing in people from different cultures than the American firms.” That said, this summer New York-based White & Case pulled off the first U.S.-German merger, with Hamburg-based Feddersen Laule Ewerwahn Scherzberg Finkelnburg Clemm. Feddersen’s Eberhard Meincke, now a member of White & Case’s partners committee, says his firm’s lockstep system already allowed rainmakers to make more money than other partners, so it was not difficult for the firm to adopt the U.S. firm’s more merit-based system. The firm also moved from accrual accounting to cash accounting. But he insists, “It’s 100 percent merger, even though you don’t believe us.” And a U.S.-U.K. merger did occur, although only after a six-year courtship. Philadelphia’s Dechert Price & Rhoads and London’s Titmuss Sainer Dechert had formed an alliance in 1994 that saw the two firms exchange lawyers and share expenses with a view to a possible future merger. And on July 1 they finally did it. The new firm will be called Dechert. Steven Fogel, managing partner of the new firm’s London office, says, “These deals are very difficult to pull off. When you do a deal from the perspective of the English firm being smaller than the American one, the chances are you do what we did, which is to go to the American system.” But Fogel adds that Dechert’s system is not purely merit-based, so his firm will not be moving “from lockstep to goosestep.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.