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When New York’s Rogers & Wells announced last spring that it was merging with London’s Clifford Chance, industry watchers predicted that a flurry of trans-Atlantic mergers would soon follow. They were wrong. One year after the news broke, not a single top-tier New York firm, or even second-tier firm, has combined with a top U.K. firm. Stymied by differences in profitability and culture, the London-New York merger movement has lost momentum, replaced on both sides of the ocean by a wait-and-see attitude. One of the main reasons, not surprisingly, is money. The top New York firms are both more profitable and smaller than their English counterparts. At Slaughter & May, England’s highest-earning firm, the profits per partner in 1998 were �728,000, according to the British legal press. This comes to slightly more than $1 million. By contrast, the five highest-earning New York firms had profits per partner of more than $1.5 million in 1998, according to The American Lawyer magazine. Plenty of New York firms have profits per partner comparable with those of the top London firms. But they tend to lack the high-quality, high-volume corporate finance practice that the top English firms want in a merger partner. “London firms would like to do it, but the people they’d like to do it with aren’t interested,” says David Temporal, a partner in the London office of the legal consulting firm Altman Weil. The result, according to Temporal, has been a trans-Atlantic “standoff.” CULTURE GAP Cultural differences between English and New York firms create another hurdle. These can encompass everything from how partners are compensated and how clients are billed, to the fuzzier but equally significant differences in lawyers’ interpersonal styles. Many New York firms pay partners based on their rainmaking, with the ones who bring in the most business earning the most money. English firms tend to compensate in a lockstep manner, by which partners with the same seniority take home more or less the same pay. “We had a rather extreme, objective, performance-based system” at Rogers & Wells, says Laurence Cranch, managing partner of Clifford Chance Rogers & Wells in New York. However, the partners unanimously agreed to shift to more of a lockstep system as part of the merger. English firms are also known for billing fewer hours, but at higher rates, than U.S. firms. In London, the norm is between 1,400 and 1,800 billable hours per year, compared with New York, where it runs upward of 2,000. To some New York partners, fewer billable hours are taken as a sign of a weaker work ethic. Others, such as Cranch, chalk up the difference to accounting methods rather than culture. “They are more conservative about recording their time,” he says. Less tangible cross-cultural differences have to do with how law is practiced. New York firms have a reputation for acting as business as well as legal advisers. English firms are not as “proactive” when it comes to commercial concerns, says Altman Weil’s Temporal. Robert Dell, managing partner of Latham & Watkins, a national firm based in Los Angeles, adds that another cultural difference is that in England, associates and partners often share the same office. Although the arrangement might assist associates in learning how to practice, it is unthinkable to most U.S. lawyers. In New York, a factor working against trans-Atlantic mergers is that many view the union of Rogers & Wells and Clifford Chance as more of a takeover by the British firm than as a merger of equals. Clifford Chance had around 1,900 “fee-earners,” which includes lawyers and paralegals, compared with Rogers & Wells’ approximately 400 lawyers. Cranch of Rogers & Wells disputes that view, saying that the new firm is “very different organically than Clifford Chance was before the merger.” Some New York firms have staked out a market share in England without merging. Richard Levick, who advises law firms on media issues, believes that some New York firms are looking to that city’s Weil, Gotshal & Manges as a model, asking, “Is it less expensive to offer �1 million for a high-profile lateral and bring them over with a book of business?” Which was how Weil Gotshal founded its London office. LOOKING WEST? Levick adds that in the past year, the British attitude toward finding a New York merger partner has lost its urgency, and London is instead looking to other areas of the country. In fact, the two most public recent courtships between England and America both involved California firms. Latham & Watkins, a firm of around 1,000 lawyers, is in talks with Ashurst Morris Crisp, which has more than 1,100 fee-earners, although the British press has reported that some U.S. partners are strongly opposed to the merger. Dell, who practices out of Latham’s San Francisco office, declines to comment on the state of discussions. San Francisco’s Orrick, Herrington & Sutcliffe was also in talks for months with Bird & Bird, but that deal fell apart when Bird & Bird wanted to expand in Europe more rapidly than Orrick did. Still, in some ways, a London-West Coast merger might make more cultural sense than a London-New York merger. Although the English are known as reserved, some think they would get along better with mellow Californians than with gruff New Yorkers. “Reserved and casual are more complementary than reserved and cynical,” is how one East Coast partner at a West Coast law firm puts it.

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