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New York’s Fried, Frank, Harris, Shriver & Jacobson and London’s Ashurst Morris Crisp have broken off merger discussions, ending a year of speculation on whether the two firms would undertake the first trans-Atlantic merger of equals. In a joint statement issued Tuesday, the firms said they had concluded “there were too many uncertainties in the path of completing a combination of two partnerships of substantial size and histories.” “For each of us the merger was an opportunity but not a need,” the statement continued. “The two firms remain on excellent terms, and we expect to continue to work together in the future as we have in the past.” Tuesday’s announcement was the first time either firm had publicly acknowledged they were in discussions. But reports of a possible merger have been a fixture in the British legal press since last spring, animating conversations within legal circles on both sides of the Atlantic. The proposed combination would have been the first merger of British and American firms of roughly similar size, profitability and transactional practice strengths. Earlier trans-Atlantic combinations involving Clifford Chance, Jones Day and Mayer, Brown, Rowe & Maw have paired large, international firms with much smaller New York or London partners. According to The American Lawyer’s Am Law 100 and Global 100 surveys, 560-lawyer Fried Frank and 686-lawyer Ashurst Morris had respective profits per partner of $875,000 and $868,000 in 2001. Both firms have strong reputations in mergers and acquisitions, and capital markets in particular. “It would have made people sit up and take notice,” said one New York managing partner who has given the trans-Atlantic merger issue considerable thought. “Those are two good firms.” The British legal press has reported that a major sticking point in talks between the firms has been how to integrate top-performing Fried Frank partners into Ashurst Morris’ lockstep compensation system. The New York partner said similar issues have bedeviled most discussions between British and American firms. “British firms tend to be more democratically lockstep while American firms tend to reward top people disproportionately,” he said. “My impression is that the senior people at Fried Frank make a lot of dough.” Paul M. Reinstein, co-managing partner of Fried Frank, declined to discuss the reasons for the firms’ decision to end the talks. He said he and Valerie Ford Jacob, both of whom assumed firm management in February, had approached the merger talks optimistically. “At the end of the day, we gave this opportunity our best shot,” Reinstein said. He said Fried Frank would continue to focus on growing organically and would consider future opportunities as they arose. In a written statement, Ashurst Morris senior partner Geoffrey Green said he and his partners believed the merger could have been a success in the long term, but they could not convince themselves that “the long-term benefits outweighed the short- and medium-term uncertainties.” In the same statement, Justin Spendlove, the firm’s managing partner, said a merger with an American firm was “clearly off the agenda for the foreseeable future.” He said the firm would focus on Europe while continuing to collaborate with U.S. firms, including Fried Frank.

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