Correction, 8/17/12, 6:45 p.m. EDT: The original version of this article included an incorrect number for how many lawyers Middletons has. The first paragraph of the article has been revised to include the correct number, 283. We regret the error.
Three months ago, reports surfaced that K&L Gates was holding merger talks with multiple firms in Australia. Now, the Am Law 100 firm with roots in Pittsburgh confirms it is in discussions with 283-lawyer Melbourne-based Middletons about a potential combination, making it the latest Am Law firm in line to establish a footprint Down Under.
“Our leadership teams believe that the client-driven consolidation and globalization evident in the market for legal services will continue unabated and the potential synergies that would arise from the combination of our firms deserve (and are receiving) serious consideration,” K&L Gates chairman and global managing partner Peter Kalis and Middletons national managing partner Nick Nichola said in a joint statement issued Thursday.
The firms said their discussions began several months ago and that formal proposals could go to their respective partnerships before the end of the year, assuming the two sides can reach an agreement,
Legal Week reported in May that K&L Gates was eyeing an Aussie outpost. The U.K. publication specifically mentioned Middletons—a full-service firm with offices in Brisbane, Melbourne, Perth, and Sydney—as a leading merger candidate. Middletons grossed $117 million in the fiscal year ending June 30, according to Australian publication Business Review Weekly. For its part, K&L Gates grossed $1.06 billion and recorded profits per equity partner of $890,000 in 2011, according to The American Lawyer‘s latest Am Law 100 survey. It currently has nearly 1,800 lawyers spread across 41 offices worldwide.
Thursday’s announcement noted that a tie-up with Middletons would enable K&L Gates to strengthen its position in the Asia-Pacific region and offer benefits in a variety of overlapping practice areas, including corporate, energy, banking, labor, litigation, intellectual property, and regulatory, among others.
Australia has become a hotbed of merger activity lately, with global firms looking to capitalize on an uptick in trade between companies in that country and those based in other Asian nations. Norton Rose, Linklaters, and Ashurst are among the large U.K. firms that have combined with top domestic firms Down Under in the past two years. In June, partners at London-based Herbert Smith and Australia’s Freehills approved a merger that will become effective in October. Other recent tie-ups in the country include the China-Australia merger that created King & Wood Mallesons earlier this year, and DLA Piper‘s combination with its longtime Australian relationship firm, DLA Phillips Fox, which took effect last May. (Unlike some firms that have moved into Australia and other countries via mergers completed under the Swiss verein structure, K&L Gates and its merger partners fully integrate their revenue and profit pools.)
Am Law Daily sibling publication The Asian Lawyer has asked whether more U.S. firms would seek merger and alliance partners among Australia’s top domestic firms. In addition to K&L Gates, Legal Week cited Hogan Lovells, Mayer Brown, and White & Case as Am Law 100 firms reportedly eyeing Oz earlier this year. (A number of U.S.–based firms—including Baker & McKenzie; Dorsey & Whitney; Jones Day; Sidley Austin; Skadden, Arps, Slate, Meagher & Flom; and Sullivan & Cromwell—already have a presence in the country.)
Should it come to fruition, a merger with Middletons would mark K&L Gates’s latest effort to expand overseas. In February, the firm launched its 41st office, in Milan, when it agreed to combine with Italian firm Marini Salsi Picciau Studio Legale. K&L Gates is also one of more than a dozen firms to apply to open an office in South Korea following the passage of a free trade agreement between that country and the United States allowing law firms based here to set up shop there. (The Am Law Daily reported Thursday that Sheppard Mullin Richter & Hampton and Ropes & Gray are the first Am Law firms to officially launch in Seoul.)