(Courtesy photo)

The ink has barely dried on the three-way merger agreement between U.K. law firms CMS Cameron McKenna, Nabarro and Olswang but rumors are already circulating that an American firm may be joining the party.

It would be easy to dismiss any such move as wildly overambitious. Law firm mergers are notoriously hard things to put together—most talks break down long before making it to a partner vote. Actually integrating them is harder still.

And CMS Cameron McKenna is seeking to assimilate not one but two sizeable firms into its partnership, in the largest-ever U.K. law firm merger. Its focus should therefore surely be on realizing that deal, rather than trying to do another, right? Not necessarily.

That would be a fair assessment if CMS Cameron McKenna, a midmarket practice best known for projects and energy work, sought to directly merge with a U.S. target. That is technically possible, but unlikely.

Like most large U.K. law firms, CMS Cameron McKenna operates an accrual-based accounting system with an April 30 fiscal year end, and compensates its partners via a modified lockstep. Most U.S. firms, on the other hand, utilize a cash-based accounting setup with a calendar fiscal year and compensation systems based more on individual performance. Reconciling these differences in a conventional merger would be both complex and potentially costly.

That’s why almost every recent major cross-border law firm combination has utilized the Swiss verein—a holding structure that allows member firms to join forces yet retain their existing forms. (The combinations that formed Dentons, DLA Piper, Hogan Lovells, King & Wood Mallesons, Norton Rose Fulbright and Squire Patton Boggs were all carried out via a verein.)

CMS Cameron McKenna could also pursue a verein-based deal. But that’s not likely, either.

In fact, the U.K. firm probably wouldn’t be directly involved in any U.S. combination at all. An American firm would instead be likely to join CMS Legal: a pan-European legal and tax group with 60 offices and more than 3,200 lawyers, of which Cameron McKenna is just one of 10 member firms. If Cameron McKenna already has its plate full with Nabarro and Olswang, a U.S. firm becoming the 11th CMS member would be another plate entirely.

CMS was established in 1999 by Cameron McKenna and independent practices from Austria, Belgium, Germany and the Netherlands, and has grown over the years with the addition of firms based in France, Italy, Portugal, Spain and Switzerland.

The group has a number of centralized managerial and operational functions that distinguishes the arrangement from that of a mere alliance network. CMS has a single overarching constitution and governance structure, with a global executive committee that determines firm-wide budgets and strategy. It also has a combined practice and sector group structure that runs across each of the 10 firms, with single leaders at a global—rather than regional or member—level.

That said, it is still a relatively loose affiliation compared to the majority of global law firm partnerships, with each member firm granted almost complete autonomy to run its own business and control aspects such as finances and staffing.

CMS is also structurally unique, as it is probably the only law firm to operate as a European Economic Interest Grouping. EEIGs don’t separate out members’ liabilities, but are otherwise very similar to vereins. As the name suggests, U.S.-based firms technically can’t become members of an EEIG. But a CMS spokeswoman told The American Lawyer that an American practice could enter into a contract with an EEIG to deliver “effectively the same outcome.”

In May, CMS appointed former Cameron McKenna managing partner Duncan Weston to a new group role as executive partner for global development. Weston has shown an eye for opportunism—in 2013, he led Cameron McKenna’s merger with Scotland’s Dundas & Wilson. It would not be out of character for him to seek a U.S. member to add to the group at some point. CMS has global aspirations and you can’t really claim to be a truly global firm without a presence in the world’s largest legal market, after all.

CMS Member Firms

UK: CMS Cameron McKenna (CMS Cameron McKenna Nabarro Olswang from May 1, 2017)

Austria: CMS Reich-Rohrwig Hainz

Belgium: CMS DeBacker

France: CMS Bureau Francis Lefebvre

Germany: CMS Hasche Sigle

Italy: CMS Adonnino Ascoli & Cavasola Scamoni

Netherlands: CMS Derks Star Busmann

Portugal: CMS Rui Pena & Arnaut

Spain: CMS Albiñana & Suárez de Lezo

Switzerland: CMS von Erlach Poncet