The deadline for the partnerships of Atlanta’s McKenna Long & Aldridge and global megafirm Dentons to vote on a combination has come and gone, but the firms have not yet announced whether there will be a deal.
McKenna’s partnership still has not voted, according to three McKenna partners, even though the two firms jointly announced Oct. 29 that the voting by their respective partnerships would be completed no later than Nov. 14—last Thursday.
Reached on Friday, McKenna’s chairman, Jeffrey Haidet, said he had nothing to announce yet.
A McKenna partner told the Daily Report on Nov. 8 that Haidet postponed voting that day, telling partners in an email that some of them had asked for more information.
Dentons’ partnership was wrapping up its voting on Thursday, a firm spokesperson said, but Dentons still had not announced the results on Friday.
Two of the McKenna partners who talked to the Daily Report said they still expect a vote to occur.
The “overwhelming majority” of Mc­Kenna’s partners support a combination with Dentons, one of them said Friday. “The question is whether two-thirds do.”
The firm’s partnership agreement requires a two-thirds supermajority to approve a merger.
“A dissident minority could throw the whole thing off,” the partner said.
A tie-up between McKenna and Dentons would create one of the world’s largest law firms, with about 3,175 lawyers and professionals.
McKenna instantly would gain global reach and Dentons would substantially bulk up its presence in the United States, which is still the world’s largest legal market.
But there are trade-offs—perhaps more for McKenna than for Dentons.
“Lawyers are the most change-resistant people in the world and this is a major change. Some people are going to be grieved by any change,” said law firm adviser Ed Wesemann. “Some people will get hurt by conflicts. Some are not going to like the new systems that go into place.”
A consultant for Edge International, Wesemann helped London’s Denton Wilde Sapte connect with Chicago’s Sonnenschein Nath & Rosenthal for the 2010 merger that formed SNR Denton, one of the three predecessor firms to Dentons.
Dentons was created in March from SNR Denton’s combination with international firm Salans and Canadian firm Fraser Milner Casgrain. With about 2,600 lawyers and professionals and more than 75 locations in 50 countries, Dentons is structured as a Swiss verein. Its regional members are separate legal entities.
McKenna’s partnership must decide whether to join the Dentons verein and merge with its U.S. member. They were informed of the potential combination at the end of September and a partnership vote initially was scheduled for Oct. 28.
That vote was postponed and then the two firms announced jointly Oct. 29 that their boards had approved the deal and were submitting it to their partnerships for a vote, which would be completed by Nov. 14.
McKenna would gain a global presence from the combination, but in exchange for becoming part of a megafirm. It is the smaller of the two firms, with about 575 lawyers and professionals in 13 U.S. offices plus outposts in Brussels and Seoul.
It would be expensive and difficult for McKenna to expand globally on its own, Wesemann said, because “it’s tough to get the bandwidth and name recognition” when entering new markets.
McKenna expanded substantially in California last year through a March merger with 145-lawyer Luce, Forward, Hamilton & Scripps, which gave it more lawyers in California than its historic bases in Atlanta and Washington.
Because Dentons is structured as a Swiss verein, Wesemann said, McKenna would “essentially be sharing a brand,” if the firms combine–but not profit pools.
“It is all about the brand platform. The McKenna partners do not get one new dime from having offices in London or Istanbul,” said Wesemann, because Dentons’ Swiss verein structure means the U.S. partners would not share profits with their new partners in other parts of the world.
“They gain from the new work that they get, conceivably by referrals but more importantly because they are part of Dentons,” he said.
Some vereins are very loosely structured, operating more as an international alliance than a single firm, but Wesemann said Dentons is more integrated. “Dentons has the philosophy and intention of building a true one firm. They are a Swiss verein for regulatory purposes but for management and strategic purposes, it is one firm.”
Dentons’ global CEO and chairman is Elliot Portnoy, who was the chairman of Sonnenschein. Portnoy’s website biography calls him the “driving force” behind the 2010 combination that formed SNR Denton.
Based in Washington, Portnoy joined Sonnenschein in 2002 and built its government affairs practice into what Legal Times’ Influence magazine has called one of the top 10 lobbying practices in Washington, where McKenna also has large lobbying and government contracts practices. In 2007 Portnoy became Sonnenschein’s youngest chairman.
Control is one of the things at issue in any merger. Part of the negotiations between Dentons’ and McKennas’ management likely was over the number of seats Mc­Kenna will have on the Dentons board and its role in the firm’s management, Wesemann said. “Because Dentons is already a giant firm, they are not going to give away a whole lot, I wouldn’t think.”
So in exchange for gaining a global brand, McKenna would give up some control and its historical identity.
The benefits for Dentons are clear, Wesemann said. They want what every megafirm is looking for—offices in every country.
“With 75 locations, a big part of their strategy is they want general counsels to wake up in the morning and say: ‘We’ve got a problem in Istanbul. Who has lawyers in Istanbul?,’ and have the Dentons name come to mind,” he said. “Even if you aren’t, you want the perception to be that you are everywhere.”
And adding heft in the United States is a major draw. Wesemann said the U.S. legal market amounts to about $260 billion dollars, which is 40 percent of the global legal market of $650 billion. While numerous international firms have opened offices in Eastern bloc and Third World countries, he said, the available legal work there is quite small compared with the U.S.
“If you are going to be a global law firm and a global player, the United States is where you need a huge presence,” he said. “This is the place where people do deals. This is where the money is and where the sophisticated legal practice is.”
U.K. and international firms are actively looking at U.S. opportunities, Wesemann said. The latest U.K.-U.S. combination was in June, when London’s Norton Rose joined with U.S. firm Fulbright & Jaworski to create Norton Rose Fulbright, which has more than 3,800 lawyers.
If it combines with McKenna, Dentons will gain seven new U.S. offices plus one in Seoul. Both firms have offices in New York, Washington, Los Angeles, San Francisco, Miami and Brussels—and Dentons has a one-man outpost in Atlanta, where Mc­Kenna is headquartered.
Wesemann viewed the overlap in the U.S. offices as a good thing, despite the integration issues that would arise.
“You can never have too many lawyers in capital market cities. That increases their level of dominance,” he said of Dentons.