The proposed combination between McKenna Long & Aldridge and global megafirm Dentons is off, the firms have confirmed.
After several delays, McKenna put the proposed deal to its partnership for a vote Tuesday—but called a halt to the voting by midday because of too much opposition. The partners received an email before the balloting had closed informing them that the firm’s board had decided not to go forward with the merger, according to a McKenna partner.
“We are not in a position to successfully bring our firms together at this time,” the firms said in a joint statement on Tuesday. “We look forward to maintaining the many friendships and working relationships, including with shared clients, that partners in both firms have forged. Both firms will continue to advance their respective strategic priorities.”
The combination would have created one of the largest law firms in the world, with about 3,175 lawyers and professionals. McKenna has about 575 partners and professionals, while Dentons has 2,600.
McKenna’s partnership agreement required a two-thirds vote by its equity partnership to approve the deal. The firm weighs votes by equity interest, not headcount, so two-thirds of the firm’s equity points were needed for the vote to go through, the McKenna partner confirmed.
McKenna and Dentons confirmed they were in merger talks at the end of September, then announced Oct. 29 that the boards of the two firms had approved the deal and were putting it before their partnerships for a vote, with a deadline of Nov. 14.
McKenna suspended the vote on Nov. 8, saying partners had requested additional information, then set a new deadline of Nov. 26 for voting to conclude.
But before Tuesday’s voting period had closed, the partners were notified that the board had decided not to go forward with the combination with Dentons.
The McKenna partner said it was possible the firm had the requisite votes but was not prepared to “jam it through” over the opposition. “There was a perception that a substantial portion of the partnership opposed it,” the partner said.
Even if the “no” votes were not enough to kill the deal under the partnership agreement, the firm may have decided that pushing it through would be “destructive,” the partner suggested.
Some partners in McKenna’s government contracts practice—one of the firm’s marquis practices—were among the opposition, the partner said.
Their concern was losing the McKenna name, the partner added.
If McKenna had combined with Dentons, it would have joined a Swiss verein in which each regional member is a separate legal entity with its own profit pool. That would have meant a merger between McKenna and Dentons US, the verein’s U.S. entity.
McKenna Long & Aldridge was created from a 2002 merger between Washington’s McKenna Cuneo and Atlanta’s Long Aldridge & Norman, which united McKenna Cuneo’s well-established government contracting practices in Washington and California with Long Aldridge & Norman’s complementary government affairs practice—and kept the McKenna name.
McKenna Cuneo’s government contracts practice dates to 1958 and is the oldest and largest in the country, according to Chambers USA.
A senior Dentons partner, who said that only six of his firm’s roughly 900 partners were against a merger, claimed that a “small minority” in McKenna’s D.C. government contracts group used their control of a larger portion of the equity partnership interest in McKenna to prevent the deal with Dentons from going through. About 75 percent to 80 percent of McKenna partners were in favor of a merger with Dentons, said the senior partner.
A source familiar with the machinations at McKenna contested that narrative, telling The Am Law Daily that opposition to the Dentons deal went beyond D.C. to include government contracts partners in other offices and litigators in California.
A McKenna spokesman did not respond to a request for comment on the identity of practice groups opposed to the merger with Dentons.
Global accounting giants PricewaterhouseCoopers and KPMG advised McKenna partners on due diligence matters and coordinating a merger vote among partners located in the firm’s 15 offices around the world, according to the source familiar with the matter, who spoke with The Am Law Daily on the condition of anonymity. This source said that some McKenna partners expressed concerns about potential tax obligations arising from Dentons’ Swiss verein structure. (Dentons did not engage external advisers of its own.)
The failure of the merger talks between Dentons and McKenna came a day after Orrick, Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman announced that they had ended their merger talks due to client conflicts. Both Orrick and Pillsbury agreed to a one-year moratorium on poaching partners from one another in the aftermath of those scuttled discussions.
The senior Dentons partner said that no such agreements have been reached with McKenna. The partner added that with a majority of McKenna partners in favor of joining Dentons, there could be lateral movement in the future from one firm to another.
Dentons will continue to evaluate its strategic options, including potential mergers with other firms, said the senior partner.
The firm was formed earlier this year through the three-way merger of international firms SNR Denton and Salans with Canadian firm Fraser Milner Casgrain.
Brian Baxter writes for The Am Law Daily, a Daily Report affiliate.