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Few managing partners at large (and not so large) US and City firms now doubt the efficacy of a transatlantic merger – at least in theory.Resolving client conflicts of interest, reconciling compensation systems and other integration issues may be daunting and expensive, but the benefits of merger are obvious.Even the largest firms are too small to fund comfortably the international expansion necessary to serve an increasingly global clientele.The right combination of London and US law firms could become a firm of choice for international capital markets and M&A assignments that neither could capture alone – especially in the other’s home market.Not surprisingly, the market is awash with rumours of possible link-ups between US and London firms. Skadden Arps Slate Meagher & Flom, Simmons & Simmons, Clifford Chance, Rogers & Wells and White & Case are all frequently mentioned as suitors, targets or both.Yet, outside of last September’s mini-merger of Christy & Viener in New York and Salans Hertzfeld & Heilbronn in Paris and London, nothing has happened.An investment banker recently told me that the business case for law firm mergers is so compelling that his bank would be targeting law firms as M&A clients if they were convinced that lawyers would ever do a deal.The joke has more than a kernel of truth. Mergers require long-term vision. Law firms, as partnerships, operate in the short term. Mergers that will reduce profits per partner for even a year or two in the hope of achieving synergies down the road are unlikely to appeal to a cadre of senior partners who may not be around long enough to reap the benefits of the merger.Most firms operate democratically, hold elections for at least some of the firm’s management and require a partnership vote on big decisions.As a practical matter a merger would need a broad consensus of the partnership. Such a consensus is difficult to achieve where the benefits of the merger are strategic and the detriments, at least to some partners who may suffer a reduction in status or worse in the merger, are very real.Law firm mergers will inevitably be presented as mergers of equals, in that neither firm’s partners are likely to receive a premium for their partnership equity in the merger.Rather, each partnership will have to convince itself that its partners will enjoy increased wealth through the additional business the enlarged partnership will attract.This may be the sensible (and only) way of achieving a merger of law firms, but it takes away the momentum to merge that large cash windfalls provide in the corporate context.In the context of a law firm, cultural issues gain in importance. Many US and London law firms that profess receptivity to a transatlantic merger qualify their enthusiasm by insisting that their culture be dominant.This may be shorthand for saying that they do not want their compensation set by strangers or on the basis of new criteria that they may have difficulty satisfying. Or it may include broader issues, such as pace of work, investment in know-how and client sharing. However a firm’s partners define its culture, a willingness to remake that culture is more likely to lead to merger than an insistence on preserving it.Even where there is a will, the way to international law firm mergers will take a lot of management time and resources. While it is hard to think of a more worthy task for law firm management, managers include working partners who are important to the development and conduct of the firm’s client business.Taking these partners away from client work for any significant time entails real cost. In most law firms, where client work takes almost absolute precedence over administration and other non-billable tasks, merger planning and implementation would entail a dramatic shift in priorities.Corporate mergers are aided often by a sense of urgency on the part of management or the presentation of an opportunity. In the recent boom times, there is little desperation among leading London and US law firms that they cannot succeed independently. Slaughter and May, Cravath Swaine & Moore and other magic circle firms seem to have concluded that there will always be a market for top-end corporate and securities practices in London and New York.For other major law firms that have a different vision, or whose market position is less secure, there is little sense of urgency when profits per partner are rising at double digit rates as they have been for the last three years. Again, the inherently short-term view of most law firms makes it difficult to disrupt a very good present to preserve a future in which today’s senior partners will be retired.The rapid expansion of accounting firms into law is not yet seen as a threat by first-tier London and US law firms. While few doubt the potential of accounting firms to develop significant volumes of legal business through their international client networks, they are not yet significant competitors for big ticket legal work and are effectively barred from practising law in the US by trade practice restrictions.None of these things would deter mergers if opportunities were obvious. But matching up law firms across the Atlantic is not easy. The top-tier London firms such as Slaughters, Linklaters, Freshfields and Allen & Overy, fit best from a practice standpoint with firms in New York, such as Sullivan & Cromwell, Davis Polk & Wardwell, Cravath Swaine and Wachtell Lipton Rosen & Katz, to name a few. But these New York firms would find such a merger dilutive and feel less of a need to be global.A US firm in the ‘second 10′, including large national firms headquartered outside New York, might find a merger with a top-tier London firm attractive.There would be a number of strategic benefits to both sides in such a merger, not the least of which would be broad access for the London firm to the deep US legal market. Profits per partner also could be comparable, making a merger easier. But a top-tier UK firm, seeking to focus on international capital markets, mergers and acquisitions and structured finance, might find a national US practice unwieldy and a distraction from the London-New York axis it is seeking to build.A number of second-tier London firms would be happy to consider a merger with a national US firm. But the profits disparity would be difficult to overcome in most cases.While law firms on both sides of the Atlantic look for merger partners they cannot have, two enlightened law firm managements will do a deal. Others will follow after that. The business logic is too compelling for it to be otherwise. But the first merger may still be some time away.Jeffrey Gordon is a partner at Mayer Brown & Platt in London.

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