Shortly after the combination of Eversheds and Sutherland Asbill & Brennan this year, an article was published suggesting the end of Big Law’s “affair” with the Swiss verein. The rationale for the “lost romance” observation was that Eversheds Sutherland chose a structure known as a “company limited by guarantee” for its combination. Another structure that has been employed by other businesses is known as a European economic interest grouping (EEIG). While there are some differences in the structures, by and large, they are designed to operate like vereins. Frankly, I doubt law firms have ever been “in love” with the verein and, given that only about 10 large, U.S. firms operate under a vereinlike structure, the level of interest is pretty modest. Perhaps “dalliance” would be a more apt term.
To be clear, the verein is a financial structure that permits law firms to engage in large, cross-border combinations where regulatory restrictions, differing accounting and financial reporting methodologies (e.g., cash vs. accrual), inconsistent leverage models and cultural differences make combinations prohibitively complicated and costly. Such structures are not unique to law firms. In fact, businesses around the world, including the four big accounting firms, have used successfully such structures to accommodate growth through combinations.
