Reed Smith is aiming to move its Europe and Middle East arm to an alternative business structure, or ABS, by early next year, as the Pittsburgh-based firm also considers a domestic merger to bolster its coverage in the United States.
The American Lawyer affiliate Legal Week revealed last year that the global firm was considering converting its Europe and Middle East arm to the ABS structure in order to “future-proof” its operations.
Europe and Middle East head Tamara Box has told Legal Week that the firm is “absolutely planning” to move to the structure with the goal of completing the process in the final quarter of this year or the first quarter of 2019.
“We want to use that structure as an agility tool to ensure we are nimble enough to service our clients in the future,” Box said. “We operate as a global profit pool, so we have had to manage regulatory issues within different jurisdictions to clearly preserve that.”
An ABS conversion allows law firms to bring nonlawyers into its equity and share profits, and Reed Smith, which ranks 25th in the Am Law 100 and 32nd in the Global 100 with $1.1 billion in revenue, is attracted by the potential of closer integration with teams or businesses run by nonlawyers who could offer something different to its clients. The ability to share profits would help Reed Smith attract and retain senior staff on the consulting side.
Meanwhile, the firm—which lost a large group of lawyers from its Philadelphia office earlier this year—is also considering where it wants to bolster its U.S. operations and how best to do so.
One London Reed Smith partner said they felt the firm was “trying to gear us up for a possible merger” at the firm’s partner conference held in Orlando earlier this year. The partner said that while nothing specific was discussed, partners were given “soft messaging” about opportunities.
“Were the right merger partner to come along that happened to fill strategic needs, we would look at that,” Box said. “While we don’t have anything on the horizon presently, we are not afraid of those opportunities.
“We are still focused on strategic hiring in the U.S.—there are some places where we have skills gaps in our coverage or areas we want to continue growing,” she added, explaining that the firm’s Houston, Miami and New York bases are areas of priority for the firm “to add stellar talent in.”
Reed Smith hired a 14-lawyer team from Norton Rose Fulbright earlier this year that expanded the firm’s life sciences and health industry group in Washington, D.C., New York and Austin.
A number of international law firms are considering how best to improve their U.S. coverage. Allen & Overy is currently holding merger discussions with Los Angeles-based O’Melveny & Myers, while Baker McKenzie is also actively targeting a U.S. merger.