History of mergers: State of the union

‘The global Magic Circle is all American. The reality is that the English Magic Circle are now competing with the next tier down of US firms. So, for a UK Magic Circle firm to merge with a lower tier US firm would likely be accretive.’

So says Charlie Geffen, formerly a partner at Ashurst and Gibson Dunn. He expresses a common pessimism on this side of the pond about the chances of an elite UK and US merger.

For any City firm with global ambitions, there is a niggling question: ‘What is your US strategy?’ Incredibly, despite more than 20 years of transatlantic flirtation, the answer still hangs in the air for many.

Some firms insist they have answered it. The likes of Lovells (Hogan Lovells), Richards Butler (now Reed Smith) and Eversheds (Sutherland) would hail their respective American unions and navigation of the thorny integration process as wins. But clearly, there is a Magic Circle-shaped exception.

From Clifford Chance (CC)’s ill-starred combination with Rogers & Wells in 1999 to Allen & Overy (A&O)’s abortive merger with O’Melveny & Myers (OMM) in 2019, the City elite’s relationship with would-be US suitors has been fractious.

Meanwhile, that same timeframe has seen US firebrands storm London, attracting top local talent with market-leading salaries and a strategic dynamism that unwieldy UK counterparts struggle to match. They have insidiously won marquee clients and mandates that even five years ago would have been the preserve of the Magic Circle. As Lee Ranson, chief executive of Eversheds Sutherland remarks: ‘US firms have been ambitious and prepared to invest. Prepared to be disruptive. There was a view that the US firms would stay small but they’re not going to do that.’

‘US firms have been ambitious and prepared to invest. Prepared to be disruptive. There was a view that the US firms would stay small but they’re not going to do that.’
Lee Ranson, Eversheds Sutherland

It has become a bitter reality that the Magic Circle can forget about replicating a comparably thrusting presence in the US. As Zulon Begum, law firm merger expert and partner at CM Murray, says: ‘For someone like Linklaters to merge with a US firm of a similar size, you’d be looking at the white-shoe New York firms. While the likes of Linklaters and Slaughter and May are really profitable relative to the UK market, they are not the same as the New York firms.

‘Top of equity in New York can hit $18m, and the alignment of profits is one of the key issues when pursuing a merger. Even if you did merge, integrating those two firms would be a huge task.’

But say there was a way? The respective strategies of Ashurst and A&O recently have piqued market interest, with both firms making sustained strides into the US via lateral plays, while also keeping themselves open to a stateside proposal. Gareth Price, A&O’s global managing partner, recently noted: ‘When the talks with O’Melveny were called off, we said at the time that we would keep all options on the table when it came to the US, and we still hold that view.’ More on the OMM episode later.

It is not only the most cynical who declare the luxury of choice is long since a thing of the past for UK firms and that the door to such expansionism is shut.

Lessons from history

Some say the history of the Magic Circle’s forays into America can be told from one of its first outings – CC’s courtship of Rogers & Wells (see box, right). The lesson, according to one partner at a rival firm: ‘You’ll spend a tonne of money, waste a load of time, and ultimately make no progress.’

In 2000, Titmuss Sainer Dechert bridged the Atlantic divide by formalising what had been a looser relationship with Philadelphia-based Dechert Price & Rhoads. While Dechert has since gone on to become a top-50 global outfit, the deal at the turn of the millennium was more a US takeover in the City than a meeting of equals. Nonetheless, it became only the second firm that could describe itself as transatlantic.

After the failure with Rogers & Wells, CC pursued a different tack in 2002. Rather than talk a leading US firm into a combination, it opted for a bold team hire, luring 16 partners from San Francisco-based Brobeck, Phleger & Harrison. This proved even more disastrous – CC eventually paid out millions to Brobeck’s bankruptcy trustee after it sued over claims the Magic Circle firm’s predatory hiring drove Brobeck out of business. Just two years after the hires, CC wound down its West Coast practice.

‘Our success in mergers was due to a combination of a thorough vetting process to make sure we’re choosing the proper fit and a deliberate integration process.’ Dominic Griffiths, Mayer Brown

By 2002 a pattern was already emerging – the Dechert deal saw the UK subsidiary accept American primacy and this was followed by Rowe & Maw striking a deal with Chicago’s Mayer, Brown & Platt. By playing along, Rowe & Maw was able to crowbar the UK firm’s name into the merged entity and secure some lucrative protections. One of the terms is understood to have given London huge sway in promotions to equity in the City, with little buy-in from the US needed.

In the immediate post-merger years, the London office of what in 2007 became known as just Mayer Brown – ditching any pretence at parity between the UK and US halves – rose with the market and benefited from significant investment. But the City outpost was hit hard by the 2008 crash and a lack of attention from a US-headquartered management preoccupied by tensions between its New York and Chicago offices.

By 2008 the London office had grown revenues by more than 35% to a high of £111.6m, while partner numbers had increased to 109 (up from 87 at merger time) and fee-earner numbers stood at 355. But between 2008 and 2009, the City outpost lost seven partners and almost £18m in revenue was wiped out in just one year as a result of the recession.

Today, while Mayer Brown does not divulge its London revenues, its latest City headcount data shows 251 fee-earners and 95 partners. While this is arguably a step backwards from 2008, the office remains the eighth-largest London outpost for a US firm.

In any case, the firm credits the merger for creating a cohesive global platform that has chimed with clients. The numbers are not bad. According to Dominic Griffiths, Mayer Brown’s London managing partner, the deal created a ‘strategic footprint,’ which has contributed to a 290% increase in appointments to client panels in just nine years (from 73 in 2013 to 285 in 2021). ‘Clients that were traditionally serviced out of two offices previously, are now serviced out of 12,’ Griffiths insists.

All in all, he considers the merger a success. ‘Our success in that merger, and the several we’ve completed since, was due to a combination of a thorough vetting process to make sure we’re choosing the proper fit and a deliberate integration process to ensure the success of the merger.’

‘Dentons is an idea – we don’t want to just be a flag. To be a French firm in France, to be a local provider in all our jurisdictions, that idea requires a verein.’ Joe Andrew, Dentons

In 2003, American outfit Jones Day snapped up City stalwart Gouldens to create a £60m London business. There was fallout. The transatlantic firm posted flat revenues for several years amid a scarcity of quality laterals.

The 2008 economic crisis hit the firm hard: total fee-earner numbers for London fell from 190 at the beginning of 2010 to 166 by the end of the year, symptomatic of more austere times. In late 2009 it emerged that five partners had been demoted to counsel – around 10% of the firm’s City partnership at the time.

One upside was legacy Jones Day’s Fortune 500 client base, which provided the merged shop with a healthy deal flow: in 2010 it advised on 98 deals with a total value of €49.1bn.

Jones Day is notoriously opaque about its financial performance, but revenue in the Global 100 has grown from $1.52bn in 2009 to $2.2bn in 2021 – an increase of 45%. There is also headcount data to consider. Upon merging, Jones Day’s City office boasted 49 partners, but this remains flat as of last count in 2021. Hardly inspiring, but the office is on the up, with total fee-earner numbers growing 5% in the last year from 151 to 158. And as with Mayer Brown, Jones Day’s acquisition propelled the City firm into the hallowed ranks of the top 25 global firms by revenue – a far cry from Gouldens’ last entry in the Legal Business 100 in 2002, where it ranked 43rd, with UK turnover of £42.3m.

Further examples chime with the view that for a UK firm to succeed with the Americans, it must either swallow its pride and accept its recessive status or keep its American merger partner at arm’s length. In the cases of DLA Piper (2005) and Dentons (2010), a Swiss Verein structure achieved the latter solution – dodging tricky questions around profitability and compensation structures while still claiming an American presence.

In the case of Dentons, the tie-up which created SNR Denton (the firm would come to be known as ‘Dentons’ via a series of other mergers in 2013) was the merger of the UK-based Denton Wilde Sapte (DWS) and the US firm Sonnenschein Nath & Rosenthal (SNR) in September 2010. At the time, DWS was one of the top 20 UK firms by revenue at £167.5m, and while SNR was the larger beast, it had a negligible reputation outside of the US.

After a rocky patch immediately post-merger (the UK business made just £237,000 profit per equity partner (PEP) for 2010/11, 34% lower than the £360,000 achieved pre-merger), the latest figures for the UK, Ireland and Middle East arm of Dentons put PEP in the region of £1m, while revenue stands at £260.4m, reflecting 14% growth on last year.

UKIME head Paul Jarvis hailed the impact of Dentons’ close to 200-strong global network of offices in achieving this growth – pointing to inbound work from outside the region surging by 40% to £35m.

Dentons can today claim the title of ‘world’s largest law firm’, thanks to the 2015 combination with 4,000-lawyer Chinese practice Dacheng. While such an accolade is dubious to some, in that context the firm considers its UK/US tie-up a job well done. Comments Dentons global chair Joe Andrew: ‘When I led the combination of Sonnenschein and DWS I hoped that we could then form a truly global firm. However, most people would not have guessed that combination would be the foundation of what has become the world’s largest firm and therein lies the big story.’

‘If you’re a US firm pursuing a European firm, the assumption is that the leaders would be American. Willingness to be truly global is uncommon.’
Miguel Zaldivar, Hogan Lovells

Andrew recalls that when the merger was being tabled in 2009, a verein was the only option: DWS’s pre-existing Middle East presence posed tax complications when seeking a US deal. The firm had the chance to reassess this structure during the 2013 mergers but opted against it.

Andrew contends that Dentons’ model of seeking mass scale through vereins is part of the firm’s vision of going ‘beyond the flags.’ He argues: ‘Dentons is an idea – we don’t want to just be a flag. To be a French firm in France, to be a local provider in all our jurisdictions, that idea requires a verein. Putting everyone in the same economic unit is so hard, because obviously every market is different – New York and London still demand the highest rates.’

Tamara Box, EME managing partner at Reed Smith, is sceptical: ‘They’re big and in loads of places. Is that translating to a unified relationship with clients or just lots of different things for different clients?’

Norton Rose similarly pursued a Swiss Verein structure for its 2013 tie-up with Houston firm Fulbright & Jaworski – which at the time was vaunted as a mega deal eclipsing Lovells’ and Hogan & Hartson’s combination a couple of years earlier. In 2013, the tie-up went live, creating a 3,800-lawyer, $1.9bn firm comfortably inside the top ten largest in the world at the time.

Just three years later financial metrics had slipped – in 2016 the combined income was $1.732bn, down significantly from $1.9bn upon merging, although currency fluctuations did impact the dollarised figure. By 2020, UK-only fee income had grown 6% from the previous year to hit £251.8m, but this is still sluggish growth compared with Norton Rose’s turnover of £233m in 2007.

Commentators have largely appraised the Norton Rose Fulbright (NRF) deal as a sector play, rather than a grand entrance into the US market. Tony Williams, principal at legal consultancy Jomati Consultants, and managing partner of CC between 1997 and 1999, says: ‘There was an expectation at the time that the range of Norton Rose mergers, as they did them in Australia and South Africa and Canada as well, would give them the market position to become one of the leading natural resources firms in the world.

‘It is good but I don’t think it has quite got to a dominant position in that area. I wouldn’t categorise it as a failure, but I wouldn’t say that it has been transformational in the market either.’

Others put it more bluntly. One partner at a leading US firm in London comments: ‘Norton Rose 30 years ago was great but it hasn’t really moved on. That merger is an example I’d give of two firms being forced together in order to grow. It was a case of division two in the states, division two in Europe.’ This is contested by NRF global chair Farmida Bi: ‘Our goal of combining was to have global coverage with an industry focus, which we achieved. The combination has been mutually beneficial for our clients and our firm, which is consistently ranked as a global leader across many practice areas.’

Springboard

Ted Greeno, co-managing partner of Quinn Emanuel Urquhart & Sullivan’s successful London office, is unconvinced by the concept of a merger of equals. ‘I remember some old wisdom I was taught when I was a younger solicitor: “There’s no such thing as a merger, just a takeover one way or the other.”’

If there is a firm that can credibly claim to be a successful transatlantic meeting of comparable businesses, it is arguably Hogan Lovells. In 2010, the merger between Lovells and Washington DC powerhouse Hogan & Hartson went live, producing a 2,500-lawyer giant with an estimated combined turnover of $1.66bn.

As with any such integration, problems in the form of team departures and settling on a single remuneration structure appeared. Implementing Hogan & Hartson’s legacy performance-based compensation model worldwide proved protracted. Chief executive Warren Gorrell, described as the ‘visionary’ behind the merger by a number of Hogan Lovells partners since, persevered. The firm ended up with a model finely balanced between lockstep and eat-what-you-kill.

‘We were financially integrated from day one, which means you are literally financially invested together in the success of the new firm. For us, that was really helpful.’
Lisa Mayhew, BCLP

Early financials were inauspicious – 2011 and 2012 saw flat revenues and in 2013 global income even dipped 2%. But revenue since the merger has increased by 56% from $1.66bn to $2.6bn in 2021/22, while PEP has soared 119% from $1.14m to $2.5m today.

Begum observes: ‘Hogan Lovells has been quite successful – they retained both names, which is a good sign. It seems to have become a firm in its own right, people don’t refer to the legacy names. You can’t really think of another UK/US firm combination where one party doesn’t outweigh the other.’

Hogan Lovells chief executive Miguel Zaldivar attributes the union in part to the willingness of both legacy firms to be totally aligned. Despite the firm being structured through separate LLPs in the US and internationally, it operates a shared profit pool and Zaldivar insists that it is not a verein. ‘It’s extremely important not to be a verein,’ he declares. But perhaps the key driver was a strategic and cultural alignment, which Zaldivar argues is rare: ‘There was a real willingness to be truly global. If you’re a US firm pursuing a European firm, the assumption is that the leaders would be American. Likewise, I often sense that British firms want to acquire talent in America and run it as a British business. Willingness to be truly global is uncommon.’

Zaldivar maintains there were bases of institutional clients from both firms that each brought something to the table. The US side brought a lot of American clients expanding in Europe and Asia and Lovells already serviced some of those clients, like Ford and KPMG. This is corroborated by Williams: ‘With Hogan Lovells, what helped is that they had known each other for some years and they’d worked together on common clients so there was quite a serious affinity. Both recognised that the markets were changing and that this was an opportunity for them to reposition the merged firm in a way that neither of them would have achieved alone.’

Box is something of a buff about transatlantic firms. In 2012 she was looking to leave Berwin Leighton Paisner (BLP), specifically for a merged firm, not knowing what lay in store for BLP a few years later. As such, she did extensive research, ending up at Reed Smith. She’s bullish about it: ‘I would argue I got lucky – because I’m pretty sure I’m at the most successful merged firm out there. Some of it is a bit of a fluke, some of it is cultural, some of it is early decisions that maybe wouldn’t have been made if you knew how hard it was going to be.’

While Reed Smith’s buyout of Warner Cranston in 2001 technically made it a transatlantic firm, it was not until its 2007 acquisition of UK shop Richards Butler that it earned credibility on both sides of the pond. It also sparked Reed Smith’s global empire, adding France, Greece, the Middle East and Hong Kong.

The tie-up also handed Richards Butler a contentious practice it sorely needed, and it was serendipitous timing: the merged firm’s litigation practice gave it a valuable hedge during the 2008 downturn. At the time of the merger, Richards Butler had £85m in revenues. In 2022, Reed Smith’s London practice accounted for $243m in turnover, making up 17% of the firm’s overall revenues of $1.44bn.

‘US firms have such a strong home market in corporate America. Legal advice is valued more highly than in corporate UK.’
Ted Greeno, Quinn Emanuel

Box believes that a relentless drive towards a single profit pool is required to achieve true unity: ‘Whether by accident or design, the first thing we did was go for a single profit pool. Reed Smith is not a verein, and it doesn’t mean vereins can’t work. But every firm and lateral I talk to, they’re trying to figure out in vereins how they can function like one firm. We got there accidentally.

‘It doesn’t mean there aren’t complications but fundamentally it sets your culture up in a certain way which says: “We mean to be a single partnership.”’

Ranson argues that Eversheds falls into the global category, following its merger with Sutherland Asbill & Brennan in 2017. Eversheds was the bigger beast, boasting revenues of just over £400m at the time, while Sutherland brought with it over $300m in turnover and offices in Austin, Houston, New York and Washington DC.

He says: ‘Our view was without that merger, we couldn’t build a leading global firm. We didn’t think it was credible to not have a high-quality presence in the US.’

Standing today as a top 40 global firm with revenues of more than $1.2bn, the merger is arguably a validation of marrying two ‘division two’ firms to create a global platform.

News of BLP’s $900m combination with America’s Bryan Cave in 2018 did not set the heather on fire. As Legal Business wrote at the time: ‘Confirmation that BLP was uniting with a solid US operator, but one whose brand had limited potency in Europe, did not quicken the pulse.’

Nonetheless co-chair Lisa Mayhew says: ‘Financial progress doesn’t happen overnight, but I would point to last year as key in terms of our progress. In our third full year since the merger, we had a 33% increase in profits. PEP broke the $1m barrier for the first time and that’s the level of financial performance that neither legacy firm had achieved before.’ She also points to the tripling in size of the firm’s French office, and a recent four-partner hire from DLA Piper in Frankfurt as evidence of the firm’s international draw.

According to Mayhew, the good financial news is a direct result of BCLP opting for full integration rather than a verein: ‘We were financially integrated from day one, which means you are literally financially invested together in the success of the new firm. For us, that was really helpful.’

However, a few years on, the jury is still out. Says Williams: ‘It doesn’t seem to have done either firm any harm, but it doesn’t seem to have been massively transformational either. They probably both say they’re in a better market position than either of them might have been alone, but it’s still relatively early days.’

Born in the USA

‘If it’s not American, it’s not as good.’ So says one leading partner at a transatlantic firm. It is a reductive explanation, but perhaps nothing better epitomises the struggle of establishing the UK’s elite law firms in the US.

Greeno notes: ‘US firms have such a strong home market in corporate America. Legal advice is valued more highly than in corporate UK. They can charge higher rates and their business is inherently more profitable.’

It is precisely this disparity that has historically barred the Magic Circle from tying up with an elite US firm and, in Zaldivar’s view, the problem has only got worse: ‘At Hogan Lovells these days we’re roughly at the level of Allen & Overy in terms of PEP, but when you look at our results in America, there are only a few firms ahead of us. When you are going to do a combination, if you’re a New York firm, it means you are going to be diluting your profitability. The PEP gap between the US and UK is immense. And there are very different approaches when it comes to compensation systems. Ten years ago, this gap wasn’t at the same magnitude.’

Despite this, the UK elite is far from dissuaded. In recent months, A&O and Ashurst have eschewed courting an American suitor in favour of surgical team hires and office openings to solidify their respective US footprints. Freshfields has also opted for a similar tack in recent years. Is this sensible, or unrealistic?

Murmurings of a deal between A&O and LA-bred OMM began circulating in 2018, and in many ways this made sense. A&O’s PEP of £1.5m was broadly equal to OMM’s, and a merger would have created an international player with more than 3,000 lawyers and combined revenues of around £2.4bn, making it the third-largest firm in the world at the time.

Even A&O’s statement in 2019 explaining the end of discussions conceded there were ‘compelling synergies’ between the two firms. But behind the scenes there were stirrings of dissent in the ranks of A&O’s influential corporate partners in London, while disputes partners were understood to be more in favour of a merger, given OMM’s strong American litigation practice.

And it seems it was less of a mechanical failure than a motivational one. One partner at a rival firm says: ‘Why did the O’Melveny deal fail? On one level, there were various bits of detail that they failed to agree on, but fundamentally, the problem was that there was not the momentum and vision among the A&O partners to make it happen.’

Another former US firm partner says a cultural mismatch was more to blame than a technical failure: ‘The culture is very different. The collapsed discussions between A&O and O’Melveny have shown that getting the pedigree of a UK firm and a US firm to match is huge.’

For its part, A&O has opted to go its own way and slowly build out its American practice via strategic lateral hires. This year the firm posted 10% growth in global revenues from £1.77bn to £1.94bn, attributing half of that growth to its US operations. This equates to a muted £85m addition to US turnover for A&O. The firm added 27 partners across the US last year, 24 of which via lateral recruitment, and opened new offices in Silicon Valley, San Francisco and Boston. The expansion was fuelled by a focus on key areas of tech, life sciences and private capital.

Price is philosophical: ‘We wouldn’t pretend that the way we do it is the only way, or even the best way. It’s just the way that works for us at the moment. I’m sure there are peer firms that look at our investment in the US and think: “Well, they won’t be able to do a merger now”, but the 50% [contribution to] revenue growth is evidence that the additions have settled in well and that client demand is strong.’

Converting this investment into top-of-the-market mandates has been quite successful – in its most recent results, A&O boasted of advising Bridgepoint on the $7bn sale of Element to Temasek, with teams from across Europe, UK and the US offering M&A, finance, antitrust and IP advice.

While not strictly M&A, a more impressive US-only deal materialised in June 2022, when Los Angeles projects and infrastructure partner Kent Rowey led a large team on the $9.5n transaction for the new terminal one at JFK Airport, the largest single-asset project financing in U.S. history.

On the more mainstream M&A front, in December 2021 A&O’s corporate head for the US Eric Schube co-led a team (alongside London commercial partner Jim Ford) advising world-leading art and luxury business Christie’s on the sale of Christie’s International Real Estate to @properties for an undisclosed sum.

Freshfields has been making similar in-roads, and it has not gone unnoticed. In 2019, the firm splashed out on a New York M&A team from Cleary Gottlieb, spearheaded by Ethan Klingsberg. And last year, Freshfields hired veteran dealmaker Damien Zoubek from Cravath, creating an American transactional team with pedigree and a notable book of clients.

Such sustained corporate investment has translated into a healthy deal pipeline. In 2020, Freshfields’ US practice advised AstraZeneca on its $39bn acquisition of Alexion Pharmaceuticals, the largest announced acquisition of a US company that year. And in 2021, the firm represented Universal Music Group (UMG) on its buyout by Pershing Square Tontine Holdings for roughly $4bn.

Managing partner Rick van Aerssen is upbeat about American prospects: ‘Given our investment in the US, there has been significant growth there for both our legacy clients as well as our growing base of US-headquartered clients. We are ahead of our plan that we set ourselves in the region.’

Latest figures from the firm put Freshfields’ US partner headcount at 60, with its Silicon Valley office doubling in size over the last year. Among the West Coast hires, Freshfields added data privacy and security lawyer Christine Lyon in August 2021 from Morrison & Foerster and corporate partner Andrew Hill from Wilson Sonsini in May.

Such moves indicate that Freshfields is willing to break the bank to pursue American progress even if it means potentially rubbing its European arm up the wrong way. One partner at a rival firm says: ‘Freshfields has done well, but it’s bloody expensive. Everyone they hire in the US will be top of lockstep in Europe and that’s hard. If you hire 100 people in the US, fundamentally that is going to change the profitability of the firm.’

But for some, even putting money where your mouth is isn’t enough. One law firm leader with experience of US firms remarks: ‘Freshfields have made some big hires in New York and it’s impressive, they must have spent a lot of money. But what is the strategy? Is it buying books of business? It’s not clear. They are never going to have the critical mass to compete with Cravath or Wachtell.’

Indeed, the challenges are evident in the numbers. At the start of 2016 Freshfields fielded 200 lawyers in the US with aspirations to double headcount and generate 15-20% of revenue out of the US as a ‘reasonable and achievable target’, over three to four years.

The firm has fallen short of those aspirations. Freshfields in the US is currently home to fewer than 300 lawyers and the practice is responsible for 10.6% of firmwide revenue – or £174m, according to the firm’s most recent LLP accounts.

‘Will there be more mergers? Yes. It will keep happening because people will see it as a way out of some of the concerns from the pressures we’re facing.’
Tamara Box, Reed Smith

Wing and a prayer

The City’s watercoolers have been buzzing this year with talk of other UK firms eyeing US ties.

As Legal Business went to press, rumours that the secretive Anglo-Scottish private equity outfit Dickson Minto was in talks with Milbank abounded. Sources point to potential conflict issues arising from putting such a private equity firm together with Milbank’s powerful bank-side lender practice, although the proposition could be the answer for a US firm that has long struggled to galvanise its corporate practice in London.

Dickson Minto has also been linked with Fried Frank, but discussions have since collapsed. All three firms were coy at press time, declining to comment.

Ashurst has perennially been linked with the Americans, with names over the years including Latham & Watkins, Fried Frank and White & Case.

But market chatter restarted this summer, with suggestions that Ashurst was actively seeking a merger partner once more. This was swatted away by Ashurst chief executive Paul Jenkins, who claimed it was merely a strategic priority ‘to do more in the US over time’.

In any case, the market is split on whether Ashurst would be a desirable suitor for a US partner. Box says: ‘The big issue for US firms is that international firms don’t look very profitable currently. It’s a hard sell. On that basis, a lot of US firms will be balking. It’s going to take a real trick to get it right, but Ashurst is among the most attractive.’

Geffen has a particularly valuable insight, having been senior partner at Ashurst as it pursued its 2012 Australian merger with Blake Dawson. He says the Australian foray had the US as the endgame: ‘The big strategic question when I was there was: “Do you have another go at the US, or do you do something like Blake Dawson to secure Asia-Pacific and then go to the US when you’re stronger?” That was the debate. At the time it was really the only question that mattered as there was a general acceptance that the firm needed to do something. In the space of six months almost from nowhere, the firm concluded it would do the Australian deal with the view that it was the prelude to a subsequent US deal.’

In spite of all the uncertainty and mutual scepticism, those hoping to witness another transatlantic mega-merger may be in luck. Rather than being burned by those that came before, the Magic Circle and the mid-tier alike are refusing to give up on the American question.

Box, for one, is optimistic. ‘Will there be more mergers? Yes, there will. It will keep happening because people will see it as a way out of some of the concerns from the pressures we’re facing.’

But there is a harsh reality underlining all of this. If the UK elite dreams of a successful US tie-up in the US, rather than a mere footprint, pride will need to be swallowed. With US firms continuing to assert their dominance in London and Europe, as they have for a decade or more, the balance of power has shifted. In this context, those based in London must pose themselves an existential question: ‘What concessions are we prepared to make that will allow us to be more than the European arm of a US firm?’ LB

tom.baker@legalease.co.uk
megan.mayers@legalease.co.uk

Dos and don’ts of transatlantic mergers