‘I didn’t see anyone not put their hand up’: CMS, Olswang, Nabarro vote for merger

Madeleine Farman, Matthew Field and Kathryn McCann speak to those inside and outside the fence

‘A merger was definitely going to happen. That was obvious when I was at CMS four years ago,’ a former CMS Cameron McKenna partner tells Legal Business. ‘It is another great scheme; I don’t feel that the firm’s brand has improved since I left. I know from people inside that the network, although they make a great show of it working well, doesn’t really work as well as it should.’

Leadership at Camerons, Nabarro and Olswang have refused to provide more than a hurried 15-minute interview since the three-way tie-up was announced on 10 October. In that interview, Camerons senior partner Penelope Warne, Olswang chief executive Paul Stevens and Nabarro senior partner Ciaran Carvalho gave little away about plans for the new firm, which will have combined revenues of £450m, or £950m if you count the wider CMS network.

‘It’s kind of about doing one thing at a time,’ says Carvalho of the merger, scheduled to go live on May 2017. ‘The leadership team is keen to ensure we have as much support from partners now, and then we need to keep that momentum going when it’s done.’

Seemingly, the three firms’ leadership teams were able to sell the idea of the merger with great success to their respective partnerships. ‘The vote was very, very well attended,’ one Nabarro partner says. ‘In a room with 100 people, I didn’t see anyone not putting their hand up. It was well supported.’

‘Leadership is keen to ensure we have support from partners now, and we need to keep that momentum going.’
Ciaran Carvalho, Nabarro

He adds: ‘It’s a compelling case. You know whether it feels right or not. It’s not one thing; it’s a collective feel that you have. You have CMS with its massive global reach, you have a strong European presence, yet we bring the real estate bench strength, and all the bells and whistles with that, so that’s a massive boost for them. So far I can’t see any downsides to this at all. The conflicts check out – there’s virtually no conflict risk – it’s very compelling.’

According to those currently at the firm, partners at both Nabarro and Olswang received personalised dossiers mapping out the new partnership structure under the combined firm. The documents detailed their own place within the newly-combined entity’s equity structure under the current CMS UK LLP, which will be renamed CMS Cameron McKenna Nabarro Olswang LLP. Camerons’ current remuneration has a two-tier lockstep with a fixed-share rank introduced in 2013 that got rid of a fixed-share ‘equity gateway’ level and sped up the path to equity.

In October, Legal Business reported that Nabarro and Olswang partners are subject to a lock-in until November 2017, while Camerons’ partners are spared.

Another issue that has hampered Nabarro’s attempts to merge previously is its pension deficit. According to its April 2015 LLP filing, this had increased from £24m to £32m. A Nabarro partner confirmed the newly-combined partnership will take over Nabarro’s pensions liability and pointed out Camerons already has its own pension scheme carved out into a separate LLP account.

Whether there will be further redundancies from the three firms’ international offices is unclear at this stage. A spokesperson for the firms says there were ‘no plans for fee-earner redundancies as part of the merger, nor do we envisage any office closures’, but acknowledged a review of business services roles is currently underway.

A number of partners Legal Business spoke with, however, voiced concern over whether all offices would join the newly-merged entity. A current Nabarro partner says: ‘I have no idea what’s going to happen to those offices; I don’t think anyone knows. It’s as much about what those offices want to do rather than what the UK wants to do.’ Since the merger announcement, Nabarro has dropped out of its five-firm alliance with Broadlaw Group as a consequence of its plans.

Although a US suitor has also been discussed as part of the merger, many current and former partners expect management to bed down the UK moves first and seek out a US partner over the next two years.

The newly-merged firm touts its size as its strength, but market rivals question whether rapid expansion equates to success. One former Camerons partner says: ‘It really depends if they can integrate the partners onto the ladders, if that is what they are going to do. With Dundas & Wilson, [Camerons] just put them at the bottom because it was practically a rescue. There is value to just being a bigger firm. Certainly the mid-market is likely to get squeezed and squeezed.’

Nevertheless, some peers believe the combination has much to commend it. Says Dentons chair Joe Andrew: ‘Not every single partner at Nabarro, CMS and Olswang is going to think it’s a great idea, but I think, self evidently, it is.’

madeleine.farman@legalease.co.uk, matthew.field@legalease.co.uk, kathryn.mccann@legalease.co.uk

For more on the merger, see the The Last Word: Merger mania and Camerons’ double merger adds up but will it multiply?