‘Surprising’ was the adjective frequently deployed by City partners in October when merger talks between Berwin Leighton Paisner (BLP) and US firm Bryan Cave were unveiled, with BLP going back to the US market 19 months after its attempts to tie up with Greenberg Traurig ended brutally.
The new candidate for a transatlantic union is closer in size and profitability to BLP compared to Greenberg and the union would create a 1,700-lawyer entity with 32 offices in 12 countries.
St Louis-headquartered Bryan Cave has 910 lawyers spread across 26 offices, including 19 bases in the US. It recorded PEP of $866,000 in 2016 compared to £630,000 for 840-lawyer BLP in 2016/17 – some distance from Greenberg’s PEP of $1.55m.
Yet a number of City partners have noted that similar financials do not equate to parity in the reputation of the two firms in their respective markets. A former BLP partner told Legal Business: ‘They may look at it as a merger of equals and it could be so in terms of profitability, but the danger is that in its market Bryan Cave is not as prominent as BLP is in its own.’
In the top 75 of the Global 100 based on revenue ($607.8m), Bryan Cave has recorded fairly pedestrian top-line growth of 9% over the past five years. While its revenue per lawyer at $639,000 compares respectably with some US competitors, profit margin at 28% is low for a major American player.
‘BLP is desperate to avoid the same humiliation. Lisa Mayhew cannot afford to make the same mistake twice.ʼ
Another question raised by the market is the practice fit behind the possible merger: while real estate is once more a top priority for BLP, transactional and retail-focused Bryan Cave has only about 150 lawyers in the practice area, compared to BLP’s 360.
A veteran of merger discussions, Bryan Cave has seen recent talks collapse after having been on the brink of acquiring DC disputes and regulatory firm Dickstein Shapiro in 2015 before it agreed a deal with Blank Rome. The firm previously acquired Denver’s Holme Roberts & Owen in 2012, Atlanta’s Powell Goldstein in 2009 and New York’s Robinson, Silverman, Pearce, Aronsohn & Berman in 2002, while talks with Squire Patton Boggs predecessor Squire, Sanders & Dempsey also failed in 2006.
In all this, one veteran ex-partner observed that BLP would not have gone public with the announcement if talks were unlikely to succeed following the high-profile collapse of the Greenberg Traurig merger negotiations: ‘Not only did those merger talks fall apart, but the chairman of Greenberg was in the press slating BLP. Now BLP is desperate to avoid the same humiliation. [Managing partner] Lisa Mayhew cannot afford to make the same mistake twice.’
BLP said the outcome of the talks will be announced by the end of the year but did not comment beyond its official statement.