Merger will create a $1bn firm with over 1,000 lawyers
In what is the largest announced US law firm merger of 2016, Washington DC’s Arnold & Porter and New York’s Kaye Scholer confirmed last month they are to merge, creating a firm with $1bn in revenue.
The business will be renamed Arnold & Porter Kaye Scholer and have more than 1,000 lawyers with nine US offices and four other international locations when it goes live on 1 January.
In London, Kaye Scholer’s ten-partner London office will join Arnold & Porter’s 19-partner team at Tower 42 on Old Broad Street, making it a top 20 US firm in London by partner headcount, based on 2016 Global London data. The office will have around 60 lawyers.
Arnold & Porter’s London managing partner Tim Frazer will lead the UK team, while Kaye Scholer’s London managing partner Philip Perrotta will return to fee earning.
Frazer said: ‘The merger combines Arnold & Porter’s regulatory strengths with Kaye Scholer’s transactional and financial strengths, making us a much more credible presence in London. We can be a leading life sciences practice and a leading financial services practice as well as very strong in litigation.’
Arnold & Porter has been expanding in London in recent months, recruiting international arbitration partner Patricio Grané Labat from public international law specialist Volterra Fietta, white-collar crime partner Sean Curran from London disputes boutique Guney, Clark & Ryan, and Olswang’s former Asia managing partner, Rob Bratby.
Both firms suffered declining revenue and profit globally in 2015. Arnold & Porter posted a turnover of $650m for 2015, down 6% from the year before. The DC-based firm suffered a 13% slump in profits per equity partner (PEP) to $1.21m in the last calendar year.
‘The merger makes us a much more credible presence in London.’
Tim Frazer, Arnold & Porter
Meanwhile, former Global 100 firm Kaye Scholer posted revenues of $370m for 2015, a decline of 1%, while PEP was at $1.38m, down 2%. The larger Arnold & Porter averaged 234 equity partners in 2015, while Kaye Scholer has 96 equity and 24 non-equity partners.
Some rivals have questioned the cultural mix of the two firms, with one City partner at a US firm suggesting Kaye Scholer still had a ‘cut-throat New York reputation’.
But the pair said the firms shared complementary practices, as well as a commitment to pro bono work. ‘There’s been an incredibly enthusiastic response,’ said Frazer.
The combination is the latest in a string of potential tie-ups involving Global 100 firms in a market that is ripe for consolidation, but is one of the only significant deals to reach close. Last month Morgan, Lewis & Bockius abandoned merger talks with an ailing King & Wood Mallesons, while Addleshaw Goddard and Hunton & Williams have held talks in recent months about a combination. Talks between US firms Reed Smith and Pepper Hamilton were terminated in April.
matthew.field@legalease.co.uk