Firms should take time and resist merger mania

Mallesons Stephen Jaques is not a small firm – with almost 200 partners itis the biggest

firm in Australia, indeed in the region. But it is not inthe same league as Clifford

Chance, let alone the Clifford Chance-Rogers &Wells-Punders giant set to stride across

the legal landscape.A merger would have served both parties. As our analysis shows (page

12),the Australian market is booming and firms with an eye to internationalexpansion

would be wise to look at breaking in. Similarly, Australianfirms, flush from their own

round of mergers and consolidation, have an eyeto expansion, and joining forces with an

international firm or alliancecould well have given Mallesons a head start.But the whole

thing appears to be off. This is likely to come as asurprise to those who assumed that

Clifford Chance's merger mania wasreaching epic proportions. Some had feared that the

giant was in danger ofmoving too fast, merging for the sake of it without considering

thelong-term effects on its core UK firm, its partners and its position.But the news

that Clifford Chance has called a halt to the merger becauseof disputes over structure

shows that the firm has not lost its way and hasrealised that merging is a difficult and

sometimes dangerous game. Bringingtogether two firms is more than combining the balance

sheets. It is poolingresources, systems and strategies, but it is also creating a new

structure,almost a new firm, which partners – on both sides – must buy into,

feelcomfortable with and feel committed to.On the positive side for the profession,

whatever the exact sticking pointduring those long-distance conversations, it is to

Clifford Chance's creditthat it pulled back and refused to compromise.The negative side,

of course, is that smaller firms are increasingly in apowerless position when it comes

to potential partnerships. When a firm aslarge and powerful as Mallesons is effectively

faced with the choice of "doit the Clifford Chance way or don't do it all", then other

firms bothdomestic and foreign should take note that we are increasingly movingtowards

a monopolistic structure in legal business.