Herbert Smith green lights October merger with Australia's Freehills
Herbert Smith and Australian firm Freehills are set to merge to create an £800m firm after receiving the go-ahead from partners today.
David Willis
Herbert Smith’s partner vote was done by secret ballot and had been going on for about 10 days, with votes being counted today, while Freehills’ partners voted at a meeting earlier today.
According to Herbert Smith partners voted “overwhelmingly in favour” of the merger. Herbert Smith required 75 per cent approval from partners while Freehills required 85 per cent. The combination, which will be called Herbert Smith Freehills, is still subject to regulatory approval and is penned to launch on 1 October.
The two firms will fully financially integrate and share a single profit pool, as revealed by The Lawyer last week (21 June 2012), but Herbert Smith managing partner David Willis declined to comment on the proposed remuneration structure and how profits would be split. Based on Herbert Smith’s turnover for 2011-12 and Freehills’ 2010-11 turnover, a merged firm would have revenue of around £826m.
David Willis and Freehills managing partner Gavin Bell will lead the merged firm as joint CEOs. The enlarged entity will have 2,800 lawyers, including 460 partners, across 20 offices in Europe, Asia and the Middle East. Willis said that the two firms had been in serious discussions about a merger for around six months, but exploratory talks had been going on for longer than that.
In a statement, Willis said: “We’re excited about bringing together two pre-eminent law firms to create a new and distinctive global law firm. We share with Freehills a strong belief that over the next few years the market for premium legal services will become increasingly dominated by a small number of truly global firms. This merger will therefore put us in a strong position to provide clients with the single global offering they increasingly demand.”
Bell added: “The merger will give Herbert Smith Freehills the platform to become the leading global law firm across Asia Pacific, a region likely to see continued substantial growth and to become an increasingly important part of the global legal services market. Establishing from day one a single, integrated firm will give all partners the incentive to work together toward a set of shared goals and ensure a seamless service to clients.”
The Lawyer first reported that Herbert Smith was looking at a merger in Australia in May 2011 (16 May 2011).
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Readers' comments (39)
Another Aussie | 29-Jun-2012 1:01 pm
An emphasis on structure is the wrong approach for the two firms to take. It focuses on the firm and suggests that the priority is on partner profits and profit sharing, rather than on client service and the platform that you bring to the clients.
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Anonymous | 29-Jun-2012 2:32 pm
Mixed feelings about this "excitement" - some of those who took redundancy (due to the powers that be deciding less of us can do the same work) are still at the firm - bit insensitive to suddenly spring this on everyone - great timing, was it Willis' idea I wonder
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General Counsel | 1-Jul-2012 6:29 am
I have worked with both Herbies and Freehills as a client. Both firms were average at best. The new Freebies firm poses no competition for the Magic Circle firms. If we use them at all - and that's a big IF - it will be for the commoditized work that a chimp sitting in front of a word processor could do.
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Sock Puppet | 2-Jul-2012 3:00 pm
I must congratulate the Herbert Smith PR people for popping up so quickly in the comments section to put a positive spin on the story before the great hordes of real people put in their more cynical view. I would just like to reassure them that they style of comments are exactly what we would normally expect to see on these pages and I can't imagine anyone will be able to tell which are real and which are puffery. So don't worry - it will work brilliantly and you will not look at all desperate or sad.
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D Willis | 2-Jul-2012 3:14 pm
That is a bloody good idea! Chimps in front of word processors. Why didn't I think of that myself?!? Just think of how many associates and support staff we could make redundent by replacing them with chimps in front of word processors. I'll get right on that - will call it Project Bananas!
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Herbies Insider | 2-Jul-2012 3:35 pm
Senior management has been pounding everyone over the head for months about the "merits" of this merger and partners were "strongly encouraged" to support the merger. Notwithstanding that the merger managed to pass the FIRST vote, many partners are highly skeptical. Let's see what happens at the next vote when the sacred lockstep partnership is up for sacrifice as part the true financial integration.
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Anonymous | 2-Jul-2012 3:55 pm
Isn't Herbert Smith the same firm that once referred to themselves as a "mini Slaughter and May"? The reality is they have been in decline for years. Who knows if the merger can pull them out of their long spiral downward. Probably not. Can't think of any truly great law firms who merged their way to greatness.
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Anonymous | 3-Jul-2012 2:13 pm
Lots of firms have merged their way to greatness. Why there's ... uh .... well ... I'm sure there must be at least one. Maybe.
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Anonymous | 5-Jul-2012 3:59 pm
Freehills needs herbies much more than the other way around.
Anyone with the slightest understanding of the profession can see that.
Freehills has failed appallingly in every non-Aussie venture it has tried including the UK, Singapore, China, Indonesia, Vietnam, Thailand.
In the past 2 years freehills has been left behind by the magic circle breaking ground in its australian backyard.
Now every top partner and law student wants to join CC and A&O here.
So what will herbies do, now that it is saddled with rubbish from downunder?
Force Freehills partners to commit to international mobility? What a joke! Cite the Freehills track record of wasting time and money anywhere outside their country. Surely this international mobility "commitment" was oh-so-subtly written into the contract by freehills as a plan B excuse for its failing partners...
Forget the hype - Herbies will have to do what it does best these days - sack and sack again...
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