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Herbert Smith partners give green light to Freehills talks

17 January 2012 | By James Swift, Yun Kriegler

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Herbert Smith and Australia’s Freehills are pushing ahead with merger talks after The Lawyer first reported the pair were mulling discussions in December.

Herbert Smith management discussed whether to hold formal talks with Freehills in December (12 December 2011), and gave the negotiations the go-ahead. The decision came after London partner Greg Mulley, who is leading the firm’s push into Australia, held exploratory talks in Asia with Freehills and reported back to the partnership. Mulley is also understood to have spent time in Australia in the past two weeks.

According to one partner at an Australian firm, Freehills’ partners were also asked to vote on whether to pursue a merger in the closing months of 2011.

Talks between the two firms are still in early stages and an Australian lawyer based in the UK confirmed Herbert Smith was still keeping its lines of communication open with other firms.

Several market commentators, however, have said they would be surprised if Herbert Smith and Freehills hammered out anything more than a loose association. A partner from one of the big six Australian firms said that he did not understand the rationale behind the proposed tie-up deal between the two firms. He suggested Herbert Smith could be feeling left behind following the rush of UK firms into Australia, and noted that Freehills, which has only one office outside Australia in Singapore, could benefit from Herbert Smith’s existing Asia network.

At the end of 2011, Freehills had 980 lawyers, including almost 200 partners. It is the third largest law firm in Australia by lawyer headcount and the second largest by revenue. In the 2010-11 financial year, the firm pulled in A$511m (£346m).

The firm has offices in Sydney, Melbourne, Brisbane and Perth and a single international branch in Singapore.

Freehills also has a strategic alliance relationship with Beijing-based firm TransAsia Lawyers, and runs associated offices with Indonesian firm Soemadipradja & Taher in Jakarta and Vietnamese firm Frasers Law Company in Hanoi and Ho Chi Minh City.

For more on Herbert Smith see The Lawyer’s recent feature.

Herbert Smith declined to comment on the talks.

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Readers' comments (7)

  • Anonymous | 17-Jan-2012 4:50 pm

    I'm not quite sure why the rationale for this association/merger/dalliance/group grope should be quite so difficult for the Australian partner cited above to grasp.

    For Herbies, with Europe a dead letter and New York apparently not yet a glint in anyone's eye, it must make good strategic sense to strengthen a region in which they ooze quality. Australia would complete a formidable circle in the Asia Pacific, which would constitute a fantastic springboard for success elsewhere. In Freehills, they would also gain a raft of partners whose quality, pro rata, far exceeds that which is on offer at Blakes, Minters or Clutz and is easily on a par with Allens and King & Wood Mallesons.

    For Freehills, any sort of combination would make sense as well. It must be lonely when the icy breath of the global giants starts whistling around your ears. Does anyone really imagine that standing pat would protect Freehills from the sort of rape and pillage that has been visited on Clayton Utz, among others?

    It would be nice to believe that Herbert Smith will do the thing properly this time. A "loose association" is precisely the last thing they'd want, one would have thought, bearing in mind their experience of such arrangements in the past. Far better to get properly jilted and know where you stand than behave like Miss Havisham forever. It will be interesting to see whether the lesson has been learned.

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  • Anonymous | 17-Jan-2012 11:42 pm

    If HS and Freehills get it together, the combined firm will be an Asian powerhouse. All they need to find is a good American partner, possibly bringing with it a strong German practice. Suggestions?

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  • Anonymous | 18-Jan-2012 10:28 am

    Interesting, there were talks of it joining forces with Blake Dawson not so long ago, but Freehills seems a good choice. Everyone is wanting to set foot in Australia, so it's about time Herbies got their act together

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  • TheLawMap Associate | 18-Jan-2012 12:40 pm

    Australia represents a bit a treasure trove for UK law firms as it is so strategically placed.

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  • Anon | 18-Jan-2012 1:59 pm

    Anything less than a merger woould be a waste of time, and simply recreate the same issues as the Gleiss Lutz Stibbe grouping in a different jurisdiction.

    A merger would however be a huge step forward for HS.

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  • Bob | 19-Jan-2012 3:08 am

    The best placed of the big Australian firms will be the one or two that are left independent after the music stops.

    Their referral work will boom, and, if they want, they'll have the opportunity to pick and choose from the partners that are discarded from the merged firms as the Australian practices are brought back to scale.

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  • Anonymous | 24-Jan-2012 2:19 pm

    It will be interesting indeed to see whether the lessons have been learned.

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