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Herbert Smith reviews future of European alliance after failed merger bid

22 November 2011 | By Joshua Freedman

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Herbert Smith has admitted it is considering what will happen next with its European alliance after German firm Gleiss Lutz and Benelux firm Stibbe rejected a merger proposal.

Plans for a merger between Herbert Smith and its European alliance partners Gleiss Lutz and Stibbe fell on deaf ears, with partners at both European firms voting against a potential tie-up last weekend (19-20 November).

A deal with the two independents has been on the UK firm’s agenda for several years but has continually been turned down (10 December 2007).

It became part of Herbies’ ‘Project Blue Sky’ strategy earlier in the autumn (19 September 2011).

A spokesperson for the City firm said in a statement: “Following our strategic review, Herbert Smith is committed to developing an integrated platform across our network and the markets in which we operate. As a result, we’re considering a number of options across a range of territories.

“In this context we recently proposed to alliance partners Gleiss Lutz and Stibbe that the three firms enter into merger discussions. Gleiss Lutz and Stibbe have just confirmed they do not wish to pursue this. We will be considering the implications of their decisions and will let you know of any further developments regarding the alliance. In the meantime it is very much ’business as usual’, with the alliance firms continuing to focus on the needs of clients who we jointly advise.”

Gleiss managing partner Rainer Loges told German legal magazine Juve: “We still value the collaboration with Herbert Smith. But up until now we have been very successful as an independent firm and will continue to be so. That’s how we can best preserve the values and ways of functioning that our clients and staff at Gleiss Lutz value so much.”

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Readers' comments (25)

  • Marx | 22-Nov-2011 12:56 pm

    Go on Gleiss! Angela Merkel would be proud!

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  • Anonymous | 22-Nov-2011 12:57 pm

    What a mess. You only have to look around the profession to know that in order to grow you need an international base and Herbies has closed itself off to it. There is no point scratching heads and pointing the finger, what people really want to know is what is going to happen? Can Herbies compete on an international platform?

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  • Bob | 22-Nov-2011 12:58 pm

    I wish peopel would just come out and say what was really going on instead of all this PR speak

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  • Anonymous | 22-Nov-2011 1:01 pm

    "Business as usual" - i.e. Herbies and Gleiss partners not talking to each other?

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  • Anonymous | 22-Nov-2011 1:14 pm

    Ditch them and do a US merger. Fast. The current situation is a strategic disaster.

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  • Anonymous | 22-Nov-2011 1:33 pm

    "Ditch them"? Sounds to me like Herbies has just been ditched ...

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  • Anonymous | 22-Nov-2011 2:06 pm

    Oh dear. Sounds like the discussions with Cuatrecasas a few years ago.
    If you were HS, who would you merge with in the US?

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  • PtL | 22-Nov-2011 2:12 pm

    The sad, but unavoidable conclusion is that Gleiss and Stibbe might have done a deal if Herbert Smith was a leading firm and not a third tier firm in corporate.
    And there is also no reason for a continental firm to do any sort of merger with a London operation at the moment when the latter are only going to suffer over the next two years.

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  • Anonymous | 22-Nov-2011 2:27 pm

    PtL: you've hit the nail on the head and it also shows how utterly clueless HS senior management are even to have broached this at this point in the (corporate law) economic cycle.

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  • Anon | 22-Nov-2011 3:24 pm

    A firm like Sheaman & Sterling would be a great fit for Herbert Smith, they would provide coverage in the US and Germany, and greater weight in corporate and banking.
    Herbert Smith at present is too litigation heavy, too London heavy, with zero platform in North America and an 'alliance' platform in continental Europe which cannot be integrated. It is also increasingly sub scale overall compared to the leading firms.
    Bold action is required to prevent this firm being rapidly consigned to mediocrity.

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