Merging is a step too far for Herbies, Gleiss Lutz and Stibbe

The definitive decision from management at Herbert Smith, Gleiss Lutz and Stibbe to dismiss merger talks out of hand has brought an end to months of speculation about how the allied firms would manage their futures.

The definitive decision from management at Herbert Smith, Gleiss Lutz and Stibbe to dismiss merger talks out of hand has brought an end to months of speculation about how the allied firms would manage their futures.

As reported by The Lawyer last week (3 December), senior figures at all three firms spent the latter half of 2007 locked in meetings to come up with a roadmap for the future of the alliance. Although merging was mooted at the beginning of the process, it was ruled out after all three firms reached agreement that the alliance model is preferable for a number of reasons.

Herbert Smith senior partner David Gold says: “Merger was something we looked at when we started our meetings. We always discuss things. One of the advantages of being separate is that you avoid creeping bureaucracy. We have three successful firms and working as a unit we pick up international deals and major pieces of litigation. The market recognises that the product of the combination is as good, or better than, it would get from a merged firm.”

Stibbe Brussels managing partner Olivier Clevenbergh agrees, as does Gleiss Lutz managing partner-elect Rainer Loges, although each has a different slant on why alliance is better than merger.

As Clevenbergh points out: “The alliance model with respect to service is better than it would be in a merged firm.” This, he explains, is because each local firm has expert knowledge on its individual market and so is well placed to service the domestic aspects of an international transaction.

Tellingly, however, he adds: “With merged firms, London mostly decides that the total of the firms should be like London.”

An obvious concern, given that Herbert Smith is by far the largest firm in the alliance, with 235 partners compared with Stibbe’s 80 and Gleiss Lutz’s 70. For Loges, continuing as an alliance is the easiest option, particularly as a merger would throw up huge issues around matters such as how to align three different routes to partnership.

“We think about everything all the time,” says Loges on the merger question. “We’re convinced that the alliance model works and will devote our energy and time to further improving it.”

So from here on in the firms, which have a track record of working on deals together, are building on what has been created in the five years since Benelux firm Stibbe joined the Anglo-German alliance, which was formed in 2002 between Herbert Smith and Gleiss Lutz.

In the main this will centre on presenting a united front to clients and using the alliance’s track record to win roles on international deals. On another level, the alliance aims to up its focus on joint training sessions and secondments.

But with all three firms determined that the alliance will become closer than ever before, and with the trio’s deals published in aggregate on league tables, some increased form of integration is required between the three partnerships.

At the moment the alliance relationship is managed by a nine-strong group that sees three senior representatives from each firm take all the decisions that affect the collective. There has been a high degree of movement between the three firms, with more than 120 lawyers at all levels spending periods of up to three years at one of the other firms’ offices, but ultimately the people that make up the firms remain separate.

It will take more than identically designed business cards and offices to make the ranks feel as if they are part of a unified, if separate, whole.

According to Gold, the level of separation could change in the future, with summertime discussions looking at the possibility of holding joint partnership conferences.

“We haven’t done meetings with all the partners because of logistics, but one of the things we discussed in the summer is doing that,” he says. “We’ll see if we can do that in 2009.”

However, as London-based alliance partner Henry Raine points out, independence will always remain key. “We don’t think partners in Germany would want partners in London voting on issues such as their new office,” he says.