Cravaths offers 'no deal, no fee'

Cravath Swaine & Moore has entered into a multimillion dollar gamble over its involvement in the AOL/Time Warner merger.

The US firm and its client, Time Warner, have agreed a contingency fee arrangement where, should the deal be successful, Cravaths will collect $35m (£29.9m).

But should the deal collapse soon the firm stands to pick up minimal or no fees.

Cravaths declines to comment but a source close to the firm confirms the arrangement is in place.

He says: “They get paid if the deal is successful and less than their regular rates if it is not successful.

“If the deal were to die tomorrow it is true there would be no fee.”

US firms often negotiate sliding fee rates depending on the success of deals. But this one is unusual both for the pre-deal agreement and for the amount of fees.

Both sides of the £96bn merger, the world's largest, want to close the deal by the end of the year.

But the proposed marriage could come unstuck through anti-trust laws, shareholder disapproval or the regulators.