Stephenson Harwood clutches at US lifeline

Talks with Holland & Knight to create £300m firm; biggest US merger since CC-R&W

Stephenson Harwood is in merger talks with US firm Holland & Knight in a bid to create the largest transatlantic merger since Clifford Chance and Rogers & Wells. The combined firm would gross more than £300m.
Although Stephenson Harwood chief executive John Pike and Holland & Knight New York partner Brian Starer denied any discussions, sources from both sides confirmed the talks. Holland & Knight partners Reeder Glass and Brian Starer and interim managing partner Bob Feagin are understood to form part of a strategic team in discussions with Stephenson Harwood.
Starer said: “Over the last year I've visited 30 London firms, and we're looking to expand our reach into the legal business, particularly into the UK and the EU.”
A well-placed source told The Lawyer that Stephenson Harwood has been seeking to merge with a US firm since 1995, when it sent representatives to the US to speak to McDermott Will & Emery, King & Spalding, Arnold & Porter and Covington & Burling.
The London firm, which has suffered a raft of partner losses in recent times, has also been looking around to build on its domestic practice. Two years ago it was in talks with Lawrence Graham, only for discussions to founder over relative profitability. Since then, Stephenson Harwood has been making strenuous efforts to restructure, but partner profits are still nowhere near those of its rivals. In last year's The Lawyer 100, the firm – which was 30th in terms of turnover – was 54th in the profitability table.
Meanwhile, Florida firm Holland & Knight has been scouting the City for a merger partner for some time. A source partner said that Holland & Knight had approached at least two other London firms – Ince & Co and Holman Fenwick & Willan.
Another senior source said: “There were some discussions with Ince & Co, but not at top level. It never got serious and didn't even get to partner level.”
One shipping partner whose firm had been approached by Holland & Knight said: “The US firm is looking for a London office with lots of foreign offices, and looking for more clientele. Its proposal to us didn't give us many benefits – we weren't interested in becoming a factory.”
He added that Holland & Knight's practice is “not a Wall Street, but more of a mixed bag. If they're looking for overseas offices, what do they get from merging with any medium-sized firm in the UK? I didn't understand what they were doing because they should be developing in Germany, France and Italy.”
Holland & Knight was 27th in The AmLaw 100, grossing $363.5m (£254.5m), with average profits per partner of $390,000 (£273,058).
Stephenson Harwood came 30th in The Lawyer 100 last year, with a turnover of £50.3m and average profits per partner of £220,000.