Mergers on the Orient express

Clifford Chance must be kicking itself. Exactly three years ago we revealed that the magic circle firm had, for the second time, pulled the plug on merger talks with Australia’s Mallesons Stephen Jaques.

Having walked away from a deal in 1999 because it didn’t want all of Mallesons’ partners, Clifford Chance baulked at the prospect of a tie-up in the midst
of the post-Lehman apocalypse.

Now Mallesons has gone and – almost – sealed a deal with China’s King & Wood that could blow the supposedly transformational Anglo-American mergers of the past couple of years out of the water.

Back in 2008 Mallesons chief executive Robert Milliner told us that “how and when we move on opportunities will obviously depend on when we think all the relevant planets are aligned”.

China’s star has been on the rise for years and now, as US and UK firms lose their dominance in the Hong Kong market, it’s approaching its zenith. The planets, it seems, are perfectly aligned; Mallesons’ move couldn’t have been more timely, and don’t the international firms know it.

Clifford Chance has been in Hong Kong for three decades, launching in Beijing in 1985 and Shanghai in 1993, but as per local bar rules is not allowed to practise Chinese law. As international firms reel from the unexpected ascendancy of their Chinese counterparts an alliance with Broad & Bright could turn out to be the story of 2012.

Certainly, the Chinese firm’s pedigree meets the high standards demanded of a major player on the international scene. All of its founders are US­qualified and recent hires came from the likes of Baker Botts, Paul Weiss and White & Case.

Clifford Chance missed out on becoming the largest firm in Australasia in 2008 and has had to play catch-up with the likes of Norton Rose – which merged with Australia’s Deacons at the beginning of 2010 – ever since.

Launches in Casablanca and Istanbul are one thing, but with the Arab Spring wreaking havoc in the region and turmoil in Turkey’s key export market – the eurozone – helping to mute that country’s 2012 growth forecast, focusing on China makes far more sense.

Maybe someone should tell A&O.

margaret.taylor@thelawyer.com; www.twitter.com/thelawyermag