US firms are shacking up like there’s no tomorrow. Should the UK legal market be bothered?
You don’t need to be a market anorak to know that law firm mergers are on the rise. According to legal consultancy Altman Weil there have been 58 combinations between US firms so far this year, compared to 60 across 2012 and 39 throughout 2011.
Most have escaped the attention of the UK legal market, arguably because few of these tie-ups have been cross-border. But something has changed. This week alone we’ve heard about two notable US mergers, Patton Boggs with Locke Lord (29 October 2013) and Orrick Herrington & Sutcliffe with Pillsbury Winthrop Shaw Pittman (28 October 2013). All but Patton Boggs have a London base.
If the deals go ahead, what would this mean for the London outposts? It’s a question met with frosty responses from those involved, with one firm’s London office unaware the talks were even happening.
With none of the firms keen to talk London, we turn our attentions elsewhere. Managing partners in the UK, what would these US tie-ups mean for you?
“I’m not interested,” says one partner. “Orrick and Pillsbury are two firms with a reasonably similar outlook, but the difficult thing with any merger is when you have two offices in the same city. You end up with two different cultures trying to bash together.”
While a tie-up between Orrick and Pillsbury would create a $1.4bn mega-firm, with a hefty presence in Silicon Valley, the views of partners at rival London firms seem to echo the above.
“I rarely see them on the other side of a deal,” chips in one partner, at the London office of a US firm. ”They’re both pretty under the radar over here.”
But the pairing of two “under the radar” London offices doesn’t necessarily equal no bang. Pillsbury is well known for its nuclear energy work, and chairman Jim Rishwain said the firm’s London office was a major part of its energy sector focus when the firm’s strong financial results were announced in January (31 January 2013).
“I wouldn’t go as far to say I’m not interested in this,” adds one partner. “The only reason this particular tie-up wouldn’t make us nervous [in London] is because nuclear energy is only a small part of what we do. That’s all I know about them.”
Certainly Pillsbury’s London office has come to its own in recent years. At the start of the financial crisis the base had just one full-time partner in the office, following a raid by Bird & Bird in 2007 (1 October 2007). There are now 12 partners based in the City, with lateral hires including Mike Pierides from Pinsent Masons, Jim Simpson from Dewey & LeBoeuf and, most recently, a two-partner team from Canadian firm Gowlings (30 August 2013).
Does it make sense for the firm to now shack up with Orrick? Both firms have appeared pretty lonely in recent years, with Pillsbury thought to have chatted up Washington firm Dickstein Shapiro and, before that, Fulbright & Jaworski, which ended up with legacy Norton Rose. Meanwhile Orrick’s failed SJ Berwin merger in May 2010 highlighted an urgent item on new boss Mitch Zuklie’s agenda – namely, what to do about London following a string of heavy-hitting partner departures in 2012.
“I’m always looking for teams and potential merger opportunities [in London] but they’re few and far between,” former chairman Ralph Baxter told The Lawyer last year. “There are more than 100 US law firms in London all trying to do the same thing. You have to be realistic, it’s the most competitive legal market in the world.”
It certainly is.