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De Brauw's refusal to cut 'non-core' work leads to merger meltdown; Dutch firm left vulnerable to raids
Linklaters & Alliance has suffered a major blow to its European strategy after the collapse of merger talks with Dutch member De Brauw Blackstone Westbroek.
The merger talks came to a dead end last week over the failure of the 90-partner Dutch firm to restructure by cutting out areas considered by Linklaters to be non-core.
An internal memo was circulated by De Brauw on Friday (27 April), saying that it has amicably agreed to discontinue discussions with Linklaters, but for the time being will keep their close working relationship.
De Brauw managing partner Peter Wakkie told The Lawyer: "We couldn't agree on how we should develop internally in the future in order to make the merger possible.
"There was no vote in our firm. We reached a unanimous decision that our idea of developing the business was not the same as Linklaters' vision. We continue to be in Linklaters & Alliance. It is their express desire and ours."
Linklaters managing partner Tony Angel says: "It's very amicable. Client work continues as normal."
But the collapse of the talks casts further doubt on Linklaters' international strategy. Last year, German member Oppenhoff & Rädler underwent a radical overhaul after its decision to merge. A team of media and telecoms lawyers and four intellectual property partners were among those to quit the firm as a result (The Lawyer, 15 January 2001).
A partner at one magic circle firm in the Netherlands says: "De Brauw is much too large for Linklaters. Ninety partners is obviously asking for trouble in the future for certain partners, and I think De Brauw was never convinced that it could survive in a merged firm. Profitability is important, but the main problem is that they'd have to get the focus of De Brauw in line with Linklaters'.
"I think it's quite tragic for De Brauw. A De Brauw merger with Linklaters would have been more formidable in the recruitment market and in the competition for clients."
De Brauw's decision also leaves it an open target for poaching, either by Linklaters or other UK firms with Dutch offices. "There are quite a few partners in practice areas of interest to Linklaters who are very much in favour of merger," says a partner at one rival firm.
The collapse of merger talks also raises the pressure on other alliance members, who are expected to vote in May.
Roel Nieuwdorp, managing partner of Belgian member De Bandt Van Hecke Lagae & Loesch, says: "Whether we'll vote in May I don't know. We have partner meetings regularly, nearly every month, but the merger isn't the only thing we have to discuss. We'll simply see what the reactions are.
"We'll look at all the factors. I can't say that the situation is the same, because it's not, but that doesn't mean that we have to change our position."
Nieuwdorp admits that one discussion point will be whether or not all partners can stay in the firm if it merges.