Mayer Brown looks to JSM merger to aid global ambitions
7 January 2008
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Mayer Brown looks to JSM merger to aid global ambitions" /> Mayer Brown's merger with Hong Kong firm Johnson Stokes & Master (JSM) has been designed to transform the transatlantic firm into a credible global player with presences in Hong Kong, mainland China, Vietnam and Thailand. For JSM the attractiveness of being able to service clients outside the geographic confines of Asia speaks for itself.
However, according to sources on the ground in Asia, the union could be hampered by the difficulties involved in trying to integrate a Hong Kong traditionalist with a progressive international firm.
"JSM's always been a Hong Kong firm and is very parochial," says a partner at a rival firm in Asia. "It's always been very divided by internal politics. The fact that it wasn't really a united firm or an international firm in any sense before trying to merge with Mayer Brown means it will be a bit more of a challenge."
That said, according to JSM senior partner Elaine Lo, who admits having held exploratory merger talks with a number of other firms, the fact that Mayer Brown is the product of the successful merger between US firm Mayer Brown & Platt and the UK's Rowe & Maw was a key factor in deciding on the union.
Stressing that, from JSM's point of view, it was vital to merge with a firm that has presences in both the US and Europe, she adds: "There are obviously a few US law firms that have offices in the UK, but not such significant offices as Mayer Brown. There are the magic circle firms, but they haven't been successful in their US strategies.
"We thought Mayer Brown had been very successful in being able to penetrate the European market and it has experience and a track record of successfully merging and integrating."
For Paul Maher, Mayer Brown's vice-chairman, the integration of the two firms, which will be known as Mayer Brown JSM in Asia and Mayer Brown elsewhere, is a major priority for the months ahead.
With the merger due to go live on 28 January, a 10-strong post-merger integration team, which includes Maher, firmwide chairman Jim Holzhauer and London senior partner Sean Connolly, is working on a strategy for the transition.
The firms' profit pools were combined on 1 January, while work is being done on operational issues such as IT and accounting systems. In terms of structure, due to legal requirements the firm will operate three partnerships: a Hong Kong general partnership, an Illinois LLP and an international LLP.
Two representatives of JSM's 47-strong partnership, Lo and litigation partner Nick Hunsworth, will take seats on the firmwide management committee. In addition, a separate board, chaired by Lo, has been set up to focus on developing an Asian strategy.
Maher explains: "We decided that, because of the time zone and other challenges, we'd have an operational board for Asia. That will meet every other month."
The full make-up of the board is still being decided, although it is anticipated that the majority of the members will come from the legacy JSM side, with Maher and Holzhauer being joined by around three further Mayer Brown representatives.
Both firms stress the synergies between their cultures, but with rumours abounding about the cultural clashes within JSM alone, the challenge faced by the management committee and Asia board in the coming months will be to create unity out of difference.
Refco headache sees Mayer Brown derivatives chief charged
December was a big month for Mayer Brown. Just a week before it secured its landmark deal with Johnson Stokes & Master, one of the firm’s most senior partners was charged with fraud.
On Tuesday 18 December 2007 Joe Collins, the former head of Mayer Brown’s derivatives group, was indicted on charges relating to the collapse of commodities brokerage Refco. Collins was indicted on issues relating to the 2004 sale of a majority stake in Refco and its 2005 IPO.
The loss, temporary or otherwise, of Collins will be a huge blow to Mayer Brown. But Refco has been a thorn in the firm’s side for much longer than last December.
The storm clouds began to gather in August last year, when Mayer Brown was one of 25 defendants named in a fraud suit relating to Refco.
And a succession of partners have left the firm in recent months, with several citing concerns over Refco and other lawsuits (such as an earlier suit with the now defunct Oklahoma company Commercial Financial Services (CFS)) as a reason for leaving.
One former Mayer Brown partner explains: “The pivotal event for me was the filing of the Refco bankruptcy on the heels of the CFS lawsuit in the autumn of 2005.”
Collins is now on leave from Mayer Brown. A spokesman said last month that the firm’s review of the evidence available suggested that the firm had “acted in a professional, competent and ethical manner in its work on behalf of Refco”.