Theodore Goddard and Richards Butler are pushing ahead with merger plans despite Denton Hall's dramatic departure from tripartite talks last week.
The move has left Denton Hall out in the cold for the second time in two years - in November 1996 it pulled out of talks with Cameron Markby Hewitt and McKenna & Co, paving the way for those two firms to merge.
The tripartite talks, which were revealed exclusively by The Lawyer (1 September), collapsed after a dispute between Denton Hall and Richards Butler over the integration of their Hong Kong offices into the merged firm. Dentons' decision to walk out of the negotiations left Theodore Goddard, the smallest of the three firms, in a pivotal position. It was forced to decide which of the two firms to continue talking to.
But at the end of a long partners' meeting last Thursday, Theodore Goddard made what its senior partner Paddy Grafton Green described as "an incredibly difficult decision" and plumped for Richards Butler.
The decision is a blow to Denton Hall's ambitions to create its own global law firm and puts a question mark over the future of managing partner Jonathan Tatten, who led its negotiating team.
Chairman James Dallas said he "very much hoped" Tatten would stay on. He said he was "obviously disappointed" Theodore Goddard had chosen to talk to Richards Butler and not Denton Hall, but he reaffirmed the firm's commitment to its global strategy and did not rule out new merger negotiations. "This may be the end of the chapter, but it is not the end of the book," he said.
Dallas added: "In the meantime we will keep driving forwards."
If the merger between Theodore Goddard and Richards Butler goes ahead, the new firm will be the 14th largest UK law firm, with 145 partners and over 500 fee earners - a similar size to firms such as Ashurst Morris Crisp and Norton Rose.
It would have an annual turnover of £88m, two places above Denton Hall at 13th in The Lawyer's top 50 City fees survey published in August.
Theodore Goddard approached Richards Butler about the merger over a year ago and the pair invited Dentons to join talks in the summer.
Emphasising that his firm had been in talks with Theodore Goddard for over a year and denying the decision to press on was a knee-jerk reaction, Richards Butler chief executive Chris Schulten said: "Our original plan still has a lot of merit."
Grafton Green, Theodore Goddard senior partner, said: "Some people might say we were in a good position, but it was not enviable at all.