Norton Rose to merge with Canada's Ogilvy and South Africa's Deneys

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  • THIS ISN"T A REAL MERGER. It's a branding exercise. Where are the shared profits? This is not one organisation but several!

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  • The South African side is very sweet. Norton Rose can sell an African presence to its Asian clients who want to invest over there.I predict a lot of people will get really sniffy about this deal but the African piece has substance.

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  • So long as Norton Rose London hangs on to its quality people this should all shape up nicely. Like all large firms, though, they need to remember that it is quality of lawyers that matters, way above quantity. Always ask yourself, whom of your colleagues would you consider hiring to do a job for you personally? Do everything to hang on to those people - they are the ones who are worth it.

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  • @ Johnny Cash - That will clearly come in time but it's not always possible to do these things immediately.

    Remember also that the Big 4 accountancy firms have multiple partnerships but are very much single global firms with massive market power.

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  • Very interesting move. It's very much like what CC was trying to achieve in late 1990s/early 2000s -but which didn't happen in the end. However, perhaps 10 years ago there just wasn't the business case. But, perhaps now there really is one. Sometimes law firm strategy is like that, the top frms try things out that are not quite ready and then give up or backtrack to more sure ground, meanwhile other firms come along some years later and put it all into practice when the 'conditions are right'. I expect we'll see many more deals like this in the next few years.

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  • Johnny Cash - The entire premise of your comment is counter-factual, since the combined firm will not operate as a franchise but will have a single management. It will not, for now, have a single partnership, but that is very far from making it a franchise. Perhaps you should look up franchise in the dictionary.
    Re McDonalds, although your analogy is in this case fundamentally flawed it does in any event beg the question, what is so wrong with being like McDonalds? It does afterall own one of the most valuable brands in the world, makes billions of dollars per year in profits and is the undisputed leader of its industry. You may also not be aware that McDonalds actually does directly own many of its restaurants.

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  • I agree with the second commenter - people will get sniffy about this because it seems like the default reaction to every merger these days. But NR's track record with Australia shows that (so far) they seem to be ahead of the game.
    And the argument about separate profit pools just doesn't hold water. None of these other mergers we've seen have launched straight into shared profit pools - it's just not practicable.
    I think this is a great move. And so does my dog

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  • There have been a few law firm mergers that have been announced in Canada in the past week but this one is the biggest by far. Ogilvy Renault merged with another well-respected Canadian firm over 10 years ago and that merger went over smoothly. Ogilvy Renault is definitely a major player in Canada, it's in the top 10, so Norton and Ogilvys definitely have the resources and the know-how to make this happen and have it work.

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  • Isn't this just the M5 Group but on a global scale. And someone remind us all please what happened to the constituent parts of that?!?

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  • Andrew - couldn't agree more. Sharing profits is not the only thing that defines a merged firm. Look at all the firms that open up all over the place but only have salaried partners in the less profitable parts of the network. Does that mean they aren't one firm?
    It's simplistic to suggest that a merger that doesn't share profits is no more than a elaborate franchising deal.
    I think NR should be applauded for this. Just like in Australia, you can guarantee others are going to follow.

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  • It's interesting that NR are always quick to draw the parallel to accounting firms, just like CMS. And it is of course true that there are firms that don't share profits that are well-integrated on a project-to-project basis just as there are firms with a unified profit-pool (esp. when merit-oriented) which are just partnerships of convenience.
    But KPMG is unifying its profit pool after years of having separate country organizations. So the onus is on Norton Rose to demonstrate if the alliance is anything other than merely a common brand. They'll have to spend a LOT of money getting the lawyers to work, eat and play together so that it develops into more than M5.
    Oh, and Deney's is top-notch. But Ogilvy Renault? Only scraping into the top 10. And the fools don't even have an office in Saskatchewan.

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  • It’s interesting that there is a top tier firm taking a more imaginative approach to expansion, in terms of territories at least.
    The obvious thing would have been to follow the recent wave of mid market firm UK/US mergers along the lines of Hammonds, Lovells, Dentons etc.
    Being the first to do something always takes a little courage, so NR should be applauded for that.

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  • It has always really puzzled me as to why UK firms haven't made more of a push in Canada, South Africa and Australia, in view of those countries' historical ties with the UK, common language and the clear strategic importance of all three markets.
    And whilst Norton Rose may seem like a pioneer amongst law firms with its South African move it is following well behind major companies like Barclays and Vodafone, who have made multi-billion pound acquisitions in that market.

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  • Parsley, none of Canada's 30 biggest law firms has an office in either Saskatoon or Regina. The province has only recently become a force in natural resources (oil and, of course, especially potash), and it's well-served with local firms like MacPherson Lesie & Tyerman, Balfour Moss, McDougall Gauley and McKercher LLP. For now, the legal HQ for Canada's energy industry is still Calgary for the most part.
    And although Ogilvy Renault is only the 11th-largest firm by size, it has a lot of respect within the profession and has an extremely impressive client lineup (Bombardier, RBC, SNC Lavalin, Archer Daniels Midland, GlaxoSmithKline, Lloyds, etc.) It might not be a consensus Top 5 in Canada, but it's not far off.

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  • @Better late than never

    The reason Uk firms havent pushed into Canada, Oz or SA is that they are jurisdictions that are already very over-lawyered with large, fairly high quality local outfits. The profitability is accordingly bloody awful.

    Norton Rose is hardly the most profitable of UK firms - indeed it is a long way down the list - but it is much more profitable than Ogilvy or Deneys.

    The economics for proper mergers in those places dont stack up.

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  • How can the above revenue numbers be accurate?

    NR was (at least a few months ago) estimating turnover of £440m once it had incorporated Deacons in Australia. To get to the level cited above (£622m), it would need to increase turnover by nearly 50% just by this merger (£222m).

    This cannot be done by a merger with Oglivys nor with Deneys Reitz, as both firms lack turnover of this magnitude.

    Ignoring NR's projections, and working solely on their global turnover for last year (£307m), to break the $1bn (£622m) mark, NR would need to increase turnover by more than 100% to achieve the estimate that was cited in this article, in the firm's press releases and repeated throughout the legal press.

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  • Until the last few years, no major Canadian law firm practiced in Saskatchewan. (In fact, even operating in Calgary is a relatively new experience for quite a number of the country's largest firms.)

    The Canadian legal professional is incredibly conservative and quite restrictive (try re-qualifying as a solicitor into the law society of Ontario, for instance). This merger might have a very significant impact on improving the provision of legal services in Canada. For far, far too long, Canadian firms have had sizeable headcounts, poor profitability and no real outside competition to challenge their domestic market. (With no real international capabilities, it seems pointless to raise the issue.)

    The question now becomes how the so-called Seven Sisters (the major Canadian law firms) respond to the Norton Rose entrance. If separate profit pools are to stay for the forseeable future, the impact might be less significant than if profitability was to be centralised. (Even with NR's drop in PEP last year, for example, it would still be paying out quite a bit more than the most profitable Canadian law firms.)

    The one thing that will surely hurt NR's standing in Canadian legal circles is their non-existent US base. Given Oglivy's strong links to Jones Day, this might well be an attempt to leverage that relationship, but the sheer number of client conflicts between NR and Jones Day might be a sign of some looming trouble.

    From the rumblings I've heard in Canada, I suspect another major UK entry in the next 18 months is almost certain. (Queue those British firms - A&O and Clifford Chance - that have long standing relationships with Canadian clients.)

    Interesting times.

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  • Jordan...I wasn't being serious about Saskatchewan. And seeing as the Canadian government has retreated into protectionism, I'm sure Norton Rose is not that worried about it. But hey, Go Roughriders!!!

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  • NR have lost the value they once had in their people. It isn't the same place to work for. But I guess that comes with expansion. It's lost its community feel.

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