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Top South African law firm Edward Nathan & Friedland has turned its back on plans to merge with a UK law firm, and has instead sold its leading commercial practice to an investment bank.
Edward Nathan is understood to have talked to Linklaters and Clifford Chance before opting for the £40m deal with investment bank Nedcor. It is also thought to have held a "best friends" relationship with Slaughter and May.
A Clifford Chance spokesman says: "We had very initial discussions with Edward Nathan."
The sell-off, believed to be the first sale of a legal firm to an investment bank, comes at a time when UK law firms are increasingly looking at the opportunities for establishing a base to take advantage of a burgeoning South African market. Last week The Lawyer reported that CMS Cameron McKenna was the first major UK firm to ally with South African firms. It linked with with Canca Inc in Capetown and Jowell Glyn & Marais in Johannesburg.
Nedcor and Edward Nathan issued a joint statement: "[We] have concluded a unique agreement in South African history...the merging of the corporate commercial activities of a major law firm with the business of a leading investment bank."
David Temporal, of legal consultants Altman Weill, says that he has never heard of a bank buying a law firm before. He says: "I can't understand why a bank would want to do it. Law firms are not easy places to manage."
Michael Solomon, partner at rival South African firm Maitland & Co, says: "It is a unique transaction, which arose in unique circumstances.
"I personally don't think it's going to start a trend."
Another source at a rival firm says it is a good move for the lawyers. He says they will not only receive a one-off equity pay-out, but will be able to make more flexible billing arrangements on deals."
Michael Katz, Edward Nathan's senior partner, will become the chairman of Nedcor.
Edward Nathan is understood to have lost two partners in the run-up to the deal.
Commercial partners Andrew Brooking and Kevin Joselovitz recently joined investment bank Corpcap. A source says: "Joselovitz was earmarked to be the successor to managing partner Michael Katz. He is widely known as the firm's crown prince."
The firm is understood to have hived off its litigation, conveyancing, estates and probates practice, to comply with bar rules.