Norton Rose seals $1.9bn merger with America's Fulbright & Jaworski
Norton Rose is set to merge with US firm Fulbright & Jaworski, the firms have announced, with the deal going live on 1 June 2013.
Peter Martyr
The combined firm will be called Norton Rose Fulbright and, according to the UK firm, will join the top ten law firms globally by revenue and number of lawyers.
The firms’ combined revenues will come to roughly $1.9bn (£1.2bn), with Norton Rose turning over $1.32m in 2011-12, according to The Lawyer UK 200 2012, while Fulbright’s 2011 income was roughly $580m.
The confirmation follows one of the longest-running tie-up discussions in the legal market, with the UK and US duo understood to have been in talks for over a year.
It comes on the back of a Norton Rose partners’ conference in Toronto the weekend before last in which attendees voted on the combination, while Fulbright held its poll over the weekend just gone. Norton Rose CEO Peter Martyr is understood to have been in the US since the conference finalising the deal.
Some Norton Rose partners were not informed about the proposals until they arrived at the conference.
Martyr told The Lawyer today (14 November): “Certainly from our point of view and from Fulbright’s point of view it’s a spot-on marriage and it should really give us some brilliant opportunities in the future. One thing we really want to invest in which we think is a must for a global organisation is a regulatory practice. What we’re getting here is a top-class regulatory practice. In my view it will be a leader into a new chunk of business.”
Martyr is understood to have told board members a year and a half ago that the firm was not in talks with a US firm, with sources suggesting the serious discussions came after the firm sealed a merger with Canadian firm Macleod Dixon, its second deal in Canada (4 October 2011).
He today confirmed that the duo had been talking for around a year and at “full pace” for the last five or six months, adding: “We’ve been best friends for a long time and if you are best friends for this long things creep up slowly until you say maybe we should do something about this.”
He will be the global CEO of the combined business, while Fulbright chair-elect Ken Stewart will be managing partner of the US operations and will take a senior position on the overall global executive committee. Other Fulbright partners will also sit on the committee.
The new firm will be structured with a Swiss Verein over the top for accounting and tax reasons, in line with the firm’s other mergers in Australia and Canada, with the separate arms not sharing profits. The fiscal regime in the US would leave the firm with a large tax bill if the legacy firms became financially integrated.
Martyr said the firm had hired two of the Big Four accountancy firms to advise on the deal, adding: “I think we’ll watch and see what the accountants do [before deciding whether to merger financially]. Our behaviour is designed to the effect that we behave as a single business.”
The news comes after the firm went live with the Macleod Dixon tie-up on 1 January this year, following its first merger in Canada with Ogilvy Renault in 2011 (15 November 2010).
That happened at the same time as a combination with South African firm Deneys Reitz.
Martry said in a statement: “We have been looking at the US market for a number of years, seeking a firm that meets our requirements for excellence in law, good business synergies and a compatible culture. Fulbright & Jaworski meets all our criteria. It is financially strong, with forward-looking management and similar strategic growth aspirations.
“As Norton Rose Fulbright, we will continue to invest in our strongest practice areas and develop our expertise across our key industry sectors. We also expect to continue extending our global business not only in the US, but in the emerging growth markets of the future, in particular in Latin America, Africa and Asia.”
Stewart added: “This is a smart combination of two groups whose geographic presence, capabilities and client service cultures are strongly complementary. The combined organisation can provide the experience, insight and service our clients need everywhere they do business around the world.”
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Readers' comments (22)
Anonymous | 14-Nov-2012 2:27 pm
You have got to admire how NR have seemingly taken over the world through a series of mergers, setting the trend for others to follow. They may have got it through but now the real hard work begins, ie, finding the Fulbright partners desks in London, perhaps they could take some of the spare room Lawrence Graham has on offer, they're only next door.
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Anonymous | 14-Nov-2012 2:30 pm
Two Stones frantically grabbing hold of each other in the hope that neither will sink?
Although both have their bright spots, neither is a serious player and the fact they're not merging (it's a DLA style verein with no shared financials/profits) suggests neither has sufficient confidence in the other to go "all in".
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James Fairweather | 14-Nov-2012 2:40 pm
Hats off. While other firms have agonised, kvetched, denied, coyly admitted, overegged and otherwise talked too much about their future strategy, Norton Rose has got on and and done it. Consequently, we have a guaranteed upper second tier stalwart of tomorrow's global legal market (better than that in areas such as asset finance and energy), who will have stolen a march of years, in some cases, over their rivals from around the Silver Circle. Difficult not to be impressed by this.
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Mr Atlantic | 14-Nov-2012 2:42 pm
Now that is what I call a merger that will make a difference!
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Anonymous | 14-Nov-2012 3:14 pm
@ anonymous 2.30p "neither is a serious player".
So you're saying neither NR, Fulbright or the combo is a serious players in energy, mining, infra, financial institutions etc!?
COME ONE.
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Anonymous | 14-Nov-2012 3:48 pm
NR are marketing this as a merger, but it's in the end no different from an alliance like CMS. An exclusive alliance with a US firm is a step forward, but let's not pretend it's a merger. Unless you align financial interests of the partners it's not one firm. That's why KPMG (which had this model up until recently) decided to merge some of the important country practices.
In sum. It's not as integrated as Baker & McKenzie, and that really is not saying a lot, is it...
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Anonymous | 14-Nov-2012 3:57 pm
The winners in the future legal market appear to be shaping up as:
1. Magic Circle/White Shoe, who can say, "we are the best". Their 'niche' or perhaps better described as 'space' is the very top end clients and transactions.
2. Global Service Firms which start to look like the big 4 accountants. DLA Piper, K&L Gates, now Norton Rose. For international clients whose transactions are 'only' in the £100's of millions in deal value, the proposition that "we can do everything which you the client do, everywhere you do it" is a compelling pitch. NR's project lawyers in Perth should be cross-selling their capital markets capability in Toronto and London, and vice versa, and that is frankly a scary thought for their competitors in the natural resources space.
3. True niche firms/offices/teams. Recall at one point Proskauer Rose (?) saying something along the lines of, in London we're going to do funds work, and in London funds work we're going to be bigger than our Magic Circle competitors. A firm or office which can achieve a position like that has a compelling pitch to a client in the relevant space.
For the rest, the world is looking bleaker. There must be at least 20 odd mid-market full service firms that, as hard as they try, don't look any different to each other from a client's perspective. There are then perhaps 50+ other firms/offices which can do much of what the mid-market full service firms can do equally as well as they can. We all have pretty much the same overheads, the same access to practicallaw.com, loan market association etc. and other know-how, the same back office support, etc. So not only do these firms look the same from the outside in, in reality they are in fact pretty much indistiguisable.
Partners in the bleak middle are left to build personal relationships backed by an 'ok brand'. Clients become personal clients and a true 'following' should the Partner cross the street. This is a terrible long term business model.
In summary, Norton Rose, and DLA Piper and K&L Gates for that matter, should be applauded for leading the changing shape of the legal market. Other firms which were the natural competitors 10 years ago of their constituent/legacy firms, and which have not been so bold, are much more likely to fail than they are.
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Numnuts | 14-Nov-2012 4:02 pm
Fair play to NR. Fulbright have a great brand in the US and NR are Global and on the Up. Wi this remove them from the chasing pack into the global elite....it ought to. Those indicating that mergers are only mergers if you share all profits don't understand the big 4 and how they have become unassailable yet had to run multiple partnerships for tax, regulation but also remuneration reasons. How long before there's a big global 4 or 6 law firms of which NR be one? Not long I should wager. Good luck to them
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Anonymous | 14-Nov-2012 4:33 pm
"is a serious players in energy, mining, infra, financial institutions etc!?"
I think the original comment started with "Although they both have their bright spots...."
F&J is a second tier energy firm (if it were first tier, it wouldn't need to merge with a second tier firm). NR does low value mining, infra and is unheard of in FI. So by world standards, they're not serious players and I don't think eg Rio Tinto will be picking up the phone next time it's thinking of doing a deal.
In fact, if I was GC of Rio, I would be even less likely to use either firm because of who each of them has chosen as a verein co-member. If this was the test of a good firm, Baker and McKenzie and DLA would dominate world legal services.
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Anonymous | 14-Nov-2012 5:09 pm
You may want to look at RTZ's GC speed dial the next time you are in his office.
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Anonymous | 14-Nov-2012 5:30 pm
He might want to check the speed dial of the GC of HSBC too....
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Anonymous | 14-Nov-2012 7:04 pm
RTZ no longer exists - it was bought by CRA and became Rio Tinto in the 90's. Hopefully NR aren't still waiting for the GC of RTZ to call. I think the GC of HSBC might have a few other names on speed dial that he/she would use first for a deal. CC's comes to mind....
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Anonymous | 14-Nov-2012 7:53 pm
Not to mention BHP Billiton, BNP Paibas etc.., etc..,
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Anonymous | 14-Nov-2012 8:30 pm
NR got that call from Rio and others and FJ is far from second tier energy
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Anonymous | 14-Nov-2012 9:45 pm
Ugh. Another frankenfirm, joining the ranks of:
-- Sonnenschein Nath Rosenthal Denton Wilde Sapte Salans Hertzfeld Heilbronn Fraser Milner Casgrain
-- Kirkpatrick Lockhart Nicholson Graham Preston Gates Ellis Bell Boyd Lloyd
-- Bingham Dana Gould McCutchen Doyle Brown Enerson Swidler Berlin Shereff Friedman
-- Hogan Hartson Lovell White Durrant
-- Bryan Cave Robinson Silverman Pearce Aronsohn Berman Powell Goldstein Frazer Murphy Holme Roberts Owen
-- Squire Sanders Hammonds
-- Pillsbury Madison Sutro Cushman Darby Cushman Winthrop Stimson Putnam Roberts Shaw Pittman Potts Trowbridge
-- DLA Piper Marbury Rudnick Wolf Gray Cary Ware Friendenrich
-- Wilmer Cutler Pickering Hale Dorr
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Anonymous | 14-Nov-2012 10:30 pm
"...with Norton Rose turning over $1.32m in 2011-12,". Heh
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Anonymous | 15-Nov-2012 2:08 am
And that of the GC of Barclays, RBS etc. If anything NR is big in FI.
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Anonymous | 15-Nov-2012 10:13 am
The person saying F & J are second tier energy and NR does low value mining etc obviously just doesn't know anything about the market. Re GC HSBC - remind me, who did HSBC's rights issue in 2009?? Wasn't it NR? Was it not the biggest rights issue of all time? Who is selling HSBC's Asian assets?
Whose handling the major disposals for BP in Europe at the moment? Freshfields? No - NR.
Its probably already the best energy and mining firm in the world and with F & J it will just cement that.
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Anonymous | 15-Nov-2012 11:28 am
Quite amusing seeing how second tier firms try to Big Themselves and love the Frankenfirm description. Very apt, although difficult to top Dentons for innapprooriate mixing of body parts.
No question NR are second tier in mining. |Despite claiming to act for Rio and BHP (neither company would allow a major advisor to work for the other), it's noticable that Rio use Links/Allens (or Herbies) for their major deals and BHP use S&M/Blakes (now Ashursts). So, despite have a few extra body parts, the quality of the verein members will not change and NRF will remain firmly in the second tier, even for mining.
Good luck to them, though, and hopefully this exclusive referal verein arrangement will increase their revenue line, even if it reduces (to 1) the number of US firms that will work with NR now.
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Anonymous | 15-Nov-2012 3:05 pm
Frankenfirm - a description which you could also apply to many other major market players:
- Freshfields Deringer Tessin Herrmann Sedemund Bruckhaus Westrick Heller Löber
- Coward Chance Clifford Turner Pünder Volhard Weber Axster Roger Wells
- Linklaters Paines Rädler Raupach Oppenhoff & Rädler (though Oppenhoff later moved on again!)
it's a rare beast that has grown entirely through organic expansion.
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