The odd couple
24 September 2012 | By Joshua Freedman
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3 September 2012
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On the face of it Field Fisher Waterhouse has the most to gain from a possible merger with Osborne Clarke, but given their differences it’s a long shot
A clause in a partnership agreement preventing three partners from standing for managing partner says much about a firm’s culture. Quite how the line got into Field Fisher Waterhouse’s (FFW) deed is a mystery, but the contract does indeed ban IP/IT head Mark Abell, IP and technology disputes chief Nick Rose and disputes head from running for the role “or any other position within the LLP having all or a substantial proportion of the responsibilities assigned to the position of managing partner”. It is a clause that represents exactly the obstacle that makes the idea of a UK merger so difficult to fathom and gives ample insight into the politics of FFW.
One might think that solid and gentlemanly Osborne Clarke would run a mile. But the Bristol-based firm emerged last week (TheLawyer.com, 17 September) as the latest outfit to considering a merger with FFW following the latter’s collapsed discussions with Lawrence Graham (LG) earlier in the year. The talks are non-exclusive and at an early stage, with nothing expected to be finalised for the moment. FFW is talking to two other firms, while Osborne Clarke is understood to be keeping its options open.
The deal is a match on paper: both firms have strong TMT focuses, a reasonably broad European network and a client relationship-building base in Silicon Valley for sourcing US work. Both feel they need to bulk up in London, with Bristol-based Osborne Clarke last year completing its accelerated lateral hiring programme that saw it bring in roughly 10 recruits into the London partnership. Osborne Clarke has long been aiming to raise the average prestige of its clients in a bid to move away from commoditised work towards chunkier corporate mandates.
Ahead of the curve
But the synergy is largely superficial. FFW feels it needs a merger, while Osborne Clarke, despite feeling it needs more capacity in the City, could do perfectly well without a tie-up. Its merger this year with French and Italian firms Osborne Clarke Spain and SLA Studio Legale Associato gave it a unique selling product as a European firm with a strong London, Bristol and Reading practice. Indeed, it has frequently been ahead of the curve, launching in technology hubs such as Reading and Palo Alto before the market cottoned on to either as as a strategic move.
Field Fisher finally followed suit this summer with its own Palo Alto debut, but it will be difficult to repeat Osborne Clarke’s success, especially given that it staffed the base in its early years with corporate rainmaker and now-managing partner Simon Beswick. The move in 2000 has paid off, with its strategy of being known by Silicon Valley technology companies before they even set off on their journey to invest in Europe largely working.
Meanwhile, a recent report by The Lawyer showed Osborne Clarke was on a fair number of the top 50 UK public takeovers since September 2011 ranked by estimated legal fees, including sell-side roles for Kewill, Alterian and GTL Resources and a buy-side mandate for Oval on its acquisition of Cobalt. FFW boasts the likes of Facebook, Zynga and Google, but this is largely on the IT/IP side. The City firm does not enjoy the corporate relationships with earthy listed clients that Osborne Clarke has with the likes of Carphone Warehouse, which corporate partner Adrian Bott brought over when he joined the firm from Olswang in 2002.
And almost in a bid to ape Osborne Clarke’s four-pronged sector approach, FFW this year cut its own industry-group roster from a messy eleven to five: energy and natural resources; financial institutions; hotel, retail and leisure; technology, media and telecommunications; and life sciences and healthcare.
Surely FFW did not use its TMT rival as a model. Osborne Clarke’s core sectors are digital business; financial services; real estate and infrastructure; and energy and natural resources. Tweak it a bit, and you have an Osborne Clarke strategy transposed onto FFW branding.
The evidence - the sector rejig, the Palo Alto launch - suggests that FFW does not just want to merge with Osborne Clarke, it wants to be Osborne Clarke. And if the deal goes ahead, it could be. Osborne Clarke is the marginally stronger of the brands and would likely keep its name, although the market is in disagreement over this. But this points to the suggestion that FFW would do far better out of the merger than its West Country counterpart. Notably, FFW is seen as a far less maturely run firm with deep political divisions.
As one headhunter commented: “FFW turned down LG because of the profitability element and the loss of proportionate control of the IP/IT practice, which would have been watered down. But Osborne Clarke - they’ll be the ones saying no.”
A divided firm
FFW attempted to modernise last year by bringing in a new management system involving a supervisory board to keep an eye on the management board, but it has not yet shed the image of a divided firm.
Another recruiter said: “On the surface it looks like an unusual one - the personalities are completely different, the way they run their firm. If you look at the characters involved, the general environment is very, very different. I think they’ve moved [to being more maturely run] but the people are still the same.”
Osborne Clarke would appear to be better suited to a strong City corporate and TMT brand such as Olswang, with which it has frequently been linked along with Bird & Bird. An Osborne Clarke-Olswang merger would combine the former’s corporate nous with the latter’s media and litigation expertise. It would be hard to rule such a deal out, especially given the FFW merger looks like a long shot.