Reed Smith to lose out on £30m Richards Butler HK” />After wrecking several of Richards Butler’s merger attempts, the firm’s hugely profitable Hong Kong operation has distanced itself from the firm’s merger with US firm Reed Smith.
The Lawyer can reveal that no meeting has been set up between Reed Smith and Richards Butler Hong Kong, despite the US firm’s desire to open negotiations.
Chris Howse, senior partner at Richards Butler Hong Kong, said: “The merger discussions have been conducted by the London office of Richards Butler with Reed Smith.
“The Hong Kong office has not been involved, although no doubt we will be involved in the discussions in due course.”
The Hong Kong office, which operates as a separate partnership and which turns over £30m, accounts for almost a third of Richards Butler’s revenue. It was responsible for the collapse of merger talks with Theodore Goddard and Denton Hall and was sceptical about Proskauer Rose.
When Hong Kong contributions are withdrawn, Richards Butler is left with an average profit per equity partner (PEP) of just £375,000, a figure that is expected to remain static this year. Hong Kong’s contribution bumps that figure up to £460,000.
Reed Smith managing partner Greg Jordan said: “Our deal is with [managing partner] Roger Parker and the Richards Butler London partnership. We recognise that the Hong Kong partners will have to make their own decision and we’re anxious to talk to them.”
Jordan remains keen to sign Hong Kong to Reed Smith, but would consider continuing the current arrangement in the short term, with Hong Kong operating as a separate partnership in the belief that the partners would see the benefits of a full merger when referrals start flowing.
Richards Butler has lowered the proportion of votes needed to approve the merger from three-quarters to two-thirds. Reed Smith needs 75 per cent. The vote is set for the end of May.
The merger, first revealed on www.thelawyer.com (5 April), will create a 1,300-lawyer firm with a global revenue forecast in the region of $725m (£414m).