Since the summer of 2011 there have been 19 mergers involving major UK firms. Not all have been visionary: our lengthy study of the most recent deals examined some of the more questionable dynamics (The Lawyer, 29 October).
Last week was notable less for consolidation than for failed consummation. Field Fisher Waterhouse and Osborne Clarke called off their merger talks, and a question mark still hovers over the direction of Howard Kennedy’s discussions with Finers Stephens Innocent. Even Norton Rose, which knows a thing or two about pulling off deals, took well over 18 months in its talks with Fulbright & Jaworski before arriving at a workable combination. And SNR Denton and Salans took a year to reach their deal, complicated by the later entry of Canadian FMC. Merger may be the obvious outcome for all, but execution is never inevitable.
It’s axiomatic to add here that some, like Macfarlanes, Travers Smith, Burges Salmon and to a lesser extent Wragge & Co, have made a virtue out of last-mover advantage. And as our feature on European powerhouse Noerr reveals, resolute independence can work well (see page 16). Not every firm has Noerr’s advantage of a flourishing Mittelstand of clients and a wave of Chinese inward investment, but equally Noerr has flourished in the much more conservative German market without the benefit of being headquartered in a global financial centre, partly by paying attention to culture as well as clients.
But what about the zombie firms of the UK? We all know who they are: they have enough good clients to mask the absence of leadership, and they tend still to be making excuses about the recession to explain the lack of energy and the number of senior-level departures.
It’s not just about growth; magic circle firms aren’t increasing revenue and they’re hardly endangered. It’s not even about whether these firms are serving clients effectively; they simply have no vision to impart either internally or externally, with the result that the level of market confidence in them is close to zero. The zombies see merger as a safety net, but what they don’t realise is that no one actually wants them except, perhaps, in a fire sale. Truly, the living dead are among us.