One firm may still scupper Alliance's federation deal

The creation of the world's largest legal federation between the six firms that make up the Alliance of European Lawyers and Linklaters could still be scuppered by a vote against by one firm.

Although it is thought an unlikely event, the Alliance has told Linklaters that if one of its member firms votes against the deal, or raises an objection that is substantive and incapable of resolution, then the whole thing is off.

“This is an everybody or nobody deal,” a source said.

The relationship between Linklaters and Jeantet & Associes in Paris remains the biggest sticking point. Jeantet approved the deal in principle, along with the other Alliance firms in February, but some partners are still believed to be opposed. Linklaters has its own large Paris office and is viewed as culturally incompatible.

However, even a vote against the move by Jeantet is thought unlikely. A Paris-based source said: “It is not easy and the issues are still being heavily discussed, but discussions are taking place in a positive way.”

Representatives from each firm are expected to have hammered out the details of the plan, ready for a vote of all partners in about three weeks. If the vote is “yes', they aim to announce the deal in May.

If the deal does go through, the Alliance will ditch its existing structure a Brussels-based European Economic Interest Grouping for a more formal corporate structure to manage common assets.

For tax reasons, the most likely option is for a Swiss holding company to be established, although other corporate bases, including Belgium, are being considered.

The arrangement appears to be the European equivalent of the now defunct regional UK alliances, such as the Norton Rose M5 Group or the Legal Resources Group, under which firms created a company to jointly manage marketing, training and even some foreign offices.

For the time being, Linklaters managing partner, Terence Kyle, will not comment on any deal with the Alliance.

“When we have something concrete to announce, we will announce it,” he said. Linklaters is still insisting publicly that it is building up a European capacity “jurisdiction by jurisdiction”.

“We want to be able to provide both local and international legal advice in France, Germany, Italy and Spain,” said Kyle. “We are flexible about how we achieve that. There is no blue print to say we have got to do it one way.”

Rival firms will be quick to point out that a federation is not as powerful as a full merger.