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Partners at “magic circle” law firms Allen & Overy and New York law firm Shearman & Sterling voted overwhelmingly in favor of a merger between the two groups, an unprecedented move in the industry. The path has been cleared for one of the biggest collaborations since.
The merger, which will create a legal giant with total revenue of about $3.5 billion, is said to be moving forward after more than 99% of partners on both sides supported the plan. company statement on Friday. The deal creates a total team of nearly 4,000 attorneys.
“This is a historic moment for the firm and our industry,” Allen & Overy senior partner Wim Dejonghe said in a statement. “We are delighted that our partners have expressed such strong support. This merger is a transformative step for the legal industry.”
The deal, announced earlier this year, was the first between Britain’s so-called “magic circle” law firm and a U.S. rival in more than two decades and created one of the world’s highest-grossing law firms. Allen & Overy hopes the merger will give it a foothold in the United States, where British law firms have long struggled to gain traction in a market dominated by top U.S. law firms.
The deal caps a tumultuous period for New York law firm Sherman, which lost a number of lawyers after merger talks with Hogan Lovells collapsed earlier this year. The firm, which is dwarfed in size by Allen & Overy LLP, has also undergone a restructuring aimed at improving profitability.
The new company will be called A&O Shearman and the partnership will end in May 2024. The company has not disclosed the structure of its management.
A few weeks later, Sherman’s senior partner Adam Hakki called Dejonghe, his counterpart at Allen & Overy, just before the U.S. firm entered into a deal with Hogan Lovells The deal comes just weeks after a merger proposal from law firm Hogan Lovells collapsed in March. Allen & Overy’s troubles came four years after merger talks with California-based O’Melveny & Myers collapsed. A new opportunity to realize its American ambitions.
A senior partner at law firm Allen & Overy said there had been no communication, even privately, about exactly how the two firms’ profit structures would be combined, describing the sentiment as “excitement.” ”. Equity partners at Sherman last year made an average profit of $2.48m, while partners at Allen & Overy made an average profit of £1.82m. Both companies have previously said their compensation structures would not be difficult to integrate.
According to an Allen & Overy spokesman, the new company will use what is called a modified synchronized pay model, which involves elements based on performance and on-time service.
Shearman, a storied 150-year-old firm that once advised the cream of corporate America, is much smaller, with 2022 revenue of $907 million, or about half of Allen & Overy’s 40-plus offices . In total they will have 48 offices and approximately 800 partners.
Partners have two weeks to vote on the deal.
Former A&O senior partner David Morley said the high level of support from both parties “bodes well for their future together”.
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