Shearman & Sterling, a law firm once ranked No. 9 in the Am Law 100 ranking for gross revenue with 546 lawyers in the mid-1990s, has struggled to keep up with its BigLaw counterparts after the 2008 financial downturn. The firm was ranked No. 50 based on gross revenue, with 727 lawyers in the 2022 Am Law 200 ranking. Although Shearman’s headcount increased by 33% during that period, other large firms like Paul, Weiss, Rifkind, Wharton & Garrison, Simpson Thacher & Bartlett, Milbank, and Weil, Gotshal & Manges, increased their headcount by much more, ranging from 105% to 207%.
Law.com analyzed the data and spoke to several sources to understand why Shearman struggled to keep up with its competitors. The 2008 financial crisis affected Shearman particularly because of a decrease in its representation of big-name banking clients, as several bank mergers sent more of their work to other firms. Additionally, other large firms began to develop private equity practices, but Shearman made different investments. Furthermore, Shearman relied more on reputation than advanced marketing and business development strategies.
Shearman has been facing a net loss in partners lately, as the firm has to pay well to attract laterals while some existing partners are leaving for more money elsewhere. Several of Shearman’s international offices could be performing better. However, despite these challenges, Shearman still has several highly ranked and respected practices, including antitrust, general litigation, employee compensation, and benefits, securities litigation, and white-collar and government investigations.
Law.com reached out to Shearman for comment, but the firm declined to provide any additional information other than the statement it made amid reports of merger talks. The firm said, “We continuously consider the various growth levers accessible to us as part of our strategic planning process. These include internal and external opportunities that benefit our firm and clients.”
Shearman is reportedly in talks with Hogan Lovells for a potential merger, which could help the firm strengthen its position and improve its financial performance. Mergers can benefit both firms by allowing them to pool their resources and expertise, offering more comprehensive client services.
In conclusion, Shearman & Sterling has struggled to keep up with its BigLaw counterparts after the 2008 financial downturn, as the firm was affected by the decrease in its representation of big-name banking clients and did not make the same investments in private equity practices as other large firms. However, the firm still has several highly ranked and respected practices, and a potential merger with Hogan Lovells could help improve its financial performance and position in the market.
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Why is Shearman & Sterling reportedly looking for a merger partner?