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Allen & Overy and Shearman & Sterling, two renowned global law firms, are targeting a mid-July vote by partners on a proposed merger, as confirmed by a spokesperson from Shearman. The London-based Allen & Overy and New York-based Shearman revealed their intention to merge in an announcement made on Sunday. If successful, the merger would result in the formation of a firm boasting approximately 3,900 lawyers across 49 offices, with a combined global revenue of approximately $3.4 billion.
Approval from 75% of the partnership at each firm is required to proceed with the merger. Wim Dejonghe, Senior Partner at Allen & Overy, stated that the votes would occur simultaneously, and he anticipated the vote to take place by late summer.
The combined entity would adopt the name Allen Overy Shearman Sterling, commonly referred to as A&O Shearman, and would represent one of the largest law firm mergers witnessed in recent decades.
According to Shearman’s Senior Partner, Adam Hakki, the two firms find themselves in a favorable position regarding overlapping clientele. Hakki emphasized that by expanding their scope of work in various locations for shared clients, they can secure a larger market share. Additionally, the merger presents an opportunity to acquire new clients not previously served by either firm.
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Although Hakki refrained from naming specific clients, it is public knowledge that both firms have previously represented prominent entities such as Goldman Sachs & Co, Bank of America, and Morgan Stanley.
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Before proceeding with the merger, the firms conducted a conflicts check on their major clients, uncovering only one conflict, which they promptly resolved in consultation with the concerned client, as explained by Dejonghe.
Conflicting client relationships and attorney compensation typically present challenges in law firm mergers. Generally, U.S. firms have been more prompt in transitioning from seniority-based “lockstep” pay structures to performance-based formulas compared to their UK counterparts.
Dejonghe mentioned that the compensation systems of the two firms exhibited surprising similarities, making discussions around pay relatively straightforward. The combined firm intends to implement a “modified lockstep system” for attorney compensation.
Dejonghe elaborated that both firms have previously introduced modifications to their lockstep systems, allowing for accelerated advancement and access to lawyer bonus pools.
As the legal landscape continues to evolve, law firms adapt their compensation structures to remain competitive and attract top talent. By aligning their compensation approaches, Allen & Overy and Shearman & Sterling aim to create a cohesive culture within the merged entity.
The announcement of the proposed merger between Allen & Overy and Shearman & Sterling has garnered significant attention in the legal industry. If the merger receives the necessary approvals, it is poised to reshape the legal landscape, solidifying the combined firm’s position as a global powerhouse.
Both firms bring their rich histories and expertise to the table, having successfully navigated the competitive legal market. The proposed merger represents a strategic move that leverages their complementary strengths and shared client base.
As partners prepare for the mid-July vote, legal professionals and industry observers eagerly await the outcome, recognizing the potential transformative impact of this merger.
