Eversheds management expects ‘yes’ from partners in US merger vote

Eversheds management is hoping for a resounding endorsement from partners today (16 December) on the vote to tie up with US firm Sutherland Asbill & Brennan.

The voting process to join the two firms will conclude at 2PM today. In order for the merger to be approved, two-thirds of Eversheds partners and over half of Sutherland partners have to vote in favour.

The combined firm will be called Eversheds Sutherland, and it is understood that it will operate as a company limited by guarantee, as used by the Big Four accountancies and Gowling WLG.

The cohort negotiating the deal included Eversheds chief executive Bryan Hughes, chief executive elect Lee Ranson, chairman Paul Smith, international managing partner Ian Gray and incoming managing partner Keith Froud.

It is understood that the talks between the two firms commenced at the start of 2016, although the merger talks were revealed later this year.

The board lineup for the merged firm is expected to be announced in January 2017, while the company is expected to be operational by February 2017.

The two firms combined will create a transatlantic business with a turnover of £600m. Eversheds would be the dominant firm in the merger after posting revenues of £405m last year. According to data in The Lawyer’s Global 200, Sutherland’s 2015 turnover was £196.9m.

The tie-up will create the 39th largest firm by revenue globally, and push Eversheds into the top 10 law firms in the UK, where it will rank tenth largest.

The merger with Sutherland will add an additional 178 partners to Eversheds’ 358-strong partnership and offices in Atlanta, Austin, Geneva, Houston, New York, Sacramento, and Washington DC.

Sutherland specialises in corporate, energy, financial services, intellectual property, litigation, tax, and real estate work.

Eversheds has been vocal about its plans to pull off a US merger in the last two years. The firm held merger talks with Milwaukee-based Foley & Lardner at the end of 2015. Discussions between the two firms broke down after details of the deal were leaked to the press.

If the latest talks are successful they will mark a successful end to Bryan Hughes’ tenure as Eversheds’ CEO. During his time leading the firm Hughes announced a strategy to turn Eversheds into a global leader by 2020. As part of the strategy the firm appointed Ian Gray as its first international managing partner.

Eversheds managing partner Lee Ranson was recently elected as the firm’s new CEO and will take over from Hughes in May 2017. Corporate partner Keith Froud has been appointed to replace Ranson as managing partner.

Sutherland opened a small office in the UK in 2014 when it merged with London commodities boutique Arbis. The deal also gave Sutherland its first office in Geneva. The London office focuses on oil and metals trading.

Dentons Australia union with Gadens to complete this week

Dentons’ tie-up with Australia’s Gadens will formally complete this week, more than a year after partners first approved the deal.

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Gadens operates a federalised model across Australia, with its offices in Brisbane, Melbourne and Adelaide set-up as separate entities from those in Sydney, Perth and Port Moresby, which are integrated.

The integrated offices will join Dentons while those in Brisbane and Adelaide will become associate firms of Dentons Australia.

In October it emerged that Gadens’ Melbourne office would break away from the merger. The firm closed its Singapore office in May this year, when office managing partner Marc Rathbone joined Nabarro.

Dentons global chief executive Elliot Portnoy said: “Our clients, particularly those in China, Singapore, Hong Kong and South Korea, responded enthusiastically to the announcement of our combination.”

“Adding market-leading experience in Australia’s banking and finance, real estate, infrastructure, energy and natural resources sectors to our global teams significantly enhances our offerings to clients in the Pacific Rim.”

Last month Dentons announced it is set to move into the Central American market through a tie-up with Costa Rica-based firm Munoz Global, a deal that will also see the international firm gain bases in Panama and Nicaragua.

The combination is subject to a vote by partners at both firms.

Dentons is also understood to currently be in discussions to take on King & Wood Mallesons (KWM)’s beleaguered European and Middle East arm.

Dentons rides in to the rescue of beleaguered KWM Europe

Dentons has emerged as a potential merger partner for the beleaguered European arm of King & Wood Mallesons (KWM).

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News of the discussions comes at a critical point for KWM’s Europe and Middle East (EUME) partnership.

At the same time, it is understood that US firm Greenberg Traurig and DLA Piper are interested in some of KWM’s Europe and Middle East (EUME) business, including a number of London partners.

However, Greenberg denied an earlier report today (30 November) that it was looking at acquiring KWM’s entire EUME business. “We have no interest and have not had one conversation relating to the acquisition of KWM’s EUME business, though we wish their lawyers and staff well,” a press spokesperson said, adding: “Greenberg Traurig is an opportunistic firm, and we always look at situations where our objectives of excellence, cultural fit, value and financial discipline can be advanced.”

KWM’s European management has been forced to look at options including a merger after partners last week opted against a recapitalisation of the business, which would have secured a bailout from the Asia-Pacific arms of the verein.

Legal Week reported last week that only 21 of King & Wood Mallesons’ European partners had agreed to commit in full to the troubled firm’s failed recapitalisation plan.

That equates to just over 16% of the 130-strong European partnership – making it impossible to raise the nearly £14m required from European partners to secure the additional bailout from the Asia-Pacific arm of KWM, thought to be worth a similar value.

For the Asia bailout to go ahead, partners would also have had to commit to stay with KWM EUME for 12 months.

In response to questions about discussions with KWM, Dentons global chair Joe Andrew said: “While we would never comment on whether we are in combination conversations or not with any firm, we admire the many European/UK partners of KWM that our partners work with regularly and believe this is a very high quality group of impressive lawyers.”

Sources familiar with the matter said that other firms are also talking to KWM’s European management about a potential deal.

If the EUME management team is unable to secure a merger for the business, one potential alternative would be a pre-pack administration that could see one or several firms purchasing all or parts of the business.

It is also possible that partners within the Asia-Pacific arms of the verein could step in with another rescue offer.

KWM EUME has seen a number of partners leave the firm in recent weeks after the firm was plunged into crisis by the resignation of four high profile London partners, including UK investment funds head Michael Halford, who – it was announced last week – is heading to Goodwin Procter in London alongside four partners.

Yesterday, it emerged that KWM’s global head of litigation Craig Pollack is in talks to join Covington & Burling in London.

Morgan Lewis has previously been tipped as a potential merger partner for KWM globally, however it was reported earlier this month that talks had been called off.

Addleshaw Goddard partners approve Scottish tie-up

Addleshaw Goddard has finally voted through a Scottish merger, with managing partner John Joyce getting enough partner votes needed to approve a union with HBJ Gateley last Tuesday, ahead of the ballot closing today (28 November).

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Addleshaws will takeover HBJ Gateley’s three Scottish offices in Aberdeen, Edinburgh and Glasgow. The combination was subject to approval by both partnerships, with Gateley also voting through the merger last week. To approve the tie-up, 75% of Addleshaws partners who voted had to say yes to the merger. While Addleshaws achieved this the firm would not say how many partners abstained.

HBJ Gateley, which is not part of the English PLC due to rules around Alternative Business Structures in Scotland, had turnover of £21.9m in in 2015/16, making it the eighth biggest Scottish firm.

Added to Addleshaws’ top-line revenue of £201.8m in 2015/16, the deal will create a business worth around £220m. However the firm has been clear that it wants to make £250m in fee income by the financial year 2017/18, which this takeover will help achieve.

The union will go live before 1 June 2017 and see HBJ Gateley chair Malcolm McPherson join Addleshaws’ board. Joyce will retain his role as managing partner and Charles Penney will remain senior partner at the firm.

A HBJ partner will also join each of the executive teams leading each of Addleshaws’ four operating divisions: corporate, finance, litigation and real estate.

Addleshaws has long wanted a presence in the Scottish market, with merger talks between the firm and Maclay Murray & Spens called off in February this year. In May, the firm turned to the US for a potential merger partner, and is in talks with Virginia-based Hunton & Williams.

Joyce (pictured) said: ‘We have for a while had an ambition to be present in Scotland and so are delighted with the overwhelmingly enthusiastic response from the partners, clients and staff of both firms.  Overall, it’s a great fit for our clients and our people and we are looking forward to realising the collective benefits of our enhanced geographical reach, increased practice and sector bench-strength and flexibility in our delivery approach.’

McPherson, chairman of HBJ, said: ‘The combination of two such capable and growing firms is extremely good news for our clients, our people and our partners. The overwhelming majority of partners at both firms clearly saw the many benefits of the merger strategy and the fact that it positions us very well for further strong growth.’

According to the latest AmLaw 100, Hunton & Williams has 696 lawyers and 167 equity partners across 19 offices in the US, Europe and Asia. In 2015 it posted gross revenue of $528m, a 7% drop on 2014.

Addleshaws saw a turnaround this financial year, after a period dominated by internal discord, management changes and falling revenues. The last year saw the firm post revenue growth of 12%, up from £171m in 2013/14 to £193m – the highest levels since 2007/08. Profits per equity partner (PEP) was up 26% to £491,000.

Dentons poised to enter Central America through local merger

Dentons is set to merge with Pan-Central American law firm Muñoz Global, in a deal that would make it the second international firm in Central America.

Arias & Muñoz founders José Antonio Muñoz and Pedro Muñoz today confirmed their plans to break away from their firm to launch Muñoz Global and merge with Dentons, subject to a partner vote.

The new firm would have the Costa Rican offices of Arias & Muñoz, alongside additional offices in Panama and Nicaragua.

The combination with the newly established law firm Muñoz Global would give Dentons offices in three out of seven Central American countries –  Costa Rica, Panama and Nicaragua. 

The only other global firm with an international presence in Central America is Littler Mendelson, which has offices in Panama, Nicaragua, Guatemala, Costa Rica and Honduras.

The proposed combination follows the launch of Dentons López Velarde in Mexico and Dentons Cardenas & Cardenas in Colombia earlier this year.

It marks the next step in Dentons’ strategy to grow its presence in Latin America and the Caribbean.

Elliott Portnoy, Dentons global CEO said: “Since our launch in Mexico and Colombia earlier this year, cross-border work into and out of the region has grown rapidly, demonstrating that clients see a great advantage to being served by a global firm that can offer the best locally informed legal counsel and business advice anywhere they operate.

“Given the interconnectedness of the economies of Costa Rica, Panama and Nicaragua, we see real opportunities to serve clients further through more intra-region work as well.”

In Europe, Dentons opened its third German office in Munich with the hire of three partners from Norton Rose Fulbright, and two offices in Italy, first in Milan and then in Rome following a two-year strategic plan to build a full-service firm in the country.

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CMS, Nabarro and Olswang to merge to make UK’s sixth-biggest firm

One of the largest tie-ups in the UK legal services industry is being planned by law firms CMS UK, Nabarro and Olswang to create an international group better able to challenge the elite “magic circle” of five leading British rivals.

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The merger of the three firms, which will trade as CMS, will create the sixth-largest law firm in the UK by revenue, and will employ a team of 4,500 lawyers in 36 countries. The merger is expected to complete in May next year.

The deal comes as more law firms are seeking revenue growth outside the UK, and in particular are trying to broaden businesses in fast growing markets such as Asia rather than being reliant on the UK economy.

In recent years, “magic circle” law firms such as Clifford Chance have pulled away from smaller rivals by opening international offices to serve global corporate clients that require access to English courts and law that is used to underpin business contracts.

Penelope Warne, senior partner for CMS UK, said the deal was a sign of confidence in the City of London, adding that the three firms had been in talks before the Brexit vote.

“We didn’t feel that Brexit was a reason for us not to do this,” said Ms Warne. “It’s a sign of confidence in the City.”

She said that the three-way tie-up would create an enlarged law firm with greater expertise in six key sectors, including energy, financial services and technology. The firm will have offices in 36 countries, including a greater presence in fast growing markets in Latin America.

The firm will also invest more in new technology, including artificial intelligence, which is increasingly allowing greater automation of routine work in law firms.

“The legal sector is no different from the general business sector in facing disruption from technology,” Ms Warne said. “It was important to combine all three firms all of whom have different sector expertise … we want to drive technology through our business for the benefit of clients.”

The new firm will employ 2,500 lawyers in the UK. Combined revenues will be £450m in the UK but well in excess of €1.2bn globally.

Industry experts warned that many UK-focused law firms were struggling to compete as the legal market became more global, and as new technology is used to automate work.

“It’s a symptom of the weakness of these smaller English firms that don’t have an international presence. It’s part of the evolutionary process,” said Nick Cherryman, partner at King & Spalding, the US law firm. “If you look at the law firms with greater profitability, it’s those who have a large international footprint.”

He added: “The domestic London firms have not just stayed still but they’ve gone backwards. The talent is going to the big law firms. They have less of the talent and less market share.”

Law firms are also facing new competitors. The UK’s Legal Services Act 2007, which was designed to make the purchase of legal services more accessible, has paved the way for professional services firms — such as PwC — to expand into the legal sector.