Eversheds has achieved its longstanding desire for a US merger but the hard work has only just begun, according to chief executive elect Lee Ranson. Critical to the success of the deal with Atlanta's Sutherland Asbill & Brennan, which goes live today (1 February), will be how well the two firms align their focus on clients and practice areas.

The combination represents the end of a long journey for Eversheds, which has sought an entry into the lucrative US market for years.

At the UK firm's Wood Street headquarters in London, the atmosphere is upbeat and Ranson and Sutherland's managing partner Mark Wasserman seem relaxed and confident about what the future holds.

The pair are all too aware of the challenges ahead, however, as Ranson points out: "It's easy to announce a tie-up, the hard yards start now at the go-live date. We need to cement our culture and strategy around our clients, so our businesses operate effectively together."

The firms are combining as Eversheds Sutherland, but will remain financially independent, coming together as a company limited by guarantee, an arrangement used by the UK's Wragge Lawrence Graham and Canada's Gowlings in their 2016 combination.

The deal allows both firms to expand their global reach without giving up much control. Eversheds gains lawyers in the US, where it had none, and Sutherland gains lawyers in the rest of the world.

But with the failure of the UK arm of Anglo-China-Australia firm King & Wood Mallesons fresh in everyone's minds, how does the duo plan to make a success of this latest non-financially integrated tie-up?

Execution is the big challenge

The focus of integration efforts to date has been very much on clients. Wasserman says that 25 of Sutherland's top 100 clients are shared by Eversheds, with notable examples including Coca-Cola, Microsoft, GE and Facebook.

The whole point of the combination is to "serve clients more broadly and deeply with our practice offerings", according to Wasserman, so getting the firms' respective practice groups to work together is key – as is having partners at each firm introduce their clients to their new transatlantic counterparts.

Wasserman and Ranson have been visiting top clients together during the past six weeks, for example meeting GE in Boston last week.

Wasserman says all the clients they have talked to are reporting pressure to consolidate the number of outside firms they use and to contain costs, so they want billing arrangements that add value.

"We need a model so that we are a help to them in doing that," he explains. "Execution is the big challenge – making sure we're providing more value to clients and that we're making their lives easier and better."

"And making sure we've identified the right priorities," Ranson adds. "There are so many things you can chase after," he explains, so the challenge is to put the right resources with the right clients.

Eversheds Sutherland has scheduled its first joint partner meeting for June in London. During the past six weeks, Eversheds and Sutherland have already been convening large-scale gatherings for key practices, such as the energy groups, which held a joint 100-lawyer meeting. The insurance, tax, real estate and litigation teams are also holding meetings.

Having a common culture with shared values is absolutely essential to making this work

As part of how the combined firm intends to better serve clients, the UK and US arms each anticipate adapting their respective practices slightly to better reflect the other. Eversheds, for example, expects to invest in its insurance and tax practice to help emulate Sutherland's strengths in these areas, while Sutherland may boost its energy and finance teams to match its UK counterpart.

The pair will also look at potential areas for joint investment, such as technology and new office launches. The expectation at this stage is that each firm would retain influence in their own region, with Sutherland taking the lead on launching new offices in the US, for example.

Further US growth is already on the agenda, with Wasserman suggesting Chicago and the West Coast as obvious new sites to complement its existing offices in Atlanta, New York, Washington DC, Sacramento, Austin and Houston.

In a bid to kickstart integration efforts, both firms are creating a new bonus pool specifically to reward partners for cross-selling and client referrals.

However, unlike some previous transatlantic mergers, such as the legacy Hogan & Hartson's 2010 deal with Lovells, there are no plans to further align remuneration systems.

Ranson says: "The bonus pot is a first move to make sure that the systems are clearly aligned; we will continue to review that but we feel we have got the structure in place as it needs to be at the moment."

The combined firm will be run by a six-person executive, overseen by a 10-person board. Governance will be shared equally, with Eversheds' CEO-elect Ranson and Sutherland managing partner Mark Wasserman as co-CEOs.

"The reality is the people sitting around that global executive are the executives of each business," comments Ranson. "You have a joined-up group of individuals seeing things that are common for both businesses and that is an effective governance structure."

At the UK firm, the executive consists of Eversheds' incoming senior management team: Ranson, Ian Gray and Keith Froud, who will be taking up new roles in May as chief executive, executive partner and managing partner respectively. The Sutherland contingent is Wasserman, real estate head Victor Haley and insurance partner Thomas Gick, who will be replaced in April by corporate partner Cynthia Krus.

The board will include Ranson, Froud, Eversheds chairman Paul Smith, one regional managing partner from Eversheds and one member of its existing board, who will rotate on a quarterly basis. Sutherland will field Wasserman, Gick (replaced by Krus in April) energy partner Benjamin Clark, corporate partner Robert Pile and tax partner Eric Tresh.

While it will be years before the merger can be properly judged to be either a success or failure, reaction to the union to date has largely been positive, despite a degree of scepticism about the extent of alignment, particularly given the speed with which the two firms have come together.

One Eversheds partner comments: "There is the management change and a bit of branding adjustment but in general terms, it's business as usual. We don't need to make that many changes."

Another partner highlights how integration efforts between the two partnerships are already underway. "There have been lots of discussions between M&A partners on both sides of the Atlantic and we are all feeling very positive about the possibilities it will bring for introducing opportunities and clients."

The two leaders are optimistic that Eversheds Sutherland will not suffer some of the integration difficulties experienced by legacy SJ Berwin, which filed for administration in January after longstanding issues with capitalisation and profit distributions that pre-dated the merger with KWM.

"[That] was a culture problem," says Wasserman of SJ Berwin's demise. "That's why we've spent so much time putting our people together…It's about having people aligned in what they do."

"Having a common culture with shared values is absolutely essential to making this work," Ranson adds.

"KWM did not try to get partners to understand that doing things that help the combined organisation was particularly important. We are going to spend a lot of time focusing on that," he concludes.

 

IN NUMBERS

Eversheds

• Lawyers: 1,400
• Equity partners: 118
• Revenue 2015-16: £405.5m
• PEP 2015-16: £742,000
• Offices: London, Birmingham, Cambridge, Cardiff, Edinburgh, Ipswich, Leeds, Manchester, Newcastle, Nottingham, Belfast, Beijing, Shanghai, Hong Kong, Paris, Munich, Berlin, Hamburg, Baghdad, Erbil, Amman, Doha, Singapore, Abu Dhabi and Dubai
• The firm also has access to roughly 500 lawyers through its non-integrated Eversheds International network

Sutherland

• Lawyers: 400
• Equity partners: 86
• Revenue 2015: $301m (£241m)
• PEP 2015: $1.02m (£816,000)
• Offices: Atlanta, New York, Washington DC, Sacramento, Austin, Houston, London and Geneva