HSF's American Dream: What Will a U.S. Merger Mean For its Asia Practice?
Last year, HSF announced the closures of its Seoul and Kuala Lumpur offices. It has also recently rejigged its Singapore offerings and cut some Hong Kong staff. How much of that was so it would sit pretty for an American suitor?
November 13, 2024 at 07:52 AM
5 minute read
Law Firm MergersLaw firm mergers happen in good times and bad.
That was my first thought when Herbert Smith Freehills announced its landmark merger agreement with New York firm Kramer Levin Naftalis & Frankel. It’s not a done deal, as it’s still subject to partner voting. But so far, reception has been quite warm, despite the announcement lacking in A&O Shearman’s fanfare with fancy websites and slick marketing.
I remember distinctly when legacy Herbert Smith was chasing tails in the Southern Hemisphere. In 2012, it merged with leading Australian firm Freehills—I had a bit of a front-row seat to that combination, having been employed by the joint entity as its communications manager months after the two firms wedded.
Australian firms were all the rage back then, particularly for global players that had huge China plays and ambitious China strategies. It was the early 2010s—a time when Chinese state-owned enterprises were empowered by Beijing’s “Go Abroad” policy, looking to invest billions of dollars into energy and natural resources assets. That became a key driver for most of the Australian combinations back then. Linklaters had a thing with Allens, Ashurst combined with Blake Dawson, and King & Wood became the first Chinese firm to merge with a foreign practice.
Back then, being able to tout a seamless Asia-Pacific practice was a distinguishing factor for big law firms. It made firms cool and important, and HSF successfully sold itself that way for years.
But that phenomenon didn't last. Things began to change after China started cracking down on corruption and all the big billion-dollar buys fizzled. The APAC playbook went back to becoming just plain old Asia and Australasia. It never did quite take off again—not in the same way.
Now, the viability of law firm business has shifted. HSF, like many of its U.K. counterparts, set off to fulfill its American dream.
One source told Law.com International that a U.S. merger has been a top mandate for HSF’s management this year. Another said, “they’ve been talking about doing something for years.”
It’s not hard to see why the firm feels the need to push into the U.S., even if a Trump era may herald more volatile times.
Some lawyers I spoke to said that Trump’s nationalist, "America First" stance may lead to a boom in the U.S. economy, but only on its own terms, with little reliance on countries beyond its borders—especially China. So, the timing for a U.S. play is “quite crucially now,” one Hong Kong-based U.S. law firm partner said.
But what will this bold push mean for HSF’s Asia practice, where it counts seven offices—in Bangkok, Beijing, Shanghai, Singapore, Tokyo, Jakarta and Hong Kong?
To be sure, a merger with Kramer Levin would be more of a plug-and-play compared to A&O Shearman's massive feat, which has already pushed forward with layoffs and office and business unit closures. Kramer Levin has just 330 lawyers in five offices, one of which is in Paris, where HSF also has an office that recently celebrated its 60th anniversary. Kramer Levin's Paris office will be spun off and excluded from the merger.
In terms of footprint in Asia, Kramer Levin has much to gain without messy integration issues. According to HSF’s website, the firm has over 270 lawyers in Asia, although some who are notably experienced in Asian deals and matters are based in offices outside of the region.
About 120 of those lawyers are dispute resolution experts. That's worth noting since both the Hong Kong International Arbitration Centre and Singapore International Arbitration Centre’s latest statistics show that U.S. parties have consistently been their top users. HSF is well known as a dominant player in the international arbitration space in Asia.
But one HSF source said that, internally, the firm's U.S. merger is considered more of an “M&A play,” much like the Freehills merger was 12 years ago.
In Asia, HSF has also thrived by building local alliances. In mainland China, it operates a joint operation with domestic practice Kewei Law Firm, which has 12 lawyers, half of whom are partners. In Jakarta, it has a long-standing association with domestic firm Hiswara Bunjamin & Tandjung. And in Singapore, it has a Formal Law Alliance with local practice Prolegis.
Singapore is HSF’s second-largest office. (Its largest is Hong Kong, where it counts just over 100 lawyers). Singapore is also where the firm has spent recent months rejigging its offerings. It did away with its aviation practice, which resulted in the departures of several partners this year. Last year, it added a private capital capability and also launched a litigation practice at Prolegis. A few months ago, it decided to double down on its energy practice by hiring from King & Spalding and White & Case.
Sources at HSF told Law.com International that the firm had been making moves so it would be more palatable to potential merger partners. This year it has been shedding team members in Hong Kong, including dispute practice associates and business development and marketing professionals, sources say. And in recent months it shuttered two Asian offices—Seoul and Kuala Lumpur.
One remaining question about the merger revolves around the two firms' mismatched profit per equity partner (PEP). Kramer Levin’s 60 equity partners take home about $2.4 million in profits each year, while HSF’s estimated 300 equity partners draw $1.6 million.
Maybe, despite the American fixation with profits, it’s not always about toe-to-toe PEP.
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Related Stories
View AllYou Might Like
View AllMiles & Stockbridge to Combine With DC-Based Real Estate Finance Firm
4 minute readTrending Stories
- 1As Gen AI Acceptance Grows, Lawyers Race to Mitigate Risks
- 2Decisions Have 'Real-Life Consequences': Juvenile Court Judge Considered for Appellate Bench
- 3NY District Attorneys Ask for Level Funding Amid Statewide Drop in Violent Crime
- 4Texas Trial Boutique Matches Milbank Bonuses, Paying Up to $140K
- 5'Final Countdown': SEC Launches Nearly 800% Litigation Surge in October
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250