Editor's comment: Merging with Godot
Whatever your view of the proposed tie-up between Lovells and Hogan & Hartson, what many managing partners on both sides of the pond will be thinking is what - if anything - the talks mean to their strategy. Should UK firms be dusting off those US ambitions?
October 14, 2009 at 08:04 PM
3 minute read
What happens if the transatlantic merger arrives?
Whatever your view of the proposed tie-up between Lovells and Hogan & Hartson, what many managing partners on both sides of the pond will be thinking is what – if anything – the talks mean to their strategy. Should UK firms be dusting off those US ambitions?
Already there have been claims mounting for two years now that US firms outside of Manhattan's elite are starting to think in earnest about substantive European mergers. Yet there are many reasons to doubt this scenario. Transatlantic mergers of equals have hung heavy like Godot over the global legal market for the last 15 years – always expected, transfixing those who wait, but never arriving. Clifford Chance and Rogers & Wells and the creation of DLA Piper are as close as we've come. But the former proved too mid-market and too turbulent and the latter created a different kind of global commercial firm – nothing wrong with that, but it's not what everyone had mind. Neither deal changed the market – if anything, Rogers & Wells set it back.
Progress was so slow in part because US and UK law firms, until very recently, knew so little about each other. This point is often underestimated. Even now the majority of partners at major UK and US firms have only a sketchy understanding of each others' market; 12 years ago, when the magic circle first began blundering around Manhattan, they knew next to nothing.
With both sides having, through painful experience, garnered a little more local knowledge, the chances of pragmatic deals – those that could happen and deliver something – have improved as expectations become more realistic. And the most likely source of pragmatic deals will be America's sizeable band of upwardly mobile firms with national practices.
Ideally you are looking at a top 60 US practice with a bluechip client base, a track record of expansion and a realisation that going credibly international ain't easy. Hogan is one of those firms, but there are 25 you could put in that camp. Even with a fairly broad definition of suitor there are only 10 UK firms that would vaguely fit the bill. And the most promising deals would be with 'chasing pack' firms like Lovells, Herbert Smith or Norton Rose. That means, if the deals start coming, 20-odd US firms could be in play for five UK suitors. Do these firms need to do a deal? Of course not, but such unions do hold the realistic prospect of taking these firms to a more ambitious place at home and abroad.
The final point is how the magic circle will react. Boxed in by expectations that London's big four is supposed to marry white shoe or stay single, the question is whether this stance survives if Godot finally arrives, only to hook up with someone else.
For more, see Lovells and Hogan – something transatlantic this way comes?; and for an American perspective on the proposed tie-up, see Hogan/Lovells – the view stateside and Hogan-Lovells union faces many obstacles.
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