Lessons learnt from previous merger help drive deal forward, Pui-Guan Man and Elizabeth Broomhall discover

When counting down the days to a holiday, that 'to do' list can often seem a little daunting. But for most, pulling off an international merger deal is not one of the tasks on the agenda.

SJ Berwin management duo Stephen Kon and Rob Day (pictured, top left and centre) have been enjoying a much-needed rest since signing an agreement to merge with Sino-Australian firm King & Wood Mallesons (KWM) at the tail end of July. 

The deal, which marks the first major merger of a UK and a pan-Asia-Pacific law firm, is certainly significant. And while the tie-up has its detractors, most notably in the Australian market, where some legacy Mallesons Stephen Jaques partners felt the firm should have set its sights on a UK firm higher up the rankings, both SJ Berwin and KWM managed to drive the merger through with a sizable majority.

The UK partnership is understood to have unanimously backed the union bar a handful of abstentions, surpassing the 75% quorum required. Meanwhile, KWM's Australia partnership, which conducted a vote by show of hands, is thought to have gained around 88% approval, while nearly 100% of the firm's China's partnership and all of its Hong Kong partners voted for the deal. 

SJ Berwin's first connections with KWM stem from a five-year relationship between former SJ Berwin senior partner Jonathan Blake, who now co-heads the firm's international funds group, and legacy King & Wood partner Zhang Yi, who specialises in private equity investments.

Key shared clients for the firms include Macquarie and Westfield, both of which have a strong presence in the Australia and UK markets, with the duo speaking to 20-25 core clients to gauge reaction to a potential merger.

"I only see opportunities, not risks – we know our clients support a combination of this type. Part of the challenge of KWM is that we are a challenger to the existing firms with something very different," says KWM global managing Stuart Fuller (pictured). 

"The only risk I can [see] is that we will continue to strengthen the offering we give to our clients and that will make some of our competitors more anxious."

For SJ Berwin, the move opens up Asian markets previously unreachable through the UK firm's small Hong Kong and Shanghai presence. SJ Berwin funds co-head and head of Hong Kong George Pinkham says: "Jonathan Blake and I had been thinking for some time that Asia was extremely important and that we were probably slow in setting up an office – we were late to the table and probably too timid. 

"We're a very young firm and we don't have an established network of offices like some other firms have. So although we felt Asia was significant, we hadn't really made an impact."

Meanwhile, the obvious draw for KWM is the addition of English law capacity. Fuller says: "You need to have deep and critical English law capability to be an international firm. SJ Berwin puts us into that league of size, but also credibility of being able to do these transactions and practise under these laws. In Australia, it helped because a lot of the competition in that market now is against English firms."

SJ Berwin's marquee funds practice also provided added appeal, which alongside the European and Middle East offices will continue to lean on the UK brand in the medium term, using the King & Wood Mallesons SJ Berwin moniker.

Pinkham says: "The idea is that there is goodwill behind the SJ Berwin name, and it's just a case of however long it takes to get that goodwill transferred to the new name. The idea is to assess the impact in about a year, but it is agreed that where it's most important to get it right is the funds team. If there is a need to continue using the SJ Berwin name we will.

"Mallesons is one of the top firms in Australia, but is not particularly well known for funds. What we would like to do is make the international funds team a truly global one, so to strengthen in Australia and China. We're also very keen on becoming a strong force in Southeast Asia, and we'll do whatever necessary to achieve that."

Integration is always the biggest challenge in a merger, and more so given the cultural differences inherent in this combination. Indeed, sources have indicated that some UK partners have expressed concerns about being managed by a Chinese firm – something that SJ Berwin itself refutes given the proposed verein structure.

As Norton Rose Fulbright's global co-chair Stephen Parish comments: "I don't know where the centre of gravity of the politics sits between Beijing and Sydney as far as KWM is concerned, but I would have thought Beijing has a lot of influence. I do not know where SJB will fit into this, but I admire the fact that they have gone down this route."

Nonetheless, a key shared objective could help outweigh these potential challenges – the search for a US merger partner. With Kon and Day getting back into the swing of things as lawyers trickle back from their August holidays, the real hard work is just about to begin.

FACT FILE: KING & WOOD MALLESONS SJ BERWIN

Combined revenues circa $1bn (£645m)

Offices 30 across China, Hong Kong, Australia, Europe, the Middle East, Japan and the US

Total lawyer count 2,786, including 553 partners

Go-live date 1 November