King & Wood Mallesons (KWM) and Morgan Lewis have called off talks over a tie-up that could have created a firm with combined revenues of almost $3bn.

Discussions between the two firms had taken place during the past few months, led by the US firm's chair Jami Wintz McKeon and KWM global managing partner Stuart Fuller, with a multi-profit centre union using a Swiss verein structure one option under consideration.

The proposed merger would have created a global firm with offices across the US, Europe, Asia and Australia. KWM took in global revenues of $1.02bn (£714m) during 2015, while Morgan Lewis posted revenues of $1.84bn ($1.48bn) for the year.

KWM has long sought a US tie-up to complete its global footprint, although given the difficulties in finding a suitable partner it previously switched its focus to a best friends approach.

The firm's European partnership is currently renegotiating its finances following a stream of partner resignations, which prompted it to halt a planned £14m recapitalisation programme. At a meeting in London last week (10 November), partners were told that the firm's Asian arm – which operates as a separate partnership under a Swiss verein structure – was willing to offer financial assistance.

The offer is conditional on European partners stumping up around £14m to recapitalise the firm and agreeing a 12-month lock-in. Roughly 60% of KWM's European partners will have to agree to the deal, equating to around 70 of some 120 partners. Partners have until next week to make up their minds.

However, partners are continuing to leave the firm, with the latest including Germany intellectual property partner Michael Knospe, who is is joining Simmons & Simmons' Munich office with counsel Caroline von Nussbaum and supervising associate Massimo Bellitto-Grillo.

Last week, it was announced that global managing partner Fuller is to step down by the end of the year, prompting a rapid hunt for a successor. Fuller, who has been at the firm's helm since the merger of King & Wood and Australia's Mallesons Stephens Jaques in 2012, will remain as a partner of KWM and intends to return to full-time practice in Sydney in early 2017.