Clydes' merger talks with ailing US firm Sedgwick falter amid partner defections
Details emerge of discussions between struggling US firm Sedgwick and UK insurance leader Clydes as talks stall following partner exits
October 25, 2017 at 01:03 PM
5 minute read
Merger talks that could have seen UK insurance leader Clyde & Co play the role of White Knight to Sedgwick have faltered amid a spate of partner defections from the ailing US firm, according to sources close to the matter.
Three sources with knowledge of the discussions told Legal Week sibling title The American Lawyer that the pair had been in discussions for months about some kind of tie-up.
One source described the talks between Sedgwick and Clydes as "very bullish" as recently as three weeks ago.
One City insurance partner said: "I heard about this in the summer. The talks were pretty far advanced, I think; at one point it was said there was going to be a merger and people were deciding what they were going to do."
However, another source in the US said that Clydes' interest in a whole-firm deal had waned as Sedgwick's insurance practice lost groups of partners to rival UK insurance firm Kennedys in the US.
This year, Sedgwick's headcount has fallen nearly 35%, according to ALM Intelligence, with more than 45 partners departing the firm. In the past 30 days, nine partners have left the firm.
A source within Sedgwick said the firm had lost more than 20% of its annual gross revenue as of June, when the firm laid off a number of staff members in response to partner defections. The firm's revenue has dropped by 18% since 2013, from $208.5m (£157.5m) to $170.5m (£128.8m) in 2016.
The string of departures to Kennedys began shortly after Sedgwick's New York office lost 12 lawyers, including four partners, to Am Law 200 firm Robinson & Cole in late August.
In early September, a six-lawyer group from Sedgwick's New York office, including former office managing partner John Blancett, left for Kennedys. Sedgwick's Chicago office managing partner, John Scheiner, made a similar move to Kennedys in early October, bringing with him two other partners: Richard Geddes and Jennifer Quinn Broda. Kennedys' latest raid on Sedgwick came on Monday, when the firm announced it would be bolting on Sedgwick's former outpost in Bermuda.
That practice, now known as Kennedys Chudleigh, was led by Mark Chudleigh, who declined to comment on the merger talks between Sedgwick and Clydes. Chudleigh was considered a rainmaker at the firm, whose practice included work on a specialised insurance product known as the Bermuda Form. Some of that work was handled by lawyers in the Chicago office, according to a fourth source familiar with Sedgwick.
"Clydes is clearly losing the crown jewels they would want as part of a merger," one source with knowledge of Sedgwick said.
A related problem to the mounting exits that could also explain Clydes' cooling attitude towards a whole firm deal, is the growing amount of partner capital Sedgwick owes to those leaving the firm. One former partner said Sedgwick typically requires partners to carry a capital account equal to about 55% of their yearly compensation, with this money then paid back in 36 monthly installments.
Lawyers to have left the firm in recent months, who spoke on the condition of anonymity, said there had been little communication from firm management regarding the string of departures. One former lawyer said management sent around an email in response to a Law360 article from August that detailed defections from the firm. The message was to encourage lawyers to focus on servicing clients.
"It was business as usual to some extent," the lawyer said. "But it's kind of hard not to notice people leaving and offices being empty."
Sedgwick has 11 offices – in Chicago, Dallas, Kansas City, London, Los Angeles, Miami, New Jersey, New York, Orange County, San Francisco and Seattle.
Clydes has been ramping up its presence in the US, adding offices in Los Angeles, Washington DC and Chicago in the last year.
The firm now has some 50 partners and 200 lawyers in the US, operating out of nine offices across Atlanta, Long Beach, Miami, New Jersey, New York, San Francisco, as well as those listed above.
A spokesperson for Clydes said: "As with all major businesses we continuously study our markets for opportunities and, at any given time, we may be in discussion with a number of individuals, teams or firms . As a matter of policy we never comment on such discussions until it is appropriate to do so."
In 2016-17, Clydes revenue broke £500m for the first time, rising from £447.4m to £508.1m, a 14% increase. However, profit per equity partner fell by 2% to £650,000, a drop the firm attributed to an 11% increase in its partner numbers, which rose by 40 to 397.
Sedgwick managing partner Michael Healy did not respond to a request for comment on the stalled merger talks.
Additional reporting by Joseph Evans
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 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.
You Might Like
View AllKirkland, Debevoise & Nishimura Advise On $8.2B Japanese Acquisition of Resolution Life
Covington Swipes Mishcon Insurance Disputes Head for New Practice Launch in London
3 minute readAsia Pacific Hires: Global Firms Kick Off Q4 with Flurry of Team Hires Across the Region
10 minute readTrending Stories
- 1South Florida Attorney Charged With Aggravated Battery After Incident in Prime Rib Line
- 2'A Death Sentence for TikTok'?: Litigators and Experts Weigh Impact of Potential Ban on Creators and Data Privacy
- 3Bribery Case Against Former Lt. Gov. Brian Benjamin Is Dropped
- 4‘Extremely Disturbing’: AI Firms Face Class Action by ‘Taskers’ Exposed to Traumatic Content
- 5State Appeals Court Revives BraunHagey Lawsuit Alleging $4.2M Unlawful Wire to China
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
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