Credit: Shutterstock.com

It is easy to use the benefit of hindsight to say a deal was never likely. But Allen & Overy's ill-fated merger attempt with O'Melveny & Myers really did come close to achieving the near impossible.

Then again, few would have been surprised to see yesterday's news that the deal is off.

Agreeing to things such as a name and a basic remuneration structure should not be sniffed at. Many other firms have failed to get so close during transatlantic negotiations. Yet for all the growth and diversification benefits a merger would bring, it also threw up a few awkward questions.

Was the tie-up absolutely necessary? What lock-up system should be employed? How would it benefit A&O's banking and finance teams? What about New York? What dollar-pound exchange rate should be used for partner compensation?

The exchange rate point has been blamed as the culprit for the collapse, which is not quite as ridiculous as it sounds. Where partners sit on a lockstep ladder would require an agreed exchange rate, even if only to begin with, which could easily upset one group of partners. It could at least be argued that the recent fluctuations in the pound came at just the wrong time, when other issues had finally been resolved.

And yet while the value of the pound could have proved a death knell for the tie-up, it was clear well before the recent drop in sterling that it would not be easy to get this deal past partners.

It is one thing to agree basic terms and quite another to have literally hundreds of people sign up to them. Not even strong arm tactics – such as A&O's management threatening an open partner ballot – seemed to have much effect.

When large law firm mergers happen, they tend to be fairly quick and have the backing of a lot of people. In contrast, for A&O and O'Melveny, talks dragged on for about two years and numerous partners complained about being left in the dark. There were conflicting messages about how talks were progressing.

And even sessions designed to promote unity among both sides were sometimes dampened by something small such as a thoughtless remark, according to one person involved.

For A&O, the failed talks leave it back at square one. It now has to decide whether to seek out another suitor for a merger – which would probably prove an even more difficult task – or whether to try to build a credible practice there organically, which no top U.K. firm has yet managed to do.

For O'Melveny, the series of departures from its London office as well as its head of Brussels today leave it with a huge rebuilding exercise ahead. It also needs to decide what exactly it wants to be known for outside its traditional strength of U.S. litigation.

The merger failure also holds implications for other top U.K. firms, particularly Freshfields Bruckhaus Deringer and Linklaters, which will now have to accept that even the second tier of U.S. firms are all but out of reach when attempting a full-blown, financially integrated combination.

In short, it is hard to draw any positives from the whole episode. But perhaps a few lessons have been learned. Keeping up momentum is vital, as is keeping partners updated. And although some are sceptical of the idea, predicting macroeconomic uncertainty – especially in this market – has also become an important part of the process.