Herbert Smith Freehills and Kramer Levin Naftalis & Frankel will vote in mid-February to secure an official merger on May 1, 2025, the leaders have explained; however, Kramer Levin’s 63-lawyer Paris office will not be part of the deal.

In an exclusive interview with Law.com, leaders of both firms explained how they plan to spend the coming months talking to their respective partnerships about the rationale behind the deal, ahead of a vote that requires 75% approval from both sides.

Kramer Levin co-managing partner Howard Spilko said the management was not taking the vote for granted and would be working on discussions “on a very concerted basis." Kramer Levin already had a partner meeting Monday.

Justin D’Agostino, HSF’s CEO, and Rebecca Maslen-Stannage, HSF’s chair and senior partner, will head the new firm and retain their current titles, with Kramer Levin’s co-managing partners— Spilko and Paul Schoeman—sitting on the new firm’s executive committee and other firm governance bodies.

Kramer Levin will also have representation on the combined firm’s global council, which HSF currently operates, chaired by Maslen-Stannage, to ensure that the “Kramer team is at the top table for the new combined firm”, D’Agostino said.

Although the merger will involve little geographic overlap, the one place outside New York where both firms have an office is Paris, where Kramer Levin’s operation will now spin off and not be part of the combined firm. The Paris operation was acquired by Kramer Levin in 1999 from legacy American firm Roger & Wells when it chose to break away from a merger with Clifford Chance.

The firm’s leaders stressed that, beyond Kramer’s Paris office breaking away, there were no plans to make cuts in any of the firm’s regions; D’Agostino said that there was no intention to change away from HSF’s current strategy regarding its “international platform."

HSF Kramer firm will also operate a U.S.-specific executive team that will oversee the day-to-day running of the combined firm’s U.S. business. The U.S. executive team will host practice representatives to ensure the U.S. business is “plugged in” to the firm’s “global ecosystem." It is expected, however, that the U.S. executive will be made up largely of people from Kramer Levin.

The leaders also set out a five-year investment plan that will target growth of the combined firm’s capabilities in private equity in New York, its class actions business, and its antitrust and CIFIUS-related specialisms, alongside a focus on growing its bench strength in U.S. energy.

A challenge facing the new leaders is how to marry Kramer Levin’s significantly higher profit per equity partner figures with HSF’s.

The leaders said they would be working on a remuneration structure that allows the firm to have one integrated profit pool but to remain competitive in the U.S. It is likely to be a combination of lockstep and merit-based pay, but the details are still being worked out, they said. They added they had no plans to de-equitize partners.

Maslen-Stannage said, however, that having a single profit pool was critically important to the firm.

“We will have transitional arrangements that make sure everyone continues to benefit from the value they bring,” she added, but added that they can still operate as a “true partnership” while still recognizing that “there might be more profitable regions” that are “remunerated accordingly."

‘Immediate Scale’

Talks between the two firms began in the summer, with HSF’s leaders approaching Kramer Levin, according to Schoeman, Kramer’s co-managing partner. “We were not specifically out looking for a merger,” he said, “but when Justin and Rebecca came to visit with us [in the summer] and laid out the vision for the combined firm, it was so immediately enticing and the logic so compelling that we moved forward on it with great excitement.”

He added the pair became co-heads of the U.S. firm in 2020 and were “alert to what is happening in the legal environment."

Spilko added that the deal was a “unique” opportunity that “gives us immediate scale and strength in a way that we could not achieve organically."

“When this opportunity presented itself to us, we saw it was quite unique, and that it would give us the ability to scale up immediately,” he added.

D’Agostino explained HSF “felt that gap we have by not having scale in the U.S. was something we want to fix."

“HSF is the last top-tier international law firm without scale in the U.S.,” said D’Agostino. “Kramer Levin is a premier U.S. firm with top-quality clients and people in New York, D.C. and Silicon Valley. And when you marry those, you create something very powerful and unique.”

HSF engaged consultants to help it find an appropriate merger partner “because it was such a huge priority for the firm to build in the U.S.” He said Kramer Levin emerged as the firm with ideal synergies and a cultural fit.

When asked about the recent departure of Barry Berke and his litigation group, a top practice for Kramer Levin, Schoeman said Berke's move was not tied to the pending merger. "Barry made decisions for his own reasons," he said. "But they were not merger-related."

Berke and four other top litigators left Kramer Levin to go to Gibson Dunn & Crutcher, about two weeks before the merger announcement. According to a source familiar with the timing, Berke began talking with Gibson Dunn around February 2024, before any serious talks with HSF.