US national giant Reed Smith has finally brokered a deal to merge with Richards Butler's legacy Hong Kong arm, the US firm announced today (19 October).

The deal, which goes live on 1 January, 2008, will see all 28 Hong Kong partners join Reed Smith's partnership.

The move follows prolonged talks between the US-based firm and the profitable Hong Kong practice, which have been ongoing since Reed Smith's merger with Richards Butler's UK arm in June last year.

The stumbling block for the Richards Butler Hong Kong arm had been the significance difference in profit per equity (PEP) between the Reed Smith partners and themselves.

While Reed Smith reported PEP of around $940,000 (£461,000) last year, it has been widely reported that the Hong Kong partners have each trousered more than £1m per year.

The US national firm will now have more than 110 lawyers in Hong Kong as well as an operation in Beijing and is also in the process of attaining a license to practise in Shanghai.

Other notable recent mergers for the expansive US firm include its tie-up with Chicago outfit Sachnoff & Weaver, announced in October last year. The deal gave Reed Smith 140 lawyers in Chicago focusing on work including securities and securities litigation.

Following the completion of the Hong Kong tie-up, the firm will have more than 1,500 lawyers worldwide and annual revenues in excess of $1bn (£490m).

Reed Smith managing partner Greg Jordan commented: "A key objective of our strategic plan has been to develop a leading presence in the commercial business centres most important to our clients. Hong Kong, Shanghai and Beijing are clearly among those key markets."

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