A combination between magic circle firm Allen & Overy and US-based international firm Shearman & Sterling will create a unique global legal giant, the two practices said as they last night revealed plans for a merger.  

The announcement follows the decision in March this year to call off a proposed merger between Shearman & Sterling and Hogan Lovells after weeks of talks. That tie-up would have created a $3.6bn practice - comfortably inside the global top five. A&O's previous attempt at a transatlantic merger, with US firm O’Melveny & Myers, was called off in 2019.

Under the new plan, Shearman & Sterling would join Allen & Overy in a $3.4bn (£2.74bn) firm named Allen Overy Shearman Sterling. It would have 3,900 lawyers and 800 partners across 49 offices worldwide. A&O Shearman will be the only global firm with US law, English law and local law capabilities in equal measure, the announcement claimed. 'This merger is driven by clients’ needs for a seamless global offering of the highest quality and depth to support them in navigating an increasingly complex legal, regulatory, and geopolitical environment,' the announcement continued.   

Both parties claimed to see advantages in the deal. Shearman & Sterling will gain access to a dramatically expanded ‘rest of the world’ offering across practice areas, the announcement stated, while Allen & Overy 'will benefit from increased board-level recognition and expanded access to a corporate client base in the US'.

Wim Dejonghe, senior partner at Allen & Overy, said: ‘Together we think A&O Shearman will be a firm unlike any other in the world. We have listened to our clients and their requests for the highest quality advice to help navigate the demands they face, and to do so in an integrated and globally consistent way. We, A&O Shearman, will do this by accelerating our ability to bring the best of both firms, regardless of geography.’

Adam Hakki, senior partner at Shearman & Sterling, said: ‘Client need for global elite firms has never been greater. They are calling for integrated global legal solutions and advice: merging with Allen & Overy will dramatically accelerateour ability to meet their needs in an increasingly complex environment. Allen & Overy is an outstanding firm whose work we have long admired and thought of as a kindred spirit.' 

The proposed merger is subject to a vote of the partners of each of the respective firms. 

Tony Williams, principal at Jomati Consultants, said the deal made strategic as well as tactical sense. ‘A&O has made it very clear that it wanted and needed to be significantly more present in the states, while after the breakdown of the Hogan Lovell talks Shearman needed to announce something.’

Williams pointed out that both firms have recently done preparatory work on mergers and were able to move quickly. However he was cautious about predicting more such mergers in the immediate future. ‘The four largest magic circle firms would love to do deals in the states, the US market is significantly more profitable,’ he said. US firms, on the other hand, ‘don’t generally see the need for a massive international presence. The number of US firms willing to enter serious merger discussions at any one time is very limited.’

 

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