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A&O and Shearman set to create new global mega firm

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Magic Circle giant 🤝 US player

Magic Circle law firm Allen & Overy (A&O) and US giant Shearman & Sterling have announced they plan to join forces to create a new global mega firm.

The new outfit will be known as Allen Overy Shearman Sterling, or A&O Shearman for short, and become the third largest integrated law firm in the world with 3,900 lawyers across 49 offices and approximately £2.7 billion in combined revenues.

In a joint statement issued this afternoon, the firms said the merger had been “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 proposed merger is subject to customary closing conditions, including a vote of the partners of each of the respective firms, the statement said.

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Wim Dejonghe, senior partner at A&O, said:

“This combination of two great firms is such an exciting step for us. Both firms have a history of excellence, and 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, added: “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 accelerate our 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. We have both always placed great emphasis on attracting and retaining top talent, were early to globalize, and are relentlessly focused on quality, excellence, and collaboration.”

The news comes just weeks after Shearman and fellow US player Hogan Lovells decided to call an end to negotiations over a proposed tie-up. In a joint statement at the time, the duo said that while “deeply impressed with each other’s business, practices and people”, a tie-up at this moment was “not in the best interest of either firm”.

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77 Comments

🫨🫨🫨

Fuuuuuuuuuaaaaarkkkkkkkkkkkkkkk MEGAFIRM DOLLAAAAAAAAAA

2nd year LLB

Wow, the magic circle is crumbling!!!!!! anyone know if slaughters are raising?

Roger dodger

Crumbling 😂 saving a dying whale I think

.

So is this going to be a us firm or a British firm?

Both

An awesome bang-for-your-buck blimey firm, mate.

Socrates

A & O hasn’t been a British firm for 25 years

Anonymous

Why tho

John

A&O wants a bigger US presence and a tie up with an established US firm is the quickest way to do it. Their balance sheet doesn’t match many of the US firms that are a similar ‘calibre’ (K&E, Cleary etc) so a merger with most of them wouldn’t result in shared equity which often ends in an awkward dynamic. Shearman have a good US client base and decent balance sheet but not so good that they are difficult to match with A&O, plus they have lost key people in recent years and are in a more vulnerable position than most US firms, giving A&O bargaining power for shaping up any newly merged firm that they wouldn’t have with other US shops

Andrew

Will other magic circle firms be forced to follow suit in order to offer a truly global reach to their international clients?

Dontmindme

The acronym ASS-O

John

Kick Ass-O!

Question

Will A&O salaries be raised?

mightconsider

Way too many “&s” on the new name.

Logic Boy

One?

Lol

Loooool is this a joke. If true, the magic circle is well and truly dead

Osman

A&O has been chasing Freshfields’ US success for a while without luck. This deal I supposed establishes the US presence they so crave. Now my question is, will S&S NQs get a salary haircut or will A&O make a statement with this takeover by matching the rate S&S pays NQs currently under this new entity? This should be interesting.

Bob

A&O are absolutely not going to raise all existing salaries to S&S levels, lmao. Don’t get your hopes up.

Vv

So it’s a US magic circle hybrid? What’s the NQ salaries gonna be then? 200k? Lol. The money they have will be a madness

Lol

Those that apply, “I always wanted to join a U.S. firm because of the small teams expertise in PE and funds but also wanted to join magic circle because of their development in tech and being a full service. I thought why should choose between two and here we are…”

C

But April fools was last month..

Don’t watch

The devil works hard but legal cheek works harder. Blimey! It is a Sunday!!

Anon

But this is the biggest city legal news in decades.

Anonymous

Best comment lol

D

Imagine if you did VS at both these firms abs accepted one of them, and you bad mouthed one of them or they don’t have a good view of you..but awkward for you lool

🤠

DDD good one 😂

:D

DDD LLL

The important stuff

So when will it officially come to fruition and how does it affect lawyers salaries

Plebius

The partners of both firms have to vote to approve it. It will likely take 6-12 months finalise. Salaries won’t change anytime soon, but if the merger succeeds and results in growth then pay should increase in the long-term.

Maybe

A&O and S&S will consider the proposal for A&O and S&S and the partnership of A&O and S&S will determine whether to raise the salaries of A&O and S&S associates of A&O and S&S.

Barney the tree

Say A&O and S&S one more time

C

Yummmy moneyyuyuuuu

Associate

With the way things are at Shearman, they got let off the hook big time ….

Anon

What’s going to happen with salaries?

Insider

TBD apparently all existing S&S counsel/associates will be paid the same US rates during the 2-year transitional period.

We've been here before...

This is what happened when Lovells merged with Hogan Hartson. All the London Hogan Hartson partners and associates were gone within the 2 years…. same thing will happen here.

A&O London salaries won’t change, the same way Lovells salaries didn’t change / were never affected by anything on the US side once it became Hogan Lovells.

A&O 4PQE Shane McMahon

HERE COMES THE MONEY!

Anon

According to the solicitor’s Roll and the A&O website, you do not exist lol.

Anon

The devil will be in the details here. Most of the partners – particularly the US partners – at Shearman are used to paychecks which A&O can’t really afford to match. So to sell the merger (really a takeover) to them they’ll have to make very generous guarantees to induce partners to stay. But unless they then generate massive billings – which is definitely not a given in the current economy – the firm will be left with liabilities they can’t hope to plug.

Anon

For everyone gushing over salaries. S&S only pay 20k more. It wouldn’t be out of the realm of possibilities to match, but, we also know the A&O partnership are proper stingy. They don’t even have a deliveroo allowance ffs 😂

A&O 5PQE

Well that explains the recent new approach within the firm to salary banding

Future trainee

Please elaborate

1234

elaborate?

Gammon

A&O 5PQE = £155k = less than what a trainee at Sidley or K&E earns LMAO

Jaded

The merger absolutely no one wanted or needed, but guess we’re getting anyway…

Incoming US Firm Trainee

Shearman have been bleeding leading partners and clients for some time now – A&O clearly in charge here and likely have engineered the best parts of the deal.

Overt reputation management for S&S, but A&O have picked up a decent US practice – let’s see how this new firm flexes it’s muscle.

How will W&C, CC, Latham, Skadden and Kirkland respond? Shrug.

Anyone in the know?

Is Freshfields gonna merge next? Are there any realistic US candidates?

Joker

Merge with Fried Frank to become Fried Frank Freshies

Go away

No way. They have a decent US practice and slowly building their way up (they have swatted a number of top US lawyers from the likes of Cravath etc for their US outfits).

Mergermeister

Fried Freshfields Frankfurter Bruckhaus Mit Deringerchips On The Side

CC 2PQE

no, fbd are a class above a&o right now on both sides of the Atlantic and don’t need to plug a hole with a second-tier us shop.

Dansk

so Shearman, on some level, isn’t good enough for Hogan Lovells, but good enough for A&O? mind boggles.

Other way around

Or maybe Hogans is not good enough for Shearman…

Anon

I suspect Shearman wanted a proper merger with Hogan Lovells, which didn’t wash with the partners at HL. Shearman now seems to have accepted they’re screwed and is accepting a merger in name only with A&O.

Rip magic circle

But at least clifford chance have a swimming pool… oh wait (they’re moving out)

What we really want to know

How does this affect lebron’s legacy?

Anon

Seems like Linklaters is left in the dust after this being the least profitable among the MC firms and whose US practice is practically a joke (ignoring S&M). Unsurprising when it has wasted time and resources on the wrong things while the other firms pulled ahead in the US

Links forever

Secure a trainee contract first fresher

John

When it comes to high end M&A in London, or global restructuring mandates, there is no one I would rather have as a board room adviser to me than Links.

US associate

You can’t be serious. Shearman may be a bad example, but what about K&E, Latham, W&C, STB, Milbank, PH, Akin?

MC Ass

They have some good lawyers (mostly ex-Links / A&O / CC), but the consistent quality simply isn’t there. At the mid level, which is really the engine room of getting good work, the likes of STB and K&E are staffed mainly by average senior associates looking for a couple of years big payout before going in house.

Bubbleboy will not be stopped

A&O don’t even have a Deliveroo allowance…Shearman have been crumbling and this will just let their complacent partnership paper over the cracks with a bloated low margin MC beluga. #midmarket4eva #someoneplsfeedtheA&Ojuniors #shearmanstoppedbeingwhiteshoein1897

George

A number of underperforming associates were asked to leave recently. A&O’s focus is on the crown jewel – that is, Shearman’s US practice – and so Shearman’s UK office may be abandoned in its entirety. This would arguably be the most convenient to avoid discussions around the US/UK pay disparity. Baggers can’t be choosers.

Anonymous

Given that A&O’s new headquarters is going to be significantly smaller than its current one, it would strongly imply that it won’t be keeping all the associates it’s just picked up from S&S. To the extent it wants the London office of S&S, I suspect A&O will only want a small number of very profitable partners plus those partners’ deal execution teams. Everyone else can be managed out over the two-year transition.

Anonymous

No wonder some S&S associates quit without a new job. Complacency kills.

US firm

Do A&O really not have a deliveroo budget?

Anon

Shocking if true, do associates have to pay out of pocket for working late? I would quit for that reason alone.

A&O Trainee

No, we’re given an allowance for the A&O canteen.

Themoneyalwayswins

Playah. Big City D Playahs!

Wow

Rumour mill is that one of Macs and/or Travers will be doing the inverse of this in merging with a US mega firm to provide a UK presence. Consolidation seems to be the new trend in the sector atm.

Separately I wonder which law firm advised each party in this merger – anyone know ?

Gonzo

Davis Polk and Simpson Thacher.

BK

Lazard is serving as financial advisor and Simpson Thacher & Bartlett LLP is serving as legal counsel to Allen & Overy.

Davis Polk & Wardwell LLP is serving as legal counsel to Shearman & Sterling.

Joe

Shouldn’t they be able to advise themselves? What a waste of money…

Assoc

You can’t sue yourself, a fact which underpins the entire commercial law industry in London. A legal opinion on a debt market issuance with will cost in the thousands for that reason.

Joe

Right.

Slaughter and May operates as a partnership in which each partner has unlimited personal liability. That’s how much they trust their own advice.

What sort of a message does this send to A and O’s clients? “Yeah we couldn’t advise ourselves as we’re too scared of giving shit advice and not being able to sue ourselves”.

Jim

You reckon S&M doesn’t have insurance as they ‘trust their own advice’? I would scrub out for your commercial awareness questions …

Lool

Loool Joe’s comment is brill – good troll comment. I swear some of these aspiring lawyers or lawyers should think of switching to comedy from these liners on comments on legal cheek 🤣

Kirkland NQ

Lol the things that lot will do to get a sweet lambo on their drives. Sad.

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