As one of the most significant mergers within the legal industry, the upcoming union of Shearman & Sterling with London’s Allen & Overy has seen Shearman keep its core US partnership primarily undisturbed, even amid a numerous partner departures. Reportedly, over 30 partners have exited Shearman since the announcement of the merger last year, although less than half of these departures have come from the firm’s US business, the focal point of this deal. This was clarified by Freddie Lawson, head of partner search at UK recruiter Montresor Legal.
Attracting Allen & Overy to Shearman was the latter’s robust M&A and litigation practices in the United States. These teams have sustained their performance, even while seeing a drop in rank among top revenue-generating firms. The Texas-based offices of Shearman also provide Allen & Overy with an opportunity to reinforce their energy and infrastructure departments, which are already solid outside of the US.
The firms, interestingly, have managed to retain partners ahead of the integration. This is a notable accomplishment since the merger is a period during which numerous attorneys often opt to leave the firm. For instance, the firms have offered forgivable loans to some of their top performers, as an insider familiar with the situation revealed.
Upon the finalization of the merger next month, Allen & Overy Shearman will rank among the world’s ten largest law firms. However, notable obstacles remain. Leadership from both firms will need to seamlessly blend their traditionally transatlantic cultures and pay systems and also expand their private equity practice to compete with major Big Law players.
Still, not every partner is willing to see out the transition. There is about a 9% decline in partnership, represented by the exits. Prominent exits include finance lawyer Ward McKimm, who drove Shearman’s UK office, and George Casey, a seasoned New York M&A partner whose departure was one of many from the firm’s real estate and intellectual property groups.
The merger between Allen & Overy and Shearman & Sterling is being seen as a rescue opportunity for the latter, following a decade of shrinking legal services market share. Even before the deal’s announcement, Shearman had seen a 40% decrease in partner numbers over the preceding decade.
Nevertheless, despite global activity cooling, Shearman has continued to succeed in the M& A sphere, especially within the healthcare sector. For instance, partners Daniel Litowitz, Derrick Lott, and Creighton Condon recently advised CVS Health Corp on its $10.6 billion acquisition of primary care provider Oak Street. Furthermore, the firm’s attorneys represented SAP SE in a $12.5 billion agreement to sell Qualtrics International Inc. to various investors, including Silver Lake.
The leading partners for these deals have stayed at the firm despite the impending merger. However, there have been partners like New York deals attorney George Casey who reportedly relocated to Linklaters this year, likely taking several chemical sector clients with him.
Both Allen & Overy and Shearman & Sterling implemented measures to avoid potentially damaging partner departures which could impact their financial health. One such initiative involves offering so-called forgivable loans to partners, which do not need to be repaid if they agree to remain at the merged firm for a specified duration.