Many have already declared victory, celebrating what would have been the creation of one of the largest firms by world-wide turnover, next to offices like Kirkland & Ellis, Latham & Watkins, Baker Mckenzie and DLA Piper and with an income of more than 2.5 million euros. After 18 months of contact between the English firm, Allen & Overy and the American Firm, O´Melveny & Meyers, the calling to be the main transatlantic merger of the year did not happen.
What went wrong? The firms affected speak of currency fluctuations and instability. However, it seems that there must have been more reasons to have precipitated the failed deal:
1. Economic and political interests
Those who were always supportive of the merger were the litigation partners of Allen & Overy. The strength of the litigation practice in the United States of O´Melveny caused an articulated interest from these partners, whilst certain commercial partners did not view the deal with such enthusiasm. On the other hand, RollonFriday, employees of O´Melveny, attempted to eliminate evidence of the American firm´s ties to Donald Trump, when they were negotiating to conclude the deal. Meanwhile in London they insisted on ´de-trumpifying´ the American brand, as O´Melveny was proud to be hired by the American public administration.
On the matter of the naming of the new firm, it is worth emphasising that despite the fact that the domain www.allenomelveny.com was registered, it did not seem like it was going to be the definitive name. According to the British pressthere were partners at O´Melveny irritated with the plans for the new brand and advocated to shorten the appearance of O´Melveny in the new naming to a simple apostrophe.
3. American Corporate culture vs English
It is common in American firms to hear complaints about British lawyers working less than them considering that in the UK they usually record 1,500 working hours yearly, whilst in the US many firms reach more than 2,000. This also affects conciliation and holiday periods. British lawyers usually respect their periods off more whilst the pressure for American firms and their lawyers to register more working hours causes them, generally speaking, to enjoy less and more interrupted holidays.
Regarding the partner remuneration system, in the case of Allen & Overy and O´Melveny, it was one of the cultural points that was left until the end. This is usually one of the greatest headaches in mergers between firms and that we have been able to observe both from a national and international level. Historically, the UK has dominated the lockstep compensation system in which the antiquity of the firm and the corporate spirit takes precedence as a key consideration. However, in the US, eat what you kill has dominated, a system in which the commercial aspect prevails. In the London legal profession, it is considered crude to be so economically centralised. Nevertheless, in the non-existent merger mentioned, this point was finally saved.
Culture is a critical matter in merger processes, as we confirmed during our last visit to Greenberg Traurig in Miami, where they told us how the merger was hindered with the British firm Berwin Leighton Paisner regarding a cultural matter, which prevented what would have been a transatlantic operation in 2016.
Conclusion Today, companies that intend to conduct business in the United States tend to count on American firms; and to be a true global firm, the market compels you to have a presence there, preferably in New York, so for British law firms this type of merger has become essential. For this reason, I am totally convinced that Allen & Overy will continue to search for the optimum merger. This operation that has allowed a definitive leap to the ever competitive but profitable American market.
About the Author
Gericó Associates focuses on helping law firms to improve their market positioning. He has been -joint his business partner Alfonso Everlet- the creator and driver of the Legal Marketing & Communications Awards, celebrated biennially in Spain.
Besides, he worked as Reputation Advisor of the Bankruptcy Administration of Banco Madrid, he takes part in World Law Congress Organizing Comittee and he is a collaborator of General Council of Spanish Lawyers. Speaker on the ICAM (Madrid Bar Association), ICAB (Barcelona Bar Association), Malaga Advocacy Congress, University Carlos III, etc.; he has had several radio and TV interviews about the current situation of the law firms.