The writer is our foreign correspondent based in the UK
A boom in legal tie-ups is creating opportunities for consultants looking to win work advising on everything from integration to culture. Law firm mergers can be a nightmare to execute. High-value partners and clients can walk out the door if one gets it wrong.
Deloitte, KPMG, McKinsey, FTI Consulting and BDO are among the advisory firms to have landed roles on a string of law firm mergers in the past two years.
Law firms can manage much of the pre-merger planning and due diligence themselves, but may need more help and an outside perspective as the deal progresses, according to Brian Salsberg, global head of M&A at FTI Consulting.
The New York-listed advisory firm was appointed by Hogan Lovells and Cadwalader to guide integration planning for their merger, which completed on 1 July. The multi-month project involved managing client conflicts, aligning pay models and reviewing office seating and gifting policies.
“They have very capable people in both firms, who did a lot of pre-work and pre-thinking on their own,” Salsberg said. “But having an external adviser who has experience and having an objective voice that doesn’t have a dog in the fight, so to speak, was helpful.”
Meanwhile, Winston & Strawn and Taylor Wessing instructed accountancy firm BDO to carry out a cultural analysis of both firms ahead of their June merger.
Winston Taylor’s chair Steve D’Amore told Bloomberg Law’s On the Merit’s podcast that the assessment was to “give us confidence in an empirical way that what we were feeling in ad-hoc interactions was validated by a deep study of cash firm’s culture.”
This included a review of firm policies in areas such as pro-bono work, sustainability, training and inclusion, as well as interviews with partners and associates. The two firms also brought in advisors from Big Four firms KPMG and Deloitte and marketing consultancy Wolff Olins to help manage the operational, financial and branding integration.
KPMG and McKensey also advised Allen & Overy and Sherman & Sterling on integration ahead of their merger in 2024. As well as consultants, some law firms have also turned to external legal advisors instead of representing themselves during merger talks.
Ahead of the Winston Taylor combination, Winston & Strawn hired A & O Sherman, while Taylor Wessing instructed Jenner & Block. Ashurst enlisted Davis Polk and Perkins Cole turned to Simpson Thacher ahead of their tie-up.
Legal consultants said previously that while external lawyers can help navigate complex issues such as compensation, tax and management structure, some firms are happy to use their internal teams for merger negotiations.
Cadwalader appointed Davis Polk as legal counsel, but Hogan Lovells relied on its own M & A lawyers and did not appoint outside lawyers. McDermott Will & Emery and Herbert Smith Freehills also didn’t hire external legal counsel for their respective mergers with Schulte Roth & Zabel and Kramer Levin last year.
A competitive process: Looking ahead, the race for merger work is heating up among legal advisors and consultants as the industry gears up for more transatlantic deals.
Consultants can still tap into their relationships with law firm leaders, but more merger mandates are being contested through competitive processes.
“I can’t speak to all (of the recent mergers), but definitely for some of them, it was a competitive process where the leadership of these (law) firms would meet with a few (consulting) firms that they believe have the qualifications and then select an advisor,” said FTI’s Salsberg.
“My prediction is that as more and more of these things get announced, probably like in other industries, there will be a set of advisors who do more of them.”
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