Law: The transatlantic merger that is making waves

City law firm Clifford Chance's merger with both a German firm and a New York firm has sent shock waves through London - who is next? Is this radical development about to become a trend? By Jonathan Ames

CLIFFORD CHANCE'S announced merger a fortnight ago with New York firm Rogers & Wells and German firm Punder Volhard Weber & Axster is one of those watershed moments which will have a profound impact on legal practice - not just in the City and Manhattan, but around the world. For despite all the power and money that courses and sloshes around legal London, the really big players in the City form a comparatively small community. So when one of them does something radical and ground-breaking, the shock waves are felt deeply.

But whether those waves will translate immediately to a rush for transatlantic mergers remains doubtful. Many counterparts in the City admire Clifford Chance for its sheer muscle and tenacity in being able to pull off what has been contemplated and discussed furtively for years, but until now never chanced. And indeed, the result - the creation of the biggest law firm in the world - is not to be sniffed at.

For its part, Clifford Chance has taken an almost lofty stance since the announcement. Says Peter Cornell, the firm's managing partner in Europe: "The general reaction underlines that being first into a market provides distinct advantages. It also shows that the rationale for international firms to develop a global capability is compelling." As far as the future is concerned, Mr Cornell is clear: "What we are likely to see is other law firms accelerating their responses to meet the same client needs we have responded to."

Outwardly, however, the senior figures at Clifford Chance's main City rivals are playing their cards close to their chests. "We are not rushing to follow suit," says Alan Peck, chief executive at Freshfields. He continues guardedly: "We are concentrating on building our European network with an emphasis on integration and quality."

Likewise, another member of the City top five, Linklaters, appears to be taking a cautious view. It has been speculated that the Clifford Chance merger could hasten Linklaters' own plans for a more formal partnership link with the now six members of its year-old, European-based Linklaters & Alliance. And indeed, only last week, the alliance added its most recent member, Rome-based Gianni Origoni & Partners.

But Terence Kyle, the chief executive at Linklaters, is circumspect: "The [Clifford Chance] merger is a new element in the arena of competition among City law firms. But it is not going to impact on Linklaters & Alliance significantly in the short term. It certainly doesn't mean that we will be charging off looking for people to marry in North America." Having said that, Mr Kyle acknowledges that to retain global influence, City firms must not ignore the importance of the US market. "We have known for some time - indeed, well before the Clifford Chance merger announcement - that we will have to increase significantly our capacity in North America."

Mr Kyle is reluctant to speculate as to how other members of the top 10 club in the City will react. "Generally, I don't know what my competitors are thinking," he says. "However, the merger might well lead to other transatlantic combinations in the next year or two. But each firm will have to decide how best to pursue its own strategy in its own best interests."

Richard Tyler, the chairman of the European group at City firm Cameron McKenna, known as CMS, agrees. He says the merger will have "focused everyone's mind on the US". CMS has just closed its San Francisco office after a one-off two-year project and consolidated its US practice at its Washington DC office.

And the comments from another leading City player, Allen & Overy, highlight the increasing atmosphere for possible mergers at the top end of the legal marketplace. "We have had many approaches from leading US and European firms over the last two or three years which would comfortably have matched what Linklaters and Clifford Chance have achieved," says Allen & Overy's managing partner, John Rink. None the less, A&O remains adamant that it is not imminently going to be involved in a transatlantic merger, although it concedes that it has been having discussions with the Dutch firm Leoff Claeys Verbeke.

Privately, lawyers in the City are still unsure about the short-term effects of the Clifford Chance merger but they are more candid in their speculation. There is a consensus that Clifford Chance has caught the mood of international corporate clients in as much as there is strong enthusiasm for a transatlantic one-stop-shop for legal advice. But one factor that could give others in the City pause for thought is the limited field of work available for that sort of firm.

City lawyers point to mergers and acquisition, project finance, securities and competition - or anti-trust, as it is known in the US - as a more or less exhaustive list. Indeed, some speculate that one of the motivating factors behind the Clifford Chance merger could be the City firm's desire to benefit from Rogers & Wells' leading reputation in anti-trust work. Especially at a time when its own name in that arena has taken something of a beating in the media following the referral to the Competition Commission of the bid by brewers Whitbread - a Clifford Chance client - for Allied Domecq's pub estate.

Another by-product benefit of the merger to Clifford Chance is the new- found status in the US as a limited liability partnership, by virtue of Rogers & Wells's LLP position.

However, City commentators say the LLP factor appears more important than it is in practice. They point out that City law firms already carry significantly higher top-up insurance cover than their large US counterparts. Also it is anticipated that lobby efforts to have the Government legislate to allow UK law firms to adopt LLP status will be successful relatively soon. And perhaps most importantly, so far UK law firms have not generally been the targets of large negligence claims on anything like the same level as has afflicted accountancy firms. "The LLP factor would not have been a driver behind the merger, simply a bonus," says Cameron McKenna's Mr Taylor.

Mr Taylor goes on to point out what he describes as a significant disadvantage to forming a transatlantic merger: "By tying up with one firm you cut off referrals from all the rest of the firms in the US. The US is a vast country and there are very few national firms. So merger with a New York firm means you really can't accept referrals from firms in San Francisco or Kansas or anywhere else. If you've got a niche practice, that might not be so important, but for a full-service practice it is a factor."

That does not mean the Clifford Chance venture is doomed, emphasises Mr Taylor. "The market for international business lawyers is continuing to grow and there will be a number of different animals in the jungle. There will be several models - one will be the Clifford Chance model... but there will be others that range from being purely a domestic firm to those that involve seeing Europe as the strategic priority."

Jonathan Ames is deputy editor of the `Law Gazette'

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
Mark, Katie and Sanjay in The Apprentice boardroom
TV
Arts and Entertainment

Film The critics but sneer but these unfashionable festive films are our favourites

Arts and Entertainment
Frances O'Connor and James Nesbitt in 'The Missing'

TV We're so close to knowing what happened to Oliver Hughes, but a last-minute bluff crushes expectations

Arts and Entertainment
Joey Essex will be hitting the slopes for series two of The Jump

TV

Who is taking the plunge?
Arts and Entertainment
Katy Perry as an Ancient Egyptian princess in her latest music video for 'Dark Horse'

music
Arts and Entertainment
Dame Judi Dench, as M in Skyfall

film
Arts and Entertainment
Morrissey, 1988

TV
Arts and Entertainment
William Pooley from Suffolk is flying out to Free Town, Sierra Leone, to continue working in health centres to fight Ebola after surviving the disease himself

music
Arts and Entertainment
The Newsroom creator Aaron Sorkin

TV
Arts and Entertainment
Matt Berry (centre), the star of Channel 4 sitcom 'Toast of London'

TVA disappointingly dull denouement
Arts and Entertainment
Tales from the cryptanalyst: Benedict Cumberbatch in 'The Imitation Game'

film
Arts and Entertainment
Pixie Lott has been voted off Strictly Come Dancing 2014

Strictly
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas
    La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

    Deaf community outraged by La Famille Bélier

    The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
    10 best high-end laptops

    10 best high-end laptops

    From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
    Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

    Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

    The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
    Susie Wolff: A driving force in battle for equality behind the wheel

    Susie Wolff: A driving force in battle for equality behind the wheel

    The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
    Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

    'No abs Adam' plans to muscle in on Usain Bolt's turf

    After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
    Calls for a military mental health 'quality mark'

    Homeless Veterans campaign

    Expert calls for military mental health 'quality mark'
    Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

    Meet Racton Man

    Analysis shows famous skeleton was a 6ft Bronze Age superman
    Garden Bridge: St Paul’s adds to £175m project’s troubled waters

    Garden Bridge

    St Paul’s adds to £175m project’s troubled waters
    Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

    Stuff your own Christmas mouse ornament

    An evening class in taxidermy with a festive feel
    Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

    Joint Enterprise

    The legal doctrine which critics say has caused hundreds of miscarriages of justice
    Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

    Freud and Eros

    Love, Lust and Longing at the Freud Museum