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'

Arts and Entertainment
BBC Three was launched a little over five years ago with the slogan: “Three, is a magic number, yes it is.”

BBC Trust agrees to axe channel from TV in favour of digital move

Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer

Arts and Entertainment

Arts and Entertainment
Armie Hammer in the new film of ‘The Lone Ranger’

Arts and Entertainment

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

ebooksNow available in paperback
Arts and Entertainment

Arts and Entertainment
Buying a stairway to Hubbard: the Scientology centre in Los Angeles
film review Chilling inside views on a secretive church
Arts and Entertainment
Jason Williamson, left, and Andrew Fearn of Sleaford Mods
musicYou are nobody in public life until you have been soundly insulted by Sleaford Mods
Arts and Entertainment
Natalie Dew (Jess) in Bend It Like Beckham The Musical
theatreReview: Bend It Like Beckham hits back of the net on opening night
Arts and Entertainment
The young sea-faring Charles Darwin – seen here in an 1809 portrait – is to be portrayed as an Indiana Jones-style adventurer
Arts and Entertainment
The audience aimed thousands of Apple’s product units at Taylor Swift throughout the show
musicReview: On stage her manner is natural, her command of space masterful
Arts and Entertainment
Channel 4 is reviving its Chris Evans-hosted Nineties hit TFI Friday

Arts and Entertainment
Harrison Ford plays Indiana Jones in The Last Crusade (1989)

Arts and Entertainment

Arts and Entertainment
A Glastonbury reveller hides under an umbrella at the festival last year

Arts and Entertainment

Arts and Entertainment
Miles Morales is to replace Peter Parker as the new Spider-Man

Arts and Entertainment
The sequel to 1993's Jurassic Park, Jurassic World, has stormed into the global record books to score the highest worldwide opening weekend in history.

Arts and Entertainment
Odi (Will Tudor)
tvReview: Humans, episode 2
Arts and Entertainment
Can't cope with a Port-A-loo? We've got the solution for you

FestivalsFive ways to avoid the portable toilets

Arts and Entertainment
Some zookeepers have been braver than others in the #jurassiczoo trend

Jurassic WorldThe results are completely brilliant

Arts and Entertainment
An original Miffy illustration
Arts and Entertainment
Man of mystery: Ian McKellen as an ageing Sherlock Holmes
film review
Arts and Entertainment
Kitchen set: Yvette Fielding, Patricia Potter, Chesney Hawkes, Sarah Harding and Sheree Murphy
TV review
Arts and Entertainment
Chris Evans has been confirmed as the new host of Top Gear
Arts and Entertainment
Top of the class: Iggy Azalea and the catchy ‘Fancy’
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating

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

    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
    Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

    No grace of God for Katy Perry as sisters act to stop her buying convent

    Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
    Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

    Residents just want water and power in a city chosen to be a ‘smart’ metropolis

    The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
    Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

    Something wicked?

    Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
    10 best sun creams for body

    10 best sun creams for body

    Make sure you’re protected from head to toe in the heatwave
    Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

    Nick Bollettieri's Wimbledon files

    Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
    Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

    There is more than a shiny trophy to be won by England’s World Cup women

    The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map