Herbert Smith in tie-up to form new legal giant

A new legal giant emerges today as London-based Herbert Smith and Australian group Freehills start formally trading under the same banner.

Herbert Smith Freehills International is expected to be the dominant player in the fast-growing Asia-Pacific market in one of the biggest mergers the legal industry has seen in years.

Executives at the UK part of the company hope the sheer scale of the combination will help it gatecrash the Magic Circle of elite lawyers that includes Slaughter and May and Clifford Chance.

It is understood that the Solicitors Regulation Authority gave the go-ahead to the tie-up last month.

Based on 2010-11 figures, the combined turnover will be more than £820m and there will be 2,800 lawyers, of whom approaching 500 will be partners. Few, if any, job losses are expected.

Joint chief executives Gavin Bell, of Freehills, and David Willis, who currently heads Herbert Smith, are working through aligning the payment pool structures of the two firms, as well as preparing office openings in South Korea and Germany.

After 18 months, the company will move to having a single chief executive. Mr Bell, who has led Freehills since 2005, is widely anticipated to take over, although other candidates could emerge in a process that will be overseen by a governance board.

The deal is part of a wave of link-ups between Australian and British lawyers, though this deal is unusual as it is a full equity merger.

For example, Linklaters sealed an alliance with Melbourne-headquartered Allens Arthur Robinson in April.

The joint venture brings together their Asia-focused energy, resources, and infrastructure lawyers but will maintain separate profit pools, instead sharing revenue on a matter-by-matter basis.