A&O Shearman to Cut 10% of Partners, Close South Africa Post (1)

A&O Shearman is slashing its global partner count by 10%, shuttering its Johannesburg office, and closing down its consulting business as part of a suite of post-merger changes.

The combined firm has around 800 partners globally. The partner cuts have been communicated with those impacted, according to a person with knowledge of the firm, and will take place by the end of the firm’s financial year.

Hervé Ekué, managing partner at A&O Shearman, called the moves a “difficult but necessary step forward.”

“We never take decisions like this lightly, particularly when they affect our people,” he said in a Friday statement. “We are very grateful to the partners who will be leaving the firm, as well as to our teams in Johannesburg and Consulting for their contributions over the years.”

The reductions come four months after London’s Allen & Overy and New York’s Shearman & Sterling officially launched as a combined entity on May 1.

The closure of the Johannesburg office, launched in 2014, will see around 80 lawyers and staff exit the firm by the end of the year.

A&O Shearman’s consulting business operates across the global firm and comprises lawyers, ex-regulators, and other “industry experts”, according to the firm’s website. Its shuttering will impact around 30 lawyers and staff, the person said.

“It is commonplace during a merger or acquisition, in any industry, for a financial restructuring to occur and redundancies to follow,” said Jon Truster, a Manhattan-based legal recruiter. “While disturbing for those involved, the legal industry is not immune from this.”

The closely watched tie-up gave A&O access to the lucrative US legal market. It also provided a lifeline for Shearman, which had lost key lawyers and failed in previous merger talks.

“We are at the time post-merger where difficult decisions need to be executed on,” Truster said. “It is unclear to me how Shearman’s weak financial position, which was well known, has impacted these decisions.”

The combined firm has been working to build out its private equity practice, a key driver of growth among elite US law firms, following the merger. Its also trying to ward off poachers in London, where top deals firms are locked in a recruiting war.

The tie-up highlights a push for scale among the world’s largest law firms, which has prompted similar talks among other competitors. Philadelphia’s Troutman Pepper and Texas-founded Locke Lord on Thursday said their partners have approved a deal for the firms to merge in January.

Some longtime partners also have headed for the exit since the merger.

In London, Davis Polk & Wardwell in August hired A&O Shearman private equity partner Gordon Milne.

The firm moved to rebuild in the key practice area with the addition of Sidley Austin partner duo Dan Graham and Paul Dunbar earlier in September.

The office closures were first reported by Law.com.