London’s Allen & Overy to Merge With Shearman & Sterling (1)

Law firms Allen & Overy and Shearman & Sterling are set to merge, creating a massive new competitor in the legal industry.

The firms have reached an agreement to merge, pending approval by partners at each firm, they said Sunday. The new combined entity—Allen Overy Shearman Sterling—will have more than 3,900 lawyers worldwide.

The move comes after Shearman’s merger talks with Hogan Lovells fell through earlier this year. The deal gives UK-founded Allen & Overy a much larger footprint stateside, as some of London’s top firms also seek to boost their presence in the US.

“We have listened to our ...