Trans-Atlantic Law Mergers Are Impacting the Legal Hiring Market

The last few years have prompted a flurry of trans-Atlantic mergers between the biggest UK and US law firms. The 2024 merger between Allen & Overy, a London magic circle firm, and Shearman and Sterling, a New York white-shoe firm, formed the global, 4,000-attorney giant A&O Shearman and was the catalyst for corporate legal landscape.

Since then, Herbert Smith Freehills has joined with Kramer Levin to create HSF Kramer. In the coming months, Taylor Wessing is expected to merge with Chicago-headquartered Winston & Strawn. This is an opportunity for firms on both sides of the merger to be on the global stage without it being too expensive.

The magic circle firms in London have the chance to break into the US, while the US firms will have a well-respected foothold in Europe and the UK. They become part of a bigger brand with a far wider reach.

While this consolidation of resources undoubtedly has been a strategic and financial move for all firms involved, these mergers do present unique personnel challenges. One of the most important challenges is leadership integration because UK partners operate differently than their US counterparts.

US partners typically are rapid, performance-driven, and entrepreneurial, with much of their focus on billing rates, while UK partners traditionally rely more on committee consensus, with different compensation structures. The UK partnership structure traditionally has provided lawyers with greater voice and influence. There are advantages to both approaches, which clients will have become accustomed to, but this needs to be sensitively managed.

One aspect of the mergers that has led to some partner departures is the cultural change to partnerships when a firm adopts the US model. Post-merger, some firms have abandoned the traditional single-tier model, where lawyers would be promoted from associate to non-equity and then equity partner, instead opting for a salaried partner model, which changes the compensation structure and strategic priorities.

They have effectively fast-tracked the process to make equity partner by removing the middle-tier of non-equity partner. This change might have frustrated people who had been working their way up through the traditional route. What this shows is that there needs to be careful alignment throughout the firms that intend to merge, at every level, from senior leadership through to the office.

With several more mergers in prospect, such as Ashurst with Perkins Coie, and Hogan Lovells with Cadwalader, one of the oldest law firms in New York, they will have to consider the different tier models to avoid disruption.

Another difference between US and UK firms will be the expectation of how much lawyers are expected to be in the office. Some UK firms followed a hybrid schedule of two or three days working from home before, and now this may shift towards a greater emphasis on being in the office.

A mid-level associate in the UK might have to be in the office more, with cultural changes that might not sit well with their own identity. There could also be a strain with UK partners who say that they are now being asked to come in more for the same compensation, which managing partners and leadership will have to consider. On the flipside, and perhaps of greater relevance, US firms generally pay more.

It’s vital that merging firms get their approach right, not only for their lawyers but also for their clients. Those who work at newly merged firms must think carefully about how they communicate and maintain their positive, long-established relationships with important clients.

Some clients might be concerned that a merger will affect how they have always done things with a particular team of attorneys. They might also be worried about partners leaving. For example, A&O Shearman, have lost 113 since September 2024.

In addition, there will be an expectation that billing rates will change because US firms generally charge more. So, although cross-border deals, mergers and acquisitions, and financial and regulatory work won’t necessarily be disrupted by the new corporate arrangements, lawyers need to be transparent with their clients to ensure it is more than a case of just keeping the business going.

For UK firms, it would be much harder to break into the US market without going through a merger deal. Those that fail to adopt this strategy could fall behind in the marketplace due to the larger transactional work and clients in the US.

This difficulty is exemplified by recent efforts to break into the US market by magic circle firms as, despite repeated efforts, only Freshfields have made real strides in the past decade. From the US angle, such mergers provide the opportunity to build practices in typically UK-centric legal sectors, such as tax, employment and competition; they also pave the way to hoover up the top UK talent.

All in all, this merger trend is likely to keep growing in the coming years, as it means firms such as A&O Shearman can grow by absorbing rather than making lateral hires one by one.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Jon Howard is principal associate at Buchanan Law.

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