36 ASIAN LEGAL BUSINESS – JUNE 2023 WWW.LEGALBUSINESSONLINE.COM MERGERS The recent engagement between Magic Circle firm Allen & Overy and Wall Street brand Sherman & Sterling has been dominating headlines. The UK-U.S. union is poised to become a globally dominant legal force, forming a practice of nearly 4,000 lawyers with combined revenues of about $3.4 billion in one of the biggest transatlantic tie-ups in history. The deal, announced in May, is set to fulfil A&O’s decades-long dream of gaining a substantial slice of the lucrative U.S. market, while enabling a withering Sherman to tap into A&O’s sprawling global network. The planned tie-up, which is awaiting approval from partners at both firms, is not only dominating conversations in the industry, but also giving law firm leaders, especially those toying with the idea of a merger, plenty of food for thought. A&O Shearman is not the only merger happening, though; in particular, the middle tier of the American legal market appears to be a particularly active space. At least five law firm mergers have taken place in the U.S. this year, as fears of industry giants dominating market share push consolidation into high gear, according to Bloomberg. Analysts believed there’s been an increasing appetite on the part of larger firms to swallow up smaller boutiques. William Brennan, principal at U.S.- based management consulting services firm Altman Weil, believes this trend is set to continue for the next decade. “Many law firms are now trying to accelerate their expansion plans to make up for the two-year hiatus caused by COVID. This has resulted in a lot of law firms ‘dating’ while they explore the viability of a merger. Mergers can be strategically advantageous for law firms of all sizes, assuming there is a sound business reason for the firms to combine,” says Brennan. BIGGER THE BETTER, OR NOT Brennan, who has specialised in law firm M&A and profitability for over a decade, cautions that the emerging ethos of “bigger is better,” which has been making waves and accelerating merger talks in the Western legal industry, does not paint the whole picture. “The strategy of getting better by getting bigger is too simplistic. A successful strategy needs to be built upon a strategically sound business case for the combination, which necessarily should be based upon client needs,” notes Brennan. But for Chandler MHM – one of the top-tier players in the Thai legal market - the strategy seemed to have paid off. Originally Chandler & Thong-ek, the Thai practice was acquired by Mori Hamada & Matsumoto in 2016 in a landmark deal, riding on the Big Four Japanese firm’s ambition to make deeper inroads across Southeast Asia. The merger doubled the number of lawyers for the Thai firm, giving it an enhanced position with an expanded breadth of service offerings for not only domestic, but also overseas clients. By the same token, “the integration would allow MHM to achieve its goal of Image: eamesBot/ TWO BECOME ONE The planned mega-merger between Allen & Overy and Sherman & Sterling has sent shockwaves across the legal world, and ignited a tidal wave of interest in merging in an industry thriving on loyal client relations and expansive institutional networks. ALB delves into the dance between law firms, including the strategic considerations beforehand and factors that can make or break the union. BY SARAH WONG