‘A platform like no other’ – A&O Shearman goes live

Transatlantic merger creates global giant with nearly 4,000 lawyers and $3.5bn revenue

The most anticipated merger in the legal profession has gone live today, as UK Magic Circle firm Allen & Overy and New York’s Shearman & Sterling join forces to create A&O Shearman.  

The firm boasts nearly 4,000 lawyers, including around 800 partners, working across 47 offices, and combined revenues of around $3.5bn, putting it among the top five law firms in the world.  

The two firms first announced the landmark merger last May, with the partnerships of both voting overwhelmingly in its favour last October.  

The merger will significantly strengthen A&O’s brand recognition and presence in the US, where the firm had 260 lawyers of its own and has gained another 330, according to data from Pirical. Meantime Shearman will benefit from A&O’s strength across the UK and other international markets.

The merger has not been one of equals, with A&O bringing around 3,000 lawyers and revenue of $2.6bn compared to Shearman’s 500 lawyers and $900m turnover. Shearman, however, boasted higher profits per equity partner (PEP) – $2.48m to A&O’s $2.25m. But that reflects the New York-based firm's roots in the world's most lucrative legal market as opposed to its place in the pecking order of top US law firms, several of which enjoy PEP above $5m with Kirkland & Ellis, the world's largest law firm by revenue, achieving PEP of $7.5m in 2023.

Abu Dhabi-based Khalid Garousha and Paris-based Hervé Ekué have been named senior partner and managing partner respectively of the new firm, having been elected from eight potential candidates, all of whom had been drawn from A&O.  

Garousha will also co-chair A&O Shearman’s executive committee with veteran Shearman partner Adam Hakki, who has been appointed US chair.

Garousha hailed the new firm as “a platform like no other“, adding: "A&O Shearman is a new industry leader with unmatched experience and truly global capabilities,” he said. “I look forward to working alongside my colleagues to unlock the potential of our new firm. We will provide clients with the world-class solutions and unparalleled regional experience and knowledge that they are looking for in today’s increasingly complex commercial and regulatory environment.”

All eyes will be on the new management team's ability to make the most of the firm's platform. Law firm mergers are notoriously difficult to bed down and even mergers that have come to be regarded as a success, such as the deal that created Herbert Smith Freehills, typically experience a period of turbulence in the months following their union.

How A&O's main UK rivals respond will also be closely watched. Up to this point the Magic Circle quartet of A&O, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters have all had similar profiles in terms of their market position, finances and international footprint (see table). That has now changed, with A&O jumping well ahead of the pack in revenue terms and enjoying a significantly larger presence in the US where all four firms have been focusing their efforts in recent years. 

A&O Shearman said it counts more than a third of New York Stock Exchange-listed businesses and a fifth of the NASDAQ as clients, as well as many more listed on the London Stock Exchange and other exchanges across Europe, the Middle East and Asia.

The new firm will operate through what it described as a “matrix” of practice groups and sectors worldwide intended to improve internal collaboration. Core practice groups will include M&A, litigation and investigations and debt finance, while six key industry sectors, namely energy and infrastructure, established industries, financial institutions, life sciences, private capital/private equity, and technology, will operate across practices and geographies.  

The firm added that regional offices will focus on local go-to-market strategies and collaboration, as well as local market reputation-building, talent attraction and development, and local operations.

It was announced earlier this week that London-based A&O partner Denise Gibson had been appointed UK managing partner of the new firm. Meantime New York A&O partner Dave Lewis and Shearman New York partner Doreen Lilienfeld have been appointed co-managing partners of the US.

In London the firm will be based at A&O’s former offices at One Bishops Square before moving to a new space in the City at 2 Broadgate by early 2027. In New York the firm will work out of Shearman’s former offices at 599 Lexington Avenue.  

Both firms saw exits following the merger announcement, with Pirical reporting in March that Shearman had lost 9% of its partners – well above the average decrease of 4% found in its comparison sample of firms that have gone through mergers. Meantime A&O had lost 3%.  

Most of Shearman’s defectors were based outside the US, and were concentrated in the UK, France, Germany and the Middle East.  

Wim Dejonghe, who led A&O through the merger as senior partner but has not joined A&O Shearman, wrote today on LinkedIn: “It’s been an honour to lead A&O for the last 16 years, and as I step down as senior partner, I am grateful for a wonderful career lasting 39 years at A&O. 

“As A&O Shearman springs to life today, I am filled with both pride for what we've accomplished and excitement for what lies ahead. I’m also immensely proud that our partners have elected such a talented and diverse team to take the combined firm forward. The progress we are making - and must continue to make - is symbolised by this fantastic and very capable new team. The firm is in very safe hands.” 

The UK Magic Circle 2022/23 PerformanceRev (£m)% ChangePEP (£k)% Change
Allen & Overy2,1007%1,820k(6.7%)
Clifford Chance2,0606%2,000k(2.0%)
Freshfields Bruckhaus Deringer1,8408%2,090k1%

Email your news and story ideas to: news@globallegalpost.com