The merger of Anglo-Australian law firm Herbert Smith Freehills and US outfit Kramer Levin was finalised yesterday (1 June), in a landmark tie-up that has created a top 20 global firm by revenue. 

The merged firm – known as Herbert Smith Freehills Kramer, or HSF Kramer for short – boasts global turnover of more than $2bn and a single profit pool. It has some 2,700 lawyers including around 630 partners based across 26 offices.

Rebecca Maslen-Stannage, chair and senior partner of Herbert Smith Freehills Kramer, said the deal “unites two firms with complementary strengths and a bold vision for the future”.

She added: “We are delighted by the overwhelmingly positive feedback from our clients and our people. Together, we will focus on our strategic vision and build on this fantastic platform.”

The tie-up has handed legacy Herbert Smith Freehills, much the larger of the two parties, the sizeable US presence so sought after by international firms. The firm had a small New York office of its own before the merger, but legacy Kramer Levin had around 120 partners across three offices in New York, Washington DC and Silicon Valley. 

The US focus of the deal was underscored by the spinning out of legacy Kramer Levin’s sole international office, in Paris, late last year shortly after plans for the merger were announced. The partnerships of both firms voted “overwhelmingly” in favour of the deal earlier this year. 

The merged firm will focus on growing in key practice areas like private equity, bankruptcy and restructuring, disputes, real estate and securitisation as well as its broader transactional offering. The firm said it will also focus on building its New York presence and its regulatory and technology practices centred on its Washington DC and Silicon Valley offices. 

Justin D’Agostino, global CEO of HSF Kramer, commented: “In today’s uncertain macroeconomic landscape, clients need a global law firm with local insight across all their key markets. Herbert Smith Freehills Kramer is uniquely positioned to deliver exceptional outcomes in an increasingly complex and interconnected world.”

D’Agostino leads the firm’s global executive, which is dominated by senior figures from legacy Herbert Smith Freehills. Kristin Stammer has retained her title as executive partner for Asia and Australia, while London-based Jeremy Walden took over as executive partner for the UK and EMEA on 1 June from Alison Brown, who has been appointed to a new role as executive partner, US growth and strategic integration. Anna Sutherland, who previously co-led legacy Herbert Smith Freehills’ disputes group, has been named executive partner for practices. 

The team is completed by Paul Schoeman, who was co-managing partner of legacy Kramer Levin and has been appointed US executive partner of the merged firm. Howard Spilko, who was co-managing partner of legacy Kramer Levin with Schoeman, has been made global head of private equity and chair of corporate, US of HSF Kramer.

For legacy Herbert Smith Freehills, the combination represented a logical follow-on from the deal that created the firm 12 years ago, when London’s Herbert Smith merged with Australia’s Freehills.

After a difficult period in the immediate aftermath of that merger, when a large number of London-based partners left the firm, the deal has come to be regarded as a success, with the firm building up its European network in recent years.

The firm reported record revenue, profit and profit per equity partner (PEP) for the year ended 30 April 2024, with turnover rising 10.1% to hit £1.3bn ($1.6bn) and PEP up 12% to £1.3m ($1.6m).

Meanwhile, legacy Kramer Levin’s revenue for the 2023 calendar year was $435.2m, as reported by Law.com – less than a third of HSF’s turnover, but its PEP of $2.4m was significantly higher than its merger partner’s.

The disparity in PEP between the two sides was unsurprising, given that Kramer Levin was anchored in the lucrative US market. The merged firm will, however, require a partnership remuneration system that accounts for this disparity, a challenge the UK’s Magic Circle firms have moved to address in recent years by changing their payment models. 

The combination’s rationale had key parallels with last year’s merger between Magic Circle UK firm Allen & Overy and Shearman & Sterling to create A&O Shearman, given that it has handed legacy Herbert Smith Freehills a credible presence in the US market and the relative size of its US partner.