Statement by Orrick/Akin Gump About Ending Merger Talks Comes Up Short

Someone inside BigLaw will talk eventually to the media (or an influential legal blog) about why these merger talks did not continue. So, I’m surprised that Orrick and Akin Gump didn’t go a bit further with their joint statement released today:

“Orrick and Akin Gump have mutually agreed to conclude preliminary discussions regarding the possibility of a merger. The firms appreciated the opportunity to have the discussions, which confirmed their mutual respect for one another. However, the firms have determined not to proceed.”

This statement begs the question: “Why didn’t you proceed? ”

Whenever merger talks end, usually it’s because of either economics, serious client conflicts, firm culture or all of the above. The two firms could have gone slightly further in their statement by saying there was a “difference of opinion” regarding one of these issues.

In 2007, when Orrick and Dewey (then Dewey Ballantine) ended their merger discussions, the two firms issued this statement:

“Orrick, Herrington & Sutcliffe LLP and Dewey Ballantine LLP have jointly decided to end merger discussions. Both firms are successful, global firms that saw great potential in a combination. However, a combination of this size and scope posed significant challenges. While both firms tried their best to work through these challenges, we were unable to bring the merger to completion. No one issue led us to this point, and each firm leaves this process with great respect for the leaders and partners of the other.”

OK..the 2007 statement at least says that it was not “one issue.”

What’s also interesting is that Orrick and Dewey issued a lengthy joint news release when they started discussions in October 2006.

I welcome other thoughts on these joint statements, particularly from those in law firm management as well as from my law firm PR/marketing colleagues.

One thought on “Statement by Orrick/Akin Gump About Ending Merger Talks Comes Up Short

  1. Having been involved in many such discussions, some quite suceesful and some not, I have a 20 year history of the reasons for the failure of so many discussions. Certianly, serious client conflicts often are a serious obstacle. More often, talks are aborted because of the failure of the leadership of the respective firms to agree on governance of the proposed combined firm. A venerable Philadelphia based law firm which openly pursued many such discussions several years ago saw all of these talks fail and the firm implode as the result of this factor. Similar thngs might be said of an AmLaw 100 San Francisco firm. A third issue is from time to time ecnomics: during early rounds of such discussions, summary information is exchanged and as talks progress, the parties start to drill deeper and the most common impediment is a looming liability that one of the parties has. The final issue is often a cultural clash. We worked through a lengthy set of discussions between two major law firms in which every preliminary step worked out exremely well. Management of both sides developed a genuine liking of each other. Financial due diligence worked out well. No serious client conflicts existed. Discussions among key practice group leaders were successful. We got to the point at which a memorandum of understanding was actually executed and while the detailed agreement was being prepared and its detailed terms negotiated, meetings were then orchestrated among the working partners in small groups commenced. Then, after all of this effort, a large group of the working partners at one of the firms reported to the firm’s managing partner that they “really didn’t like those guys” and could never see wrking with them. Game called.

    A similar result obtained in a very large cross border discussion of approximately four years ago.

    Thus, the only instance in which the reason for a failed merger negotiaition to ever be publicly acknowledged is in the instance of a key client conflict and even in such instances, the issue should not have gotten past the firts round of discussions in which lists of 100 largest clients are routinely exchanged, practice areas listed in the firm’s respective web sites are reviewed by the respective sides prior to the first meeting and those issues are major points of discussions for the first round or two. Thus, the failure to spot the conflict early on is a bit of an embarrassment and firms would rather not admit that such a significant issue slipped through the cracks early on.

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