Big law firm Allen & Overy will join forces with New York-based Shearman & Sterling to create a legal practice generating approximately $3.4 billion in revenue. This merger represents one of the most significant transatlantic legal collaborations. The formation of the partnership is subject to the approval of the partners of both firms through a voting process.
The proposed merger will create one of the largest legal practices in the world, comprising a total of 3,900 lawyers and 800 partners spread across 49 offices. Although Shearman & Sterling was once a major US corporate adviser and one of the first large US law firms to expand into Europe, its standing has declined in recent years due to financial problems associated with the rapid expansion of its office network and missteps by management. In addition, in recent months the firm has seen the departure of several partners from various US and international offices.
Allen & Overy, a member of the UK's top five law firms, was founded as a London-based finance firm. In the 2021/22 fiscal year, the firm reported worldwide revenues of $2.65 billion; by comparison, Shearman & Sterling had revenues of approximately $1 billion. Allen & Overy is actively seeking to expand its presence in the United States, having attempted a merger with O'Melveny & Myers several years ago. Although merger talks lasted more than a year, the merger plans ultimately did not materialize.
It is also worth noting that Shearman partners had an average profit share of $2.48 million last year, slightly above the average profit share of Allen & Overy partners of just under £2 million. However, both firms have confirmed that integrating their respective remuneration structures will not present significant challenges.