Legal News and Views -  Asia Pacific and Beyond

So sayeth the bible ... eg The UK Financial Times

The Am Lawyer reports the following

Law Firm Merger Talks Proceed in Asia, End in Europe

http://amlawdaily.typepad.com/amlawdaily/2011/11/merger-talks-1.html

A statement from Mallesons has been added to the fifth paragraph of this story.

Partners from top Australian firm Mallesons Stephen Jaques have voted in favor of a proposed merger with leading domestic Chinese firm King & Wood, according to the Financial Times.

Mallesons partners voted on the merger Wednesday, with their colleagues at King & Wood expected to hold a similar vote on Thursday, according to U.K. publication Legal Week. The British legal newspaper reported that if approved, a combined firm called King & Wood Malleons would go live some time during the first quarter of 2012.
The Am Law Daily reported over the summer on the discussions between Mallesons and King & Wood. A combined firm would have more than 2,000 employees in offices throughout Australia and China, as well as outposts in Hong Kong, London, New York, and Palo Alto. (According to The American Lawyer's Global 100 rankings, Mallesons had gross revenue of $452.5 million and profits per partner of nearly $1.2 million in 2010.)
"Mallesons confirms that it is in discussions with leading PRC law firm, King & Wood," said a statement by spokeswoman Sue Ashe. "Our discussions are ongoing and part of an ongoing process. Until that process concludes, we have nothing further to add."
A request for comment on the merger vote sent to King & Wood was not returned by the time of this story. Should the two firms agree to proceed with their merger, it would be a first in many areas.
Ward Bower, a principal with legal consultancy Altman Weil, says that a merger between King & Wood and Mallesons would represent the largest merger deal ever involving a domestic Chinese firm. Such a tie-up, Bower adds, would also continue the trend toward international firms seeking inroads in Australia.
The pace at which U.K. firms are moving into mineral- and natural-resource rich Australia has quickened over the past few years, says Bower, who cites several major moves by global players as fitting into the trend.
Some recent examples: Magic Circle firm Allen & Overy's opening of offices in Perth and Sydney in February 2010 after it had plucked 17 partners from Aussie giant Clayton Utz. The move came after British firm Norton Rose acquired Australia's Deacons in June 2009. This year, rival Magic Circle firm Clifford Chance opened in Australia by acquiring two local boutiques, and DLA Piper became the world's largest law firm by attorney head count after merging with its Australian alliance partner DLA Phillips Fox.
In August, Squire, Sanders & Dempsey, on the heels of its merger with British firm Hammonds, announced that it was opening an office in Perth after grabbing a group of energy and M&A lawyers from Aussie firm Minter Ellison. And in September, British firm Ashurst announced a joint venture deal with Aussie firm Blake Dawson under which the two will combine their Asian operations on the way toward completing a full merger by 2014.
"As you can see, there's a lot going on in Australia, especially the number of U.K. firms looking at that market," Bower says. "There's also an incredible amount of trade between China and Australia, especially when it comes to natural resources, and I think you can expect any combined firm to try and capture some of that work."
Bower says he is particularly keen to find out what the next step by a combined King & Wood Mallesons might be. He notes that Mallesons held merger talks with several British firms over the past few years—discussions with Clifford Chance were called off in December 2008—and that a Western suitor might seek to merge with any combined operation.
"The key is the second step for [King & Wood Mallesons], whether it's with a U.K. or U.S. firm," says Bower, adding that he has no firsthand knowledge about the merger talks between the firms.
Legal Week reports that Chinese regulatory constraints prevent King & Wood from combining financially with Mallesons, so the two firms would have to merge under the Swiss verein structure. (The American Lawyer took a more in-depth look earlier this year at that mechanism, which allows profit and revenue streams to be keep separate.) In February, King & Wood spun off SG Fafalen, a Swiss firm operating in Hong Kong, which it had haltingly tried to merge with before settling on an alliance a year ago.
Also proceeding on the law firm merger front in Asia this week: discussions between Allen & Overy and leading Singapore firm Allen & Gledhill. The Asian Lawyer, a sibling publication, reports that the Singaporean legal market, once hesitant to accept the presence of foreign firms on the local scene, is taking the move in stride.
In Europe, tie-up talks have not proceeded as smoothly.
Partners at German firm Gleiss Lutz and Benelux firm Stibbe have rejected an official merger with British alliance partner Herbert Smith, Legal Week reports. The development is a huge strategic setback for Herbert Smith, which has enjoyed a longstanding alliance with both firms and had hoped to formalize the relationship under the Swiss verein structure, according to Legal Week.
But partners at Gleiss Lutz and Stibbe voted to end further discussions and Legal Week reports that the future of Herbert Smith's alliance with both firms now remains unclear.