The world’s largest law firm by lawyer-count is on its way – resulting from the merger between UK-based Dentons and Chinese firm Dacheng who have agreed to form a firm comprising over 6600 lawyers.
The merger arises from attempts by the firms to have a legal monolith that provides legal services for Chinese companies seeking overseas expansion.
A Dentons spokesperson said partners of Dentons and Dacheng had agreed to the deal, which would create a firm of 6,600 lawyers in 120 offices in more than 50 countries. The deal is awaiting Chinese regulatory approval. A formal announcement is expected next week, the FT report.
Although not the first merger between Western law firms and Chinese ‘locals’, the Dentons move is certainly the biggest and an aggressive attempt to capture a giant share of Chinese legal business.
As the Financial Times report:
The new firm is to be known as Dentons outside of China and Dacheng inside China. It will have a logo that begins with the two Chinese characters for Dacheng and ends with the name “Dentons”.
The combined firm will surpass the current largest firm by attorney numbers, Baker & McKenzie, which has more than 4,000 lawyers.
The news comes in the same week that New York-based Fried, Frank, Harris, Shriver & Jacobson said it was closing its Hong Kong and Shanghai offices.
“Some international law firms in China are struggling because of the economic downturn and the drop in inbound M&A,” said Dan Roules, a lawyer in the Shanghai office of the law firm Squire Patton Boggs. “Though outbound M&A has risen, it is very price sensitive,” he added.
Chinese law prevents a full merger of domestic and international law firms so Dentons, a global law firm, and Dacheng, a rapidly growing local firm, have chosen a Swiss verein structure that allows firms based in different countries to combine under a single brand while keeping their finances separate, said legal experts.
“You can put two firms side by side but not do any profit sharing. As a co-branding device it can be quite useful,” said Mr Roules, pointing to the 2011 merger between China’s King & Wood and Australia’s Mallesons, which was then the first tie-up of a leading Chinese firm with a sizeable western firm.
Dentons itself is the product of a 2012 merger between three law firms — US-based SNR Denton, Canada’s Fraser Milner Casgrain and Paris-headquartered Salans. That merger is also a Swiss verein tie-up which is a brand-share rather than a profit-share.
Chinese firms such as Dacheng tend to have close relationships with their clients. But most do not have a strong presence overseas, making it hard for companies to use them on outbound transactions. That dearth makes a merger with an international law firm attractive to some of them, said legal experts.
Read more at the Financial Times