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Just two weeks after merger talks between Baker & McKenzie and Heller Ehrman broke down over conflicts issues, Heller has entered into talks with Mayer Brown.

Just two weeks after merger talks between Baker & McKenzie and Heller Ehrman broke down over conflicts issues, Heller has entered into talks with Mayer Brown.  4

Just two weeks after merger talks between Baker & McKenzie and Heller Ehrman broke down over conflicts issues, Heller has entered into talks with Mayer Brown.

News of the discussions was broken by Legal Week’s sister title The American Lawyer last week, with sources close to both firms revealing that California-based Heller is aggressively pursuing other merger options, of which the most promising is a combination with Chicago-based Mayer Brown.

Both firms have declined to comment on the claims but the talks are understood to represent a second effort to combine the two firms.

Initial merger talks between the firms earlier this year were shelved because Mayer Brown’s management was wary of conflicts that could arise as a result of Heller’s insurance recovery practice, which represents policyholders in coverage disputes with insurance companies.

Mayer Brown represents insurance companies in a variety of litigation and corporate matters.

According to one source, any merger between Mayer Brown and Heller would exclude Heller’s insurance recovery practice.

It is still unclear exactly how far talks between the firms have progressed and to what extent partners at the firms know of the talks.

Heller’s management has been known to keep the partnership out of the loop regarding the firm’s merger talks. Mayer Brown partners contacted for comment also professed to be unaware of the talks.

Heller’s management has been actively seeking a merger in recent months to shore up the firm, which lost as many as 25 partners and missed budget projections by 15% in 2007.

The firm also reported a 3% decline in profits per partner to $1.005m (£549,000) in 2007 and partner defections have continued in 2008 with more than 35 additional partners leaving the firm this year, according to reports.

With rumours of further defections in overseas offices rife, many are arguing that Heller’s only option may now be a merger although some partners within the firm maintain it can survive without a tie-up.

At the beginning of this year Mayer Brown merged with leading Hong Kong firm Johnson Stokes & Master. That deal means the firm already has some 1,800 lawyers working out of 21 offices worldwide. In contrast Heller has 14 offices and a total of 650 lawyers.

Commenting on the talks with Heller, one ex-Mayer Brown partner said: “That will be an interesting challenge, but it makes sense for Mayer Brown because they are weaker on the west coast, particularly in corporate and technology work… it will probably be good for both Heller and Mayer Brown.”

However, another warned: “What will it add to Mayer Brown’s practice? The benefit will be for Heller and this sort of thing is bound to polarise opinion in the partnership.”

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