Merger partners Allen & Overy and its American partner Shearman & Sterling are facing a notable brain drain ahead of their ambitious $3.5 billion merger with reports of dozens of lawyers leaving the firms ahead of the merger.
Since the announcement of the merger in May, a wave of senior lawyers, totaling at least 20 from each firm, has departed. Allen & Overy has seen a mix of partners, counsel, and senior associates leave, many from the City head office.
Shearman & Sterling mirrors this trend with similar departures, including partners and counsel. This pattern of exits, particularly in offices where both firms have a presence, suggests a reshuffling of the legal deck in response to the merger, impacting operations across Europe, Asia, and the Middle East.
Melinda Wallman, a partner at legal recruitment firm Macrae, said that such departures are a common response to mergers, particularly in markets where both firms have established operations.
The merger, slated for completion by May 2024 and approved by an overwhelming majority of partners, signals a major consolidation in the legal industry. It is expected to bring together Shearman & Sterling’s UK staff into Allen & Overy’s City headquarters in London.
Forgivable Loans
In a strategic move to stabilize their ranks, both firms have reportedly offered partners forgivable loans to encourage their continued association post-merger. This initiative aims to counteract the trend of partner exits and ensure stability in the newly formed entity.
The resultant firm, named A&O Shearman, will be a legal behemoth, boasting nearly 4,000 lawyers across 48 offices globally and combined revenues of around $3.5 billion.
The merger signifies a strategic realignment in compensation models, which is intended to adopt a “modified lockstep” system that balances seniority with performance—a shift from the traditional UK models and a nod to more American-style remuneration practices.
Allen & Overy recently announced its shortlist for senior leadership roles in the merged firm, indicating its dominance in the merger, as no Shearman & Sterling lawyers are in contention for the top positions.
A spokesperson from Allen & Overy reassured that Shearman & Sterling partners will hold significant roles in the new entity’s leadership, with appointments to be announced soon.
