In today’s email:

• SQE goes to India

• A legal mega merger

• Track the world’s sharks

• Facebook gets fined (again)

• BT replaces its worker with AI

• Let AI make you your perfect, personalised drink

… and more!

EDITOR'S RAMBLE 🗣

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FEATURED REPORT 📰

👬 Allen & Overy is merging with Shearman & Sterling

What’s going on here?

Magic Circle law firm Allen & Overy (A&O) and the New York-based firm Shearman & Sterling (Shearman) - two of the world's largest law firms - are merging.

The new global firm will be named Allen Overy Shearman Sterling (or A&O Shearman for short) and will be one of the biggest in the world with revenues of $3.4bn (£2.7bn) and about 3,900 lawyers.

Why did the two firms merge?

In a joint statement, firms said that it has been “driven by client need”.

But really, it seems to be because:

• 🇺🇸 A&O has wanted to break into the US market (specifically New York), and

• 🌎️ Shearman has been struggling with its global offices not bringing in as much profit as it would have wanted.

Breaking into the US market has always been challenging for UK law firms. In 2018, UK firm Berwin Leighton Paisner merged with Bryan Cave, a US law firm. But since the merger, there have been reports of real issues at the new firm because of it. A&O will hope this is a quick and pain-free way into that market.

Shearman will also be hoping to benefit from the fact that A&O has well-established global offices which are more profitable than its own.

Is this a merger of equals?

A&O is bigger in terms of people — 5,800 staff in comparison with Shearman’s 1,350.

And A&O also has more revenue — £1.9bn in comparison with £730m for Shearman.

A&O also has more global offices. In merging, Shearman’s getting 26 new offices but A&O is only getting 6 more.

But, Shearman’s equity partners (the top dogs) took home £2m in average profits last year, compared with slightly less than £1.6m for partners at A&O.

A&O would also have had a good bargaining position as Shearman has suffered a bit recently. A bunch of its lawyers left after its failed merger with Hogan Lovells (see the section below called ‘Has something like this happened before?‘).

A&O’s bargaining strength is clear in that, reportedly, the senior leadership positions of the firms are going to be split 75% to A&O people and 25% to Shearman people.

Has something like this happened before?

Well, this same merger nearly happened between Shearman and Hogan Lovells instead of A&O. But that deal fell through as it was not in both of their “best interests”.

A&O also tried to merge with the US firm O'Melveny & Myers in 2019 in an earlier attempt to break America. But that deal also feel through, supposedly because the firms couldn’t agree on a valuation for O'Melveny & Myers.

In 2000, Clifford Chance (another Magic Circle firm) merged with Rogers & Wells, a US firm. The merger gave Clifford Chance a strong presence in the United States, where Rogers & Wells was one of the top 10 law firms.

So, have the firms merged now?

Not yet — the merger will go to a partner vote this summer. But things should move fast as its supposed to complete in less than a year from now.

Why should other law firms care?

This merger is really big news.

It’s the largest merger of law firms in recent history and will create a new powerhouse firm with strength in both of the the biggest legal markets in the world: New York and London.

Allen Overy Shearman Sterling is firing shots at the other Magic Circle firms — a former Shearman senior partner has said that the move will put “pressure on the rest of the Magic Circle”.

We'll have to see how these firms respond and whether they make their own American moves too!

A BIT OF FUN 😄

IN OTHER NEWS 🗞

• 🇮🇳 The College of Legal Practice has partnered with online platform Educayden to offer SQE training in India. The partnership comes after the Bar Council of India published rules allowing foreign lawyers to practise foreign law in the country. This is hopefully a step that opens access to a career in law for more people.

• 🚨 Meta, the parent company of Facebook, has been fined €1.2 billion for mishandling user data while transferring it between Europe and the US. It’s an issue as the US has more relaxed data protection laws than the EU. The fine is the largest ever imposed under the EU's General Data Protection Regulation (GDPR) privacy law. Meta has said it will appeal the ruling (which does not apply in the UK). The fine is yet another legal challenge for Meta, which has been accused of failing to protect user privacy on its platforms.

• ✂ BT plans to cut up to 55,000 jobs by 2030, with 10,000 jobs being replaced by AI. The company says this is necessary to become a leaner business and to focus on new technologies. The job cuts would affect employees across all levels and functions and spread out over several years.

AROUND THE WEB 🌐

• 🍸️ Cheers: This AI-powered bartender - BarGPT - creates the perfect cocktail for you based on whatever you ask it for. I asked it for ‘a sweet, whiskey-based drink’ and it gave me a recipe (I can’t vouch for the taste, though — it’s too early in the day!).

• 🦈 Wildlife: This cool site lets you track of all the tagged sharks (and some giant sea turtles) in the ocean.

• 🗞️ Clever: With law firms trying to break into America, you can build your US-business awareness in just 5 minutes with Morning Brew (it's free). It’s the daily email that delivers the latest news from Wall Street to Silicon Valley. Check it out!*

Credit: r/internetisbeautiful

* This is an affiliate link. It's free to join for you and if you sign up through us, we will receive a small commission.

STUFF THAT MIGHT HELP YOU 👌

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