Law Firm Merger Mania: Lovells and Hogan & Hartson Talks Still on Track
Earlier this month, we mentioned that Hogan & Hartson and London-based Lovells were in “early stages of merger talks.”
Today brings the news that the firms are in “advanced talks to merge,” according to Nathan Koppel of the Wall Street Journal. But it’s not a done deal yet:
One of the biggest challenges to a Hogan/Lovells deal, lawyers say, will be marrying the firm’s contrasting styles. Hogan is considered relatively hard charging, paying partners based on how much business they bring in. Lovells take a more genteel approach, compensating partners based largely on their seniority.
UPDATE: Bruce MacEwen, who thinks that “this deal makes superb sense,” has a detailed analysis over at Adam Smith, Esq. (gavel bang: commenter).
A memo from Hogan head Warren Gorrell, plus selected comments from our prior post — we read the comments, so you don’t have to! — after the jump.
The following internal memo was posted as comment 59:
To: All Associates and Support Staff
From: Warren Gorrell
Date: October 8, 2009
Re: Press ReportsOver the past several months, we have been exploring various strategic opportunities that the firm might pursue, including some discussions with a small number of other firms. By their very nature these discussions have been kept confidential.
We have just learned that reports of ongoing discussions have reached the press and there will be an article in a London-based publication, Legal Week, speculating on what we are doing and linking us to London-based firm Lovells. There also may be an article in The American Lawyer since they are affiliated with Legal Week.
Until we have something definitive to say, we are not going to comment further since our discussions may not result in anything concrete happening. If the situation changes and there is a significant development to report, I will let you know.
The memo basically confirms the talks but doesn’t say a heck of a lot. More revealing are some of the comments from our earlier post. Some of them expressed support for the merger, while others — perhaps the majority — sounded more pessimistic notes.
Please note that these represent the opinions of the commenters; your editors have not verified them independently. So take them with the proverbial grain of salt.
12 - Bad idea. Bad, bad idea. These two firms have nothing in common. Any merger will decrease efficiency rather than increase it. And if they’re thinking about diversifying, is NOW the time to do it? Diversifying in boom times = good because you’re preparing for bust times. Diversifying in bust times = retarded because, while you may be getting a “deal,” you’re getting a deal on what is predominantly crap.19 - Well, I guess this possible merger explains why Hogan & Hartson has been firing people across the firm under the guise of “performance reviews.” They are such an elite law firm that they have never, never in their entire history laid off attorneys (yes, this line is something they like to toot their horn about).
Hogan is trying to make Lovells believe their numbers are strong. Why in the world Lovells would want anything to do with Hogan & Hartson is beyond me - the firm is a dog with fleas. That will be Lovells’ undoing if they move forward.
35 - Lovells has tried over the past four years to really expand in the US. It hasn’t worked. Now I guess they’re forced to try to pick up a US practice to get some work. Good luck.
50 - I don’t believe this merger will ever go through, but if it did, I think it could be a positive step for both firms. Seems like many of the legal mags are saying the same.
54- The Lovells associates in the NY office are hoping this merger goes through. We joined Lovells from other firms because we were willing to forego our bonuses in order to work fewer hours. Now we specialize in working on non-billable marketing matters that go nowhere. We are on call 24/7 for non- billiable work. We have no chance of ever making partner as the pyramid is already full at the top. Partners come here with no business expecting lots of referrals from the European offices, but that doesn’t happen.
We’ll keep you posted. If you have info or insight to share about a possible Lovells / Hogan combination, feel free to email us.
Hogan & Hartson, Lovells, Closing In On Merger [WSJ Law Blog]
Hogan & Hartson/Lovells? [Adam Smith, Esq.]
Earlier: Law Firm Merger Mania: Lovells ‘Hearts’ Hogan & Hartson
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LoveHog?
Interesting analysis from the Adam Smith, Esquire blog:
http://www.adamsmithesq.com/archives/2009/10/hogan-hartsonlovells.html
"we read the comments, so you don’t have to!"
Lat, please tell me that was a Joe Dirt reference. If so, well done.
ATL / Lat, thank you for moderating the slew of non-substantive comments that were initially added to this post.
Hogan + Lovells = Hovels?
Can someone please post a link about Mystal's dad in the big house for political corruption?
I like Bruce MacEwen's analysis generally, but it seems pretty weak on these points - there's much more to evaluating a merger than simply adding the numbers together and evaluating whether or not the resultant (mythical) firm would compete with many firms similar to it. Most of the positives don't seem that great to me, and there are a few major negatives:
- they both have offices (presumably big ones, with long term leases) in the most expensive cities in the world: Moscow, Tokyo, London, NY, HK, which are also the cities in which legal work has fallen off the most.
- Lovells' RPL is really quite low by US standards (although maybe not that low compared to Hogan's), and that's going to be a problem to try to conform to US ideals about where those numbers should be (as it has been for every US-UK merger so far)
- they are two huge firms, so the conflicts issues would seem monumental to me. Most of the relatively successful US//UK mergers have been between a big firm and a smaller firm.
- most of all, Hogan is a pretty decent but not great US firm. Neither they nor a result "Hogells" is going to get premium US work, even for UK clients. This has been the case with every major US-UK merger so far - the stature of the resulting firm is not as high in the US as the former US firm was.
I don't know the firms well enough to really know if this would work, but it seems like a mistake from the outside.
This blog writer speaks with the tongue of a jackal, I'm afraid. It is only good business sense not to comment on a deal until it had been completed, god willing. Please let this river run its course before plowing the sand from its shores.
#7 is on point. Partner comp is going to be a major sticking point. I wouldn't be surprised to see some of Hogan's heavy hitters looking for a way out ASAP. And there will be plenty of firms lining up to poach talent. Not to mention, there will be some associate layoffs for certain.
Hogan + Lovells = Ho Love
10 - no, it's either Hovells or Lovegan.
What recession?
What is going to happen to deferred Hogan associates? YIKES!
Nice that Adam Smith has the courtesy of actually mentioning the news outlets that actually broke the story with their actual reporting.
I am partially vindicated! And by "partially" I mean 60% vindicated rather than 40%. Yessssss!
- 42/45/48 from "Reed Smith Joins the Attack on Lockstep!"
This is a terrible decision. We are seeing the end of two decent law firms and the beginning of a DLA Piper-level debacle.
9: Hogan has no 'heavy hitters'. Heavy hitters don't work at third-rate firms. Hogan is headed by Wayne Gorrell, who has a big book of commercial real estate work. Actually, 'had' a big book of commercial real estate work. That practice area will soon be recognized as the disaster it is - as bad if not worse than structured finance.
Law firm mergers are often less than the sum of their parts: 1+1 = 1. Now that this 'deal' is public, it better (for HH's sake) close, else HH is toast.
17: You are an idiot. Bob Bennett, Cate Stetson, Mark McConnell, John Warner, Jan Archibald, Mike House, Warren Gorrell - etc. Anyone who knows anything about big law practice in DC knows that Hogan has some serious heavy hitters.
H&H is not what it once was, but it is still a firm with some well-respected people.
17 was put in his/her place!!!
17 was put in his/her place!!!
18-20: sorry, over-the-Hill Washington hacks like Bennett and Warner (what is he, 95?) may be big names (if you are old enough to remember them), but don't represent big money (i.e., current billings). The two broads may be great from a diversity standpoint, but I doubt they ring the cash register either. The other guys seem to have graduated lawsuit from 30 to nearly 40 years ago, so they are both pretty much done, don't you think. Wayne's commercial RE practice is no more.
'Well respected' does not equate to 'economically viable'. You are obviously employed at HH - get out if you can.
I'm not trying to be a fucking asshole here, but it's not like this is Wachtell and Slaughter & May merging.
INTTBAFAH shtick = FAIL
It's a good idea. Lovells has people in places other law firms have been hemming and hawwing about opening offices for years. And you've got to be kidding yourself if you think the recession is going to kill Hogan's US portfolio. On the contrary; the increase in government involvement in practically everything validates Hogan's model - for now. As long as Obama's czars continue changing the rules on a biweekly basis, Hogan is going to have plenty of business.
Not having any rainmakers will kill a firm, but no strategic vision will do the same thing. Better to roll the dice than wither on the vine.
Oct. 29 (Bloomberg) -- The management committees of Lovells LLP, the U.K.’s sixth-largest law firm, and Washington-based Hogan & Hartson LLP recommended that their partners approve a merger that would create one of the world’s biggest law firms.
Get on it, Elie!
It continues to amaze me that quality law firms, known for being good in certain practice areas and jurisdiction and which are large but not freaking colossal, evaluate their options, and say, "We want to be like DLA Piper." That firm sucks. Everyone knows it. No one wants to work there. Their model is unsustainable. They do a crappy job, and get run over on nearly every transaction I see them on.
Maybe these firms know something I don't (like this is their only chance for survival), but I just don't get it.