This Thanksgiving, give thanks that your firm… is no longer merging with another firm? Biglaw combinations that break apart like wishbones seem to be the big theme of this week.
On the heels of Orrick and Pillsbury parting ways, the partnership of McKenna Long & Aldridge just rejected the proposed tie-up with Dentons. As we’ve reported before, talks of a transaction have been going on for months.
So what led the McKenna Long partnership to spurn the advances of Dentons?
(Please note the UPDATE added below, comment from McKenna Long.)
Here’s a report from Jennifer Smith of the WSJ Law Blog:
Two senior Dentons partners told Law Blog on Tuesday afternoon that a proposed tie-up between that firm and U.S. law firm McKenna Long & Aldridge LLP is off. While the executive boards of both firms had recommended to their partners that the firms combine, McKenna was not able to muster enough votes to approve the deal, according to those partners.
Many rank-and-file McKenna partners supported the transaction, but apparently some heavy hitters revolted:
More than 99% of Dentons’s approximately 900 partners approved the deal, those partners said, with only six worldwide voting against. But while about 75% of McKenna’s partnership also voted in favor, the firm weighs votes by equity interest, not by headcount, and the vote was called off when it became clear that it would not pass the required 66 and 2/3 % equity-stake threshold, the Dentons partners said.
And what were the worries of these rainmakers? Per the WSJ:
The objectors included a group of “prominent, high-profile practitioners who didn’t believe at the end of the day that it was the culture of their firm” to merge, one of the two senior Dentons partners said. “They simply tried to engage in fear about globalization, fear about loss of brand.”
We’ve sounded such concerns in these pages. Look back at Anonymous Partner’s post, Supersizing Biglaw: Welcome to McDentons.
And cultural fit and branding weren’t the only issues stressing McKenna partners:
Among their concerns: that the Dentons structure, known as a verein, where firms share one brand but separate profit pools, was something new and untested. A number of global firms employ that structure, including DLA Piper and Hogan Lovells.
Yet again, call us prophetic. Look back at my post, Be Afraid, Be Verein Afraid.
Maybe we should set up an Above the Law consulting arm. Is your firm thinking about a possible merger or other combination that it would like some feedback on? Feel free to drop us a line and tell us what’s going on.
UPDATE (11/27/2013, 12:30 p.m.): Here is McKenna Long’s comment to the WSJ:
“We are not in a position to successfully bring our firms together at this time,” a spokeswoman for McKenna Long said on Tuesday afternoon. “We look forward to maintaining the many friendships and working relationships, including with shared clients, that partners in both firms have forged.”
But later on Tuesday the firm disputed the Dentons partners’ account, saying talks had been called off “in advance of a previously scheduled partner vote” and that “any statements ascribing even approximate percentages to the number of our partners who supported the tie-up are inaccurate.”
The firm declined to provide its view of what would be an accurate percentage to the Journal.