Back in May, we first started hearing rumors that Arnold & Porter and Kaye Scholer were considering combining. A merger between the two would have created a firm with about 1,000 lawyers with healthy revenue numbers that could have crossed the billion-dollar mark.
Now, thanks to a report from The Lawyer, we’re hearing that the merger talks are off the table. It seems that Michael Solow, Kaye Scholer’s managing partner, told the paper that no firm had “presented us with a proposition that’s beneficial enough to our clients.” Thomas Milch, Arnold & Porter’s former chairman, said, “We talk to law firms all the time,” and refused to discuss his firm’s possible merger with Kaye Scholer.
Per the latest Am Law 100 rankings, Arnold & Porter’s gross revenue fell by 6.4 percent, to $650 million, and its profits per partner fell by 12.6 percent, to $1.21 million. By Law.com’s estimation, only two Am Law 100 firms had double-digit drops in net income and profits per partner last year, and Arnold & Porter was one of them. Kaye Scholer, on the other hand, sustained less severe declines in gross revenue (down 1.3 percent to $370 million) and profits per partner (down 2.1 percent to $1.38 million).
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Is this failed merger — coupled with both firms’ suffering financials — the reason why neither of them have announced raises on the new Cravath salary scale? Kaye Scholer is ranked No. 66 and Arnold & Porter is ranked No. 74 in terms of profits per partner for all Am Law 200 law firms, and several firms ranked lower than one or both of them have already announced raises (No. 67 Brown Rudnick; No. 69 Covington; No. 70 Hogan Lovells; No. 79 Baker & McKenzie; No. 75 Bracewell; and No. 115 Locke Lord).
Their time for excuses may be running out, while we wait for Arnold & Porter and Kaye Scholer to ante up, we welcome your speculations as to why they may be reluctant to pull the trigger on increasing salaries for their associates. Please feel free to contact us.
Remember, we are covering this trend extensively, so please drop us a line — text (646-820-8477) or email (subject line: “[Firm Name] Matches Cravath”) — when you know of another firm making a compensation move. Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file. All sources are kept strictly confidential.
A&P, Kaye Scholer Keep Mum After Report Declares Merger D.O.A. [Law.com]
Kaye Scholer, Arnold & Porter merger talks off [The Lawyer]
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Staci Zaretsky is an editor at Above the Law. Feel free to email her with any tips, questions, or comments. Follow her on Twitter or connect with her on LinkedIn.