It promised to create a property and disputes giant across the Atlantic and one of the most distinctive law firms in the global market but in the end the mooted union between Berwin Leighton Paisner (BLP) and Greenberg Traurig has been called off.
The talks, which the pair confirmed in February, had enjoyed substantial support in BLP’s muscular real estate practice and had been cited as a means of the City firm achieving its strategy of being the world’s leading property and infrastructure adviser.
BLP managing partner Lisa Mayhew confirmed to Legal Business on Wednesday (16 March) that the merger discussions had ended. Mayhew (pictured) commented: ‘There was no one single thing. There was enough there to warrant proper consideration but in the final analysis there just wasn’t enough common ground to progress the conversation further.’
A deal would have created a firm with 2,700 lawyers and revenues of over a £1bn. Both firms had already made it clear that a deal would have involved full financial integration, which would have led to challenges over unifying their accounting and compensation systems.
There is a gap in profitability between the two firms. PEP at Greenberg stood at $1.424m in 2014, against £661,000 ($1.090m) for the UK firm’s 2014-15 year.
However, Mayhew said that the challenge of putting together Greenberg’s more individualistic partner pay model with BLP’s modified lockstep was not the deal-breaker, adding: ‘There wasn’t one single killer issue.’
However, Greenberg has said that it ultimately walked away from a merger because of its belief that ‘culture eats strategy for lunch’ and its ‘conservative approach to financial risk’.
In a statement, executive chairman Richard Rosenbaum said: ‘Greenberg Traurig is a substantially larger and more diversified firm than BLP. We therefore maintain much broader practice priorities. The core real estate practice which first attracted us is indeed impressive, as are other BLP practices, and we have a great deal of respect for the firm as a whole. Real estate is, of course, a core practice and one of our strongest brands, along with litigation and corporate (M&A, private equity, capital markets, finance), which are our largest areas… For Greenberg Traurig, it was quite exciting to enhance our practices, but not at the risk of materially diluting our cultural, financial and other priorities. This is what our diligence has been all about.’
‘After spending a substantial amount of personal time on this opportunity, visiting nearly every location and meeting so many fine BLP partners, I must admit to some regret in this decision. But in the final analysis, we are a business. However exciting, we do not grow for growth’s sake and we do not ‘fall in love’ with a story or act on emotion; we run a disciplined operation, and will continue to run it and achieve our stated goals for the benefit of the many families who are dependent on us every day. We have added many shareholders, practices and offices in the last months and years and must intensely focus on integration and execution, including our continued build-out of a first class London office of an appropriate size in today’s world and the number one global real estate practice.’
The end of the talks leave the thorny strategic issue for BLP of whether to pursue another substantive tie-up in the US as some partners believe the UK law firm should do. Mayhew said BLP retains an open mind on the point but was committed to its ambitious strategy.
For further comment on the pitfalls hampering merger discussions between BLP and Greenberg Traurig, see Merging BLP and Greenberg Traurig – unique, compelling, bloody difficult