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Pivot, pivot: Shearman names new senior partner in wake of failed Hogan Lovells merger talks

Shearman & Sterling has named respected litigator Adam Hakki as the senior partner successor to David Beveridge, as the firm comes to terms with its failure to strike a merger deal with Hogan Lovells.

The move will be cemented in a formal election later in the year, however the firm said in a statement that Beveridge, Shearman’s executive group, and its policy committee are ‘unanimous in their support’ for Hakki.

Beveridge is in the last year of his term as senior partner. He took on the role in 2018, handing his position of global managing partner to Hakki, who has also been global head of litigation at the firm since 2012.

The firm said that Beveridge has started the transition to the firm’s next leader early ‘to ensure a seamless passing of the torch,’ also pointing to ‘improving the firm’s profitability, and running the lateral hiring programme’ as highlights of his leadership tenure.

Beveridge said in a statement: ‘We have made important progress in reshaping our business, and I believe this is the right time to begin a leadership transition to accelerate the pace of the firm’s ongoing transformation and the development of a new strategic vision.

‘We have a clear opportunity to optimise across the business as we work to better focus our efforts on the areas where we are best positioned to succeed and increase revenue growth in the future.’

For his part, Hakki has worked at Shearman for 25 years. He works out of the New York office, where he is highly regarded as a litigator, representing major financial institutions in ‘bet-the-company’ disputes, in particular in securities.

A Wall Street stalwart since its establishment in 1873, Shearman has suffered in the last two decades as a combination of the early 2000s dot-com crash and, more significantly, post-2008 difficulties in the banking sector saw its traditional client base struggle.

Many in the market have pointed to a belated pivot to private equity as one of many missteps for the firm, while the merger talks with Hogan Lovells prompted a partner exodus, from which it will be difficult for the firm to recover. The losses during the early months of this year in London alone included EMEA and Asia M&A head Philip Cheveley, who left for Sidley Austin, and insolvency and restructuring partner Helena Potts going to Paul Hastings. Most recently, Cravath, Swaine & Moore hired leveraged finance specialists Philip Stopford and Korey Fevzi to launch a much-anticipated English law practice for the first time after five decades in the City.

While many in the market were sceptical about Shearman’s merger ambitions, there were certain synergies between the two firms, particularly in the combination of Hogan Lovells’ Washington DC-based regulatory practice with Shearman’s headline finance expertise in New York.

Crucially, in the age of Kirkland & Ellis and the $6bn+ law firm, adding Hogan Lovells’ $2.6bn 2021-22 revenue to Shearman’s $1bn would have pushed a potential combined firm over the $3bn line. Even with Hogan Lovells’ turnover dip to $2.43bn in 2022-23, the proposition remained attractive.

In a joint statement issued last Wednesday (1 March), the two firms noted of the collapsed merger talks: ‘After careful consideration, we have mutually agreed that a combination at this time is not in the best interest of either firm.’

Hakki, meanwhile, said that lawyers at the firm were ‘excited and energised by the opportunity to strengthen the firm in service of our clients around the world.’ He also emphasised the firm’s desire to build on what works. ‘We will maintain a laser focus on our clients and prioritise our core strength as a destination for the most complex and significant transactions and disputes for corporates, financial institutions, and funds.’

This optimism notwithstanding, management at Shearman will surely be searching for alternative routes to growth. And partners, recruiters, and clients alike will be watching the firm’s fortunes with interest.