Just a day after the US elected Donald Trump as its new president, New York and Washington firms Kaye Scholer and Arnold & Porter have today (10 November) announced a combination to create a $1bn firm, the largest combination of US firms so far this year.
The merger will go live on 1 January 2017, with the firm to be renamed Arnold & Porter Kaye Scholer. It will have 1,000 offices across nine domestic and four international locations, including London.
Both firms suffered declining revenue and profit in 2015. Arnold & Porter posted a turnover of $650m for 2015, down 6% from the year before, while the DC-based firm, with a strong regulatory practice, suffered a 13% slump in profits per equity partner (PEP) to $1.21m in the last calendar year.
Meanwhile, former Global 100 firm Kaye Scholer posted revenue of $370m for 2015, a decline of 1%, while PEP was at $1.38m, down 2%. The larger Arnold & Porter averaged 234 equity partners in 2015, while Kaye Scholer has 96 equity and 24 non-equity partners.
The largest offices at the combined firm will be Washington (roughly 400 lawyers) and New York (325 lawyers). The firm will also have 175 lawyers across three offices in California, and 60 lawyers in London. It will also have outposts in Chicago, Denver, Houston, and West Palm Beach; as well as coverage in Brussels, Frankfurt, and Shanghai.
According to our Global London report, Arnold & Porter had 16 partners in the City in 2015, a 5% increase from the year before. Kaye Scholer is slightly smaller, with ten partners in the City.
Kaye Scholer managing partner Michael Solow said: ‘This combination enhances our ability to anticipate and address our clients’ most significant and complex legal matters and will result in service offerings that are among the broadest and deepest in the two key US legal markets – New York and Washington.’
Arnold & Porter chair Richard Alexander, who will serve as chair of the combined firm added:
‘The collective talents and financial resources of the new firm will allow us to continue to deliver to clients the sophisticated counsel and service that they expect, while creating substantial economies of scale that will accelerate our investments in talent and technologies and enable us to pursue innovation in the efficient delivery of legal services.’
The combination is the latest in a string of tie-ups involving Global 100 firms in a market that is ripe for consolidation with increasing commoditisation. Earlier this month, Legal Business revealed Morgan Lewis & Bockius is in talks with King & Wood Mallesons for a merger, while Addleshaw Goddard and Hunton & Williams have held talks in recent months about a combination.
Earlier in the year, talks between US firms Reed Smith and Pepper Hamilton were terminated in April.