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‘The strategy has not changed’: Hogan Lovells holds steady after end of Shearman merger talks

‘Has the strategy changed? The short answer is: no, it hasn’t.’

That was the message from Hogan Lovells chief executive Miguel Zaldivar, who spoke to Legal Business alongside deputy chief executive Michael Davison about the firm’s strategy after its proposed merger with Shearman & Sterling fell through recently.

Zaldivar (pictured) and Davison’s comments echoed those they made to Legal Business upon the release of the firm’s 2022 financials in late February.

‘We’re ready to grow’, said Zaldivar. ‘We’re ready to consolidate our market position in our four engines.’ Alongside those four core offices in London, Washington DC, Paris, and Germany, the firm also aims to expand in three key US markets. ‘We said in 2020 that our priorities include a focus on growth in three markets: New York, Texas, and California. And that remains true.’

The firm aims to focus on the tech sector in California and on energy and life sciences in Texas.  New York, meanwhile, is a potential fifth engine, with Zaldivar highlighting its importance as a financial hub. ‘New York is linked to our commitment to the financial industry, where we think we can grow more, to build on our strengths in London. It’s a natural bridge that can further connect what we do in Europe to what we do in the US.’

Neither Zaldivar nor  Davison would comment on  the motivations behind the proposed merger with Shearman or what caused the discussions. But it is easy to see what might have been attractive about the prospect of a combination with a long-established Wall Street firm.

Still, Hogan Lovells has no intention of altering its ambitions. ‘Ideally’, said Zaldivar, ‘we would achieve a greater critical mass in New York by combining with going concerns. It doesn’t have to be an entire firm. We’re open to any option that we can explore. If it’s an opportunity to grow in one of our five key industry sectors, and in the regions that we focus on in our business plan, we will explore that.’

This resolve makes sense for Hogan Lovells, perhaps in a way that it would not for Shearman. The Wall Street firm saw significant attrition as rumours of the merger percolated through the market, losing four partners in London alone in January and February 2023. Last week it announced that it had accelerated its transition to a new senior partner, with current global managing partner Adam Hakki due to take over from David Beveridge after a formal election later in the year. Shearman has been keen to present this move as merely a slight adjustment, bringing forward a change that was already on the cards. Nonetheless, many in the market have read this as a pivot.

Hogan Lovells, for its part, has suffered no such losses, and a source with knowledge of the firm said the end of merger talks has prompted little disappointment among its London partners. Despite a 7% drop, Hogan Lovells’ revenues in 2022 remained comfortably above the $2bn mark, at $2.43bn, the firm’s second-best year, behind only 2021.

‘The strategy has not changed’, said Davison. ‘And we’re still very focused on delivering it.’