Analysts have applauded the ambitious alliance forged by King & Wood Mallesons (KWM) and SJ Berwin at the end of July – providing all parts of the whole can work together successfully.
Under the deal, from 1 November private equity specialist firm SJ Berwin will join KWM under its current Swiss Verein structure, meaning it will join the three financially independent arms of the firm in China, Hong Kong and Australia, creating a brand with more than 2,700 lawyers and revenue of over US$1 billion.
King & Wood Mallesons chairman, Wang Junfeng, said: “There are significant synergies between our firms. King & Wood Mallesons has always been a pioneer in Asia and the combination with SJ Berwin cements our position as the global law firm for the future.”
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Tony Williams, the principal of Jomati Consultants, an international consultancy specialising in the legal profession, told China Business Law Journal the challenge for the new firm now “is to develop capability in other Asian and international markets, and to ensure that the constituent parts work effectively together”.
Williams said the tie-up has “also made clear that the US and UK firms will not have the global legal market all to themselves, especially as transaction and capital flows no longer of necessity have to pass through London or New York”.
“The addition of SJ Berwin is a natural development of the model,” he said. “English law is the key choice of law for cross-border transactions and disputes outside the Americas so being able to demonstrate a credible English law capability is important not only in relation to transactions to and from Europe, but also in other markets in Asia, Africa and the Middle East.”
Kent Zimmerman, a consultant at Zeughauser Group, which has several relationships with US firms interested in developing alliances with Chinese firms, told the Journal the alliance “makes sense because it makes it easier for both firms to enter the US market”.
“The US market is the crown jewel because more money is spent just on litigation in the US than on all kinds of legal services in all other countries combined,” he said. “So entering the US market will be key to being a top global firm by gross revenue. Doing this deal now gives the combined firm more options to find a stronger merger partner in the US. The combined firm’s global platform will be attractive in that regard, particularly with its breadth across Asia-Pacific, Europe and the Middle East.”
KWM’s global managing partner, Stuart Fuller, told a press conference the US has always been on the firm’s radar. “Right from the outset and initial combination we always said our vision and aspiration was to become a leading global law firm based in Asia,” he said. “As part of that, this is an important next step around English law capability in the European platform. US capability would need to be part of that to be a global form, but what we don’t have is a Gantt chart that says this firm, by this time, with this capability.”
Regarding integration, Fuller said: “We’re a firm that focuses on clients and people, we will try integration initially through client accounts, the way we approach particular sectors of the markets, in a business development sense, the way we combine our practice teams to be global practice teams led on a global basis across the firm, and then in terms of people secondments and transfers.
“So when you look back to give you some context at the past 16 months of King & Wood Mallesons [since the tie-up in March 2012 between King & Wood and Mallesons Stephen Jaques], the client focus has driven a lot of the connection of the firm, supported by secondments of lawyers between Australia and China. The back offices we’ll look to integrate over time to the extent that it actually makes business around the clients and the people.”
Zimmerman added the move was consistent with an accelerating trend toward consolidation in the legal industry. “There is a perception that bigger is better. It drives brand strength and builds go-to status for the core areas of focus that the combined firm chooses. It also allows for more money to invest in highly sought after laterals and differentiating the firm’s brand.”
Wang Ling, managing partner of KWM China, added: “Our clients are rapidly globalising. This combination with SJ Berwin provides us with the strength and depth and a quality international platform to help them navigate the complexity of inbound and outbound Chinese investment around the world.”
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