Earlier this year, when UK firm Lovells and US firm Hogan & Hartson implemented the first major trans-Atlantic law firm merger, Australian firms were not particularly surprised. This was the paradigm shift they had been expecting for some time – and they were not anticipating a corresponding groundswell of interest in the Australian market.

 “My sense is that only after [international firms] have organised themselves in trans-Atlantic mergers and made them work will they look further afield,” Minter Ellison CEP John Weber told ALB in January this year. “As important as the [Australian] market is to us, at the end of the day it’s only [a small part] of the world’s economy.

David Fagan of Clayton Utz was another who thought that the Hogan Lovells merger sent a message about the priorities of international firms. “There’s no doubt that over a period of time there’s likely to be more linkages into the Australian market from  international firms, but I think what this merger’s showing is that for the big US and UK firms, the trans-Atlantic merger is the key merger they want,” he observed.
Yet the shock arrival of Allen & Overy in Australia in February drew the focus back onto the local market. Who would A&O raid next? Who would be the next Magic Circle firm to move 'down under'? And did we really believe that the Mallesons-Clifford Chance merger was dead? Magic Circle paranoia took hold and the trans-Atlantic disappeared from the news agenda.

Six months later, it remains noteworthy that all the merger action has been seen across the Atlantic – and not in Australia. Hogan Lovells have implemented their 2,000 lawyer, 40-office merger. The partnerships of London-based Denton Wilde Sapte and Chicago-based Sonnenschein Nath & Rosenthal have recently voted in favour of their own merger, to be known as SNR Denton and to be launched on 30 September with over 1,400 lawyers across 18 countries.

In June UK firm Simmons & Simmons and US counterpart Mayer Brown (known as Mayer Brown JSM in Asia) confirmed that they were also investigating a possible tie-up, with the combined firm having over 2,400 lawyers and achieving a similar scale to the mammoth Hogan Lovells operation. As ALB was going to press the firms released a statement indicating that they would discontinue the talks. Notably, the statement highlighted compatibility issues rather than any aversion to a merger, per se.
In short, while merger talks in Australia seem to be permanently stuck at the “speculative” stage, very real steps are being taken in the northern hemisphere towards a global paradigm shift in the legal services market. Once these new paradigms have settled into place, Australasian firms may well be next on the hit list.

If the old adage of ‘no smoke without fire’ is true, perhaps some negotiations with Australian firms have already begun, although certain prospective mergers such as Mallesons and Clifford Chance appear to be all smoke and no fire. The next major merger may well involve an Australian party – but one suspects that this will simply be an adjunct to broader trans-Atlantic manoeuvres.