The biggest proposed law firm merger of the year has collapsed.
Orrick Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman were in advanced merger talks that would have created one of the country’s 10 largest firms with about 1,700 lawyers. But on Monday, the two firms issued a joint statement that the deal was off.
“We mutually determined that we will not be able to proceed due to prospective client conflicts that we have not been able to resolve, notwithstanding each firm’s best efforts,†the statement said.
Client conflicts often scuttle deals between large law firms. With Orrick and Pillsbury, there were a number of issues that the two firms were unable to resolve. Orrick, for example, has a large public finance practice, and some of those representations clashed with Pillsbury’s corporate clients.
The merger would have created a firm with roughly $1.4 billion in estimated revenues, and a dominant presence on the West Coast.
Orrick, with 1,100 lawyers, has held merger discussions with a number of firms over the past decade but never made it to the altar. In 2006, Orrick agreed to the main terms of a deal with Dewey Ballantine, but talks broke down. (The next year, Dewey merged with LeBoeuf, Lamb, Greene & MacRae, a star-crossed merger that ended in the largest-ever law firm bankruptcy.) It also held discussions with Akin Gump Strauss Hauer & Feld.
With persistent slack demand for legal services since the financial crisis, large law firms are under increasing pressure to improve revenues through growth, adding new practice areas and opening in new markets.
In some cases, firms are choosing to grow through merger. Fifty-eight law firms had announced mergers as of the end of September, a 41 percent increase from the same period last year, according to a survey by Altman Weil, a legal industry consulting firm.
“Large law firm combinations are always complex, and both our firms are disappointed that we could not clear the way for a merger,†Mitch Zuklie, the chairman of Orrick, said in a statement.
The new firm would have been named Orrick Pillsbury.
