Akin Gump Strauss Hauer & Feld and Orrick, Herrington & Sutcliffe have confirmed that the two firms are in the early stages of merger talks. While that certainly doesn’t mean a combination is a sure thing, it does raise the question of what a union of the two firms would look like. The talks were first reported by The National Law Journal’s sibling publication The American Lawyer.
For starters, a combination would create a firm with gross revenues of $1.57 billion and about 1,800 lawyers in 29 offices worldwide, according to the most recent Am Law 100 numbers. That would immediately catapult the combined firm into the top 10 highest grossing firms on the Am Law Global 100, putting it neck-and-neck with Jones Day at No. 8. As The Am Law Daily reported, at $1.46 million, Akin had slightly higher profits per equity partner in 2009 compared to a PPP figure of $1.36 million for Orrick.
For Akin, which was founded in Dallas, wedding San Francisco-born Orrick would immediately give it a major West Coast presence. Orrick has more than 450 lawyers spread among its offices in Seattle and Portland in the state of Washington; and San Francisco, Silicon Valley, Los Angeles and Orange County in California. Akin currently has 86 lawyers in Los Angeles and 14 in San Francisco.
For Orrick, the deal would mean an office in Philadelphia and a huge entrée into Texas.
With its strong ties to the energy sector, Texas has become a target of such recent interlopers as Latham & Watkins, which opened a Houston office in January. Akin has 213 lawyers in the Lone Star State, spread among its offices in Austin, Dallas, Fort Worth, Houston, and San Antonio.
Orrick would also pick up one of the largest, and most profitable, offices in Washington, something the firm hasn’t been able to build on its own. Akin has 282 lawyers in Washington and ranked No. 13 on The NLJ's D.C. 25, our annual ranking of the top money-makers among Washington firms. Akin’s Washington office brought in $227.9 million in 2009. By itself, Orrick has about 90 lawyers in Washington and didn’t rank on the survey.
Additionally, the deal would give Orrick access to Akin's lobbying practice, which regularly places No. 1 on The NLJ's Influence 50 ranking of top grossing lobbying practices. In 2009, Akin's lobbying practice grossed $96.7 million.
But in the U.S., the real question would be New York, a city where both firms each have roughly 200 lawyers.
According to one former Akin lawyer, New York has been a sticking point in previous merger discussions involving Akin because lawyers in the Big Apple enjoy their place in the firm’s hierarchy. “They haven’t wanted to see their relative position in the firm change in the past,” the lawyer said.
Internationally, the two firms complement each other relatively well, overlapping in just Beijing, London, and Moscow. From the Akin side, the combined firm would add offices in Abu Dhabi and Geneva. (Akin acquired its Geneva office from Hogan & Hartson, which spun the office off ahead of its own merger with U.K-based Lovells earlier this year.)
From Orrick, which has a much larger international presence, the combined firm would also have offices in Berlin; Dusseldorf, Germany; Frankfurt, Germany; Hong Kong; Milan, Italy; Rome; Shanghai; Taipei, Taiwan; and Tokyo.
The combined firm would also have two dynamic leaders who have made no secret of their desire to expand their respective firms.
R. Bruce McLean, who chairs Akin, has acknowledged his goal of turning his firm into a top global player, even if it means merging with another firm. At a panel discussion hosted by The NLJ in December, McLean said he would “absolutely” entertain the idea of a merger, if it meant the firm could become a major international contender.
“If we found a merger partner that allowed us to take a big step in the direction of the implementation of the strategy, we would definitely enthusiastically explore that. While we haven’t come to the conclusion we have to find a merger partner, do we look at that? Absolutely, we do look at it,” McLean said. McLean did not return calls for additional comment.
And Ralph Baxter, Orrick’s chairman, has overseen several merger attempts during his tenure. Most recently, Orrick made a highly publicized and ultimately ill-fated attempt to merge with Dewey Ballantine in 2006. Though the executive committees at both firms approved the tie-up and recommended it to their partnerships for a vote, the deal fell apart when several Dewey rainmakers jumped to Covington & Burling and Weil, Gotshal & Manges, according to The Am Law Daily.
Regardless of Orrick’s botched union with Dewey, consultants say that on paper it matches fairly well with Akin. Tom Clay, a consultant at Altman Weil, which is not involved in the Akin-Orrick discussions, said, “I don’t see any real reason to take them out of the game.”
But given that the demand for legal services hasn’t returned to pre-recession levels, Clay said both firms would likely take a “more rigorous” approach to due diligence than in the past.
So is an Akin-Orrick combination in the cards? We’ll just have to wait and see.