Dewey Ballantine and Orrick Herrington & Sutcliffe have blamed wrangles over post-merger management and a series of heavyweight Dewey departures for the shock 11th-hour decision to call off the tie-up.
The firms announced in a joint statement last week (4 January) that talks to create one of America’s largest-ever legal tie-ups had been abandoned despite the pair having nominally agreed a tie-up.
One Dewey insider cited the robust management style and influence of Orrick chief Ralph Baxter and the make-up of the joint firm’s board as major sticking points.
He said: “Dewey wanted the terms amended so that there were equal voting rights for Dewey and Orrick partners on the board. Orrick did not review the terms, so the deal was dead.”
One Orrick partner added “The merger seemed to make enormous sense, but inevitably management control is going to be an issue in any merger.”
The decision to end talks follows the two firms pushing back the proposed merger date from 1 January, citing administrative difficulties, and a raft of senior Dewey partners heading for the exit. Dewey’s restructuring and bankruptcy group took a significant hit with New York head Alan Gover defecting to White & Case and fellow partners Dianne Coffino and Ben Hoch joining Covington & Burling.
A Dewey source close to the deal commented: “You had to question why we were doing a deal that was making so many good partners leave.”
Despite the problems, a deal looked likely after the two firms announced in October that the management teams had reached an agreement and recommended the tie-up to their partnerships. While both sides are claiming to have walked away from the other, Dewey’s partner losses are a cause for concern while the collapse of talks represents Orrick’s fourth major US tie-up to have failed in as many years.
Previous failed merger partners include Swidler Berlin Shereff & Friedman and Cooley Godward, which this month merged with New York practice Kronish Lieb Weiner & Hellman. Orrick had hoped to cross-sell Dewey’s New York offering to existing clients such as Ebay, Citigroup, Goldman Sachs and Deutsche Bank, while Orrick had offered Dewey a West Coast presence and a substantial international network, significantly in Europe and the Far East.
One former Dewey partner told Legal Week: “The decision not to merge is likely to hurt Dewey more than it will Orrick. While Dewey has many fantastic practitioners, it is losing momentum as a firm while Orrick is in the ascendancy.”
Announced in September 2006, the proposed tie-up would have created a giant of almost 1,500 lawyers with revenues of nearly $1bn (£535m).
Talkback: What now for Dewey and Orrick? Is the decision a shock?
