Back in July we posted a rumour that Mallesons was said to be in merger talks with mainland Chinese firm King & Wood Over the weekend we received a tip suggesting that the merger has now been formally approved by both firms, and will proceed. From our anonymous spy:
A contact of mine at King & Wood in China has reported that the merger of King & Wood and Mallesons was passed on Tuesday this week. I have been informed that certain partners in the Beijing office are not happy and will be defecting, possibly to DLA Piper. Lawyers have been asked whether they want to stay on with King Wood Mallesons or go make a decision about leaving. Obviously the news hasn’t been announced yet so we need to keep our eye on the pulse for a few more days …
From the numbers alone, this would be a merger of equals. K&W, the top mainland China firm, Banking Firm of The Year, Dispute Resolution Law Firm of the Year, IFLR Asia Regional Team of the Year, and with about 880 fee-earners. Mallesons, by comparison, has around 900 fee-earners nationally.
Obviously this is big news, both for Mallies staff and also for other firms competing in China. For Mallesons, this means a huge buy-in to the Asian market, with potentially better access to futue inbound M&A work and the increasing scale of domestic Asian M&A and banking work. Why hasn’t either firm announced the plan to market? Possibly because, as our tipster goes on to say, they’re waiting for the Blakes/Ashurst hype to die down. And why shouldn’t Mallesons get to bask in its own glory? After all, as Gandalf the Grey (Mallesons CEP Robert Milliner) told us back in July:
We need a deeper, more long-term relationship with Chinese investors … We have a once- in-a-generation opportunity to recast our trading relationship with China. Let’s not be timid.
The apparent dissatisfaction among the firm’s Chinese partnership might provide another reason for the delay. It’s an open question how many partners, staff and clients will jump ship before the merger concludes. It certainly bodes ill for firm integration, while regulatory roadblocks may still make life difficult for foreign staff. The “KW Mallesons” branding is also an interesting concession. But if the firm can achieve full integration within China, it will occupy a position that other firms can only dream of.
So in barely a month we’ve had the Ashurst/Blakes merger (after a failed Herbert Smith approach), the Mallesons/K&W merger and the Minters Perth/Squire Sanders raid: that’s a record level of consolidation activity for the Aussie legal sector. Who will be next? Perhaps another White Shoe or Magic Circle firm buying a national presence? Keep the merger rumours coming: it’s sure to be an entertaining few months ahead.
Incidentally, we emailed David Olsson (Mallesons Beijing) for comment but strangely received an “Out off Office” message a full day later telling us that all China offices would remain closed until 8 October for the “Golden Week” national holidays. Is that a “no comment” then?
Update: in response to feedback, we’ve pulled the original image for this story, which was just a bad call all round. On updating the story to include the firms’ logos, we noticed that the branding is already quite similar. Are they even using the same font? Guess those precedents won’t have to be updated quite so much after all.
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Somewhat skeptical but excited nevertheless. If this turns out to be true, then surely the biggest story of the year? Perhaps the biggest story in australian legal industry ever? (sorry blakes)
This appears to be a much smarter merger than the rest.
Win for KW.
Forget about the article; FirmSpy, the photo you’re using is incredibly offensive, let alone rascist.
Great foothold in China for Mallies if they can make it work but prima facie seems like there’d be a massive cultural divide between the firms? Also anybody know the profit PEP between these two? Awards are nice but are they equal financially?
Wow – great photo!!
Love your use of the retard! It’s good because I’m not retarded – and he is.
Stoopid retard.
And now I feel so much better about being a FUCKING BULLY – thanks to you guys!!
You’re the best!!
I don’t think that the ultra-stringent Chinese regulations will allow for a completely integrated merger (at least not on the mainland).
Either way though, if Mallies can pull this off, it will be a game-changer.
So when do they rationalise salaries across all non-partner fee earners and bump Mallesons’ Sydney lawyers down to $2,000 p/mth? That’ll be a happy day.
Are people with Down Syndrome still an object of ridicule? Classy choice of picture.
@Andrew, @Not Retarded, @Offended: screw-up on our part and we’re in full agreement. Picture has been removed. The original author of this post didn’t realise what it was and didn’t look closely enough at the image. We may play close to the line at times, but we certainly draw the line well before that kind of disgusting excuse for humour.
Time for Freehills and Weil to get together?
To be known in the marketplace as a group of Free-Weilers.
I wonder what this means for the other firms. Any guess as to which firm will merge next?
@Anon 10:12 – Maybe you’re right. That would certainly be better than if the US firm Rottenstein LLP merged with Weil. That would make them Rot-Weilers.
So MSJ turned their backs on a CC merger to tie up with this mob?
Freehills – Weil and I would be in heaven…
Freehills have already opened their NY office in Weil’s building, you know.
More along the lines of Clifford chance turning it’s back on toxic mallesons.
A tie up “with this mob” is superior to a tie up with CC for the firm from every commercial angle…
I think its happening and may already be a done deal. Huge story. Waiting to see when the need will be shared within the firm. Not magic circle but def where everyone wants to be.
anon, more like MSJ could never secure a merger with CC. Magic Circle firms want nothing to do with full service Australian firms (as far as financial intergration at least)
Yes. CC is strong in established markets like Europe and North America but the area of growth is China. Mallesons’ choice to ‘tie up with this mob’ allows them to pursue growing (rather than stagnating and declining markets).
I think it’s a good choice.
meh…yawn
@ Marco
It’s the regulatory environment which is the challenge – not whether there is an office presence.
Wondering if there’s a monniker yet for our next Beloved Leader Stuart Fuller when Gandalf disappears into a puff of smoke? There’s a few being thrown around @ Mallies