Norton Rose Fulbright and the smaller, New York City based Chadbourne & Parke, are in late stage merger talks, one source involved in the process said, highlighting the latest signal that the legal market hasn’t yet had its fill of blockbuster merger activity.
Both firms confirmed discussions about the possible combination Thursday afternoon, although leaders did not specify where the talks stood.
The combined entity, if approved by a vote of the firms’ partnerships, would staff around 3,600 lawyers around the world with approximately $2 billion in revenue, according to the latest financial figures reported in The American Lawyer’s 2016 list of top law firms, which reported the firms’ 2015 financials. This would make the law firm rank the no No. 6 top grossing law firm in the United States according to The American Lawyer’s 2016 figures, although the pecking order will likely shift in 2017.
In the deal, Chadbourne would fit into Norton Rose Fulbright’s Swiss verein structure — a model used by some large firms that operate as profit centers by region, but under a common brand. Chadbourne, with much of its presence in the Northeast, in New York and Washington, D.C., would fit into Norton Rose’s U.S. operations: Chadbourne has around 300 lawyers, while Norton Rose has nearly 700 lawyers in the country.
“Mostly, this is a combination that is driven by the needs of both firms’ present clients to be competitive in the world,” said the source, noting that Chadbourne has entertained the possibility of expanding by merger in the past to have broader reach and service clients in more offices in different regions.
The discussions have taken place for at least a month, according to the source involved in the talks, although the discussions have been relatively limited, mainly to meetings of management committee members and practice leaders. The deal has not yet gone to a partner vote at either firm. The source was reluctant to provide a date for the vote, saying that the green or red light would come in a matter of weeks rather than months, but stressed that nothing would be finalized in the next day or two.
“This is still premature,” he said. “There are next steps that have to occur.”
The news was first reported by The Lawyer in London.
Norton Rose, with around 3,400 lawyers in offices in North American, Europe, Asia, Africa, Latin America and India, is the product of a 2012 merger between the Houston-based law firm Fulbright & Jaworski and the British firm Norton Rose. It is one of a small set of firms that have expanded globally, with the thinking that a more diverse range of services in different geographies will land lawyers more business. It is a full-service firm, with corporate transactions, commercial litigation practices, with a strength in the energy industry with Fulbright’s Houston roots.
Chadbourne is well-known for its energy and project finance practice, litigation, and government affairs, staffing the prominent lawyer Abbe Lowell, who has represented political figures such as Jack Abramoff and John Edwards and has close ties to the Clintons. Lowell was chief minority counsel to Democrats in the U.S. House of Representatives during the impeachment of Bill Clinton during the Monica Lewinsky scandal. Chadbourne also staffs former New York governor George Pataki as of counsel, who ran against President Donald Trump in the Republican primary.
The firm has had its fair share of challenges in recent years. In 2015, the firm shuttered its Beijing office and also entered and exited merger talks with Pillsbury Winthrop Shaw Pittman. More recently, the firm has been in the news for a gender bias lawsuit filed in 2016, accusing the firm and its management of discriminating against its female attorneys based on gender, when it came to pay and other management decisions. The firm has also seen its revenue slide downward over the past five years, according to financial figures in The American Lawyer. Most recently, in 2015, Chadbourne’s revenue was down 2.6 percent from the previous year, according to The American Lawyer. All of the factors contributing to the firm’s financial picture couldn’t be immediately determined.
The source, who spoke on the condition of anonymity because he was not authorized to speak publicly, was in favor of the combination.
“The next piece of this will include consideration by a wider group of people, including a wide variety of people in the full partnership,” said the source.
Going forward, firm leaders will need to discuss implementation, which includes combining firm offices and navigating client conflicts. In the United States, Chadbourne and Norton Rose both have offices in New York, Los Angeles and Washington, D.C. Internationally, Chadbourne also has offices in Mexico City, Sao Paulo, London, Moscow, Istanbul, Dubai and Johannesburg.
William Henderson, a law professor at Indiana Mauer School of Law who studies the legal industry, said that Chadbourne’s New York-based transactional practice is often times “coveted by firms that want a bigger New York footprint.”
“Other firms would have thought this is a great opportunity in New York,” said Henderson. “If you’re a global firm, you need to be in New York and have a credible bench there, so that should augment what Fulbright already had.”
Some of Chadbourne’s clients in federal courts over the past year have included Rockwell Automation, Inc., Tyco Integrated Security LLC, World Fuel Services, Inc. and the Republic of Bulgaria, according to a search in Bloomberg Law’s Litigation Analytics. Meanwhile, Norton Rose’s clients have included Walgreen Co., Expedia Inc., Fandango LLC, along with banks such as JPMorgan Chase.
The merger talks mark just the latest consolidation to hit Big Law. Last year, Arnold & Porter of Washington, D.C. and Kaye Scholer of New York announced a merger, forming a firm with about 1,000 lawyers across nine domestic and international offices.
“The principal meaning of this is that it’s another step in a consolidation of top 100 firms globally, an indication that more and more of the market is consolidating into large international and global practices,” said Peter Zeughauser, a law firm consultant with Zeughauser Group.
Will there be more merger activity ahead for 2017?
In the lead-up to the 2012 merger of Fulbright & Jaworski and Norton Rose, some sources spoke of a potential three-way merger with Pillsbury Winthrop Shaw Pittman in the mix. Will Pillsbury now come into play?
We’ll be following the developments here at Big Law Business. Please email us with any tips or information: firstname.lastname@example.org.
Rebecca Beyer contributed reporting to this story.