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Will Kaye Scholer and Arnold & Porter Do the Dance?

It’s a fair question at this point: Is an Arnold & Porter, Kaye Scholer mega-firm in the making?

Since at least Thursday, the question has been floating around in the legal market by numerous observers who have been told of early discussions between the two firms: Kaye Scholer of New York and Arnold & Porter of Washington, D.C.

If consummated, any deal between the two would create a new AmLaw 100 firm. In 2015, Kaye Scholer had 370 lawyers and $370 million in revenue, while Arnold & Porter had 666 lawyers and $650 million in revenue, according to the most recent figures in The American Lawyer.

The thing is, nobody we’ve spoken with — eight sources including current and former partners of both firms — was able to deliver a clear understanding of what stage the talks are at right now. Firm leaders on both sides have remained muted on the subject.

“I constantly talk to law firms, and I get approached all the time,” said Mike Solow, managing partner of Kaye Scholer, in an interview last night. “I would only comment on it if there was something to comment on. I wouldn’t comment on any speculation or rumor. Right now, I don’t have anything substantive to say.”

Thomas Milch, the former chair of Arnold & Porter, said pretty much the same thing about the prospect of merger discussions. I reached the firm’s current chair Richard Alexander, by email, who said he had nothing to add. And two Arnold & Porter partners, contacted Thursday, said that they didn’t know anything about the talks.

So it would seem as though the talks are fairly nascent, but if you talk to the right person in the New York legal community, you might hear otherwise. Four sources told Big Law Business that they had heard of the discussions, through either partners involved in the deal or partners at competitor firms.

One of the sources who was told by a partner involved said leaders have shared financial information with each other, and that Kaye Scholer would hold a partner meeting next week to further discuss the combination.

Said another source, who is a law firm partner: “A partner of mine called into Kaye Scholer and confirmed that those conversations are taking place.”

He noted, however, “With any of these things, you never know how real it is.”

It’s a good point. We’ve seen any number of law firm mergers fail before reaching the finish line, from Orrick Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman in 2013, to Reed Smith and Pepper Hamilton just this year. And those are just the firms that have been publicly reported. Numerous other discussions are taking place under the radar, and managing partners feel like it’s part of their job to at least scope out the Big Law terrain for possible opportunities.

Kaye Scholer, with its New York base, has been in and out of merger talks with a number of firms over the past ten years, including Cooley and Proskauer Rose. It’s known for its bankruptcy and litigation practices.

Arnold & Porter, meanwhile, with its Washington presence, has practices in antitrust, energy, bankruptcy and health care. One of Arnold & Porter’s alums is Merrick Garland, who President Obama nominated to serve on the U.S. Supreme Court earlier this year.

A little more detail on our sourcing:

Two of the sources learned about the talks through partners at one of the firms, while another heard rumors about the discussions through a variety of sources: headhunters, partners and a managing partner at another law firm. The fourth source was a partner at a competitor firm and his colleague had heard from Kaye Scholer.  All of the sources spoke on the condition of anonymity to preserve business relationships.

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