Landmark Merger: Allen & Overy and Shearman & Sterling to Create Legal Giant

The newly-formed entity will bear the name "Allen Overy Shearman Sterling," abbreviated as A&O Shearman.

Allen & Overy and Shearman & Sterling have officially voted to merge, signaling the creation of one of the legal industry’s largest combinations in decades and the end of an era for one of New York’s most renowned independent law firms.

Upon completion, this merger between London-based Allen & Overy and its smaller counterpart, Shearman & Sterling, founded in Manhattan, will result in a colossal firm boasting nearly 4,000 lawyers, including around 800 partners, spread across 48 global offices.

The newly-formed entity will bear the name “Allen Overy Shearman Sterling,” abbreviated as A&O Shearman.

This pivotal vote represents the culmination of a strategic courtship that both firms made public in May, with resounding approval as more than 99% of each partnership supported the deal. The merger is anticipated to be finalized in or before May 2024.

Wim Dejonghe, Senior Partner at Allen & Overy, described the merger as a “historic moment” for both firms and the legal profession as a whole.

Collectively, the two firms report global revenues of approximately $3.5 billion, including roughly $1 billion in U.S. revenue. This consolidation will position the combined entity among the largest global law firms by revenue.

For Allen & Overy, the merger will establish a more robust presence in the United States, where London-founded firms have been seeking growth opportunities for decades.

Shearman, on the other hand, will enjoy a significantly expanded global footprint, complementing its existing international lawyer base.

Shearman & Sterling, founded in 1873, ranks among the oldest and most prestigious law firms in New York but has experienced a series of partner departures to rival firms over the past year.

Earlier discussions regarding a merger with transatlantic law firm Hogan Lovells fell through.

Allen & Overy, founded in 1930, belongs to the exclusive group of major law firms headquartered in London often referred to as the “Magic Circle.”

The firm had previously explored a merger with U.S. firm O’Melveny & Myers, but those talks collapsed in 2019.

Historically, British law firms have sought to expand in the United States, the world’s largest legal market, through mergers or by recruiting U.S. lawyers from competing firms.

One historical obstacle to major transatlantic law firm mergers has been a discrepancy in partner profits.

Shearman reported an average profit per equity partner of $2.48 million in 2022, ranking 44th among its major U.S. counterparts. In contrast, Allen & Overy’s average profit per equity partner was £1.82 million ($2.21 million) in its fiscal year ending April 30.

David Barnard, Founding Partner of consultancy Blaqwell and former manager of Linklaters’ North American operations, emphasized the appeal of offering high-quality legal services in the world’s major financial markets, particularly to the financial services community. He noted that the combined firm would become a “really significant force” in the legal industry.