Rise of 19%

Partners at Allen & Overy enjoyed an uplift of 19% in their average earnings in the financial year before the tie-up with Shearman & Sterling.

A&O Shearman released new figures today regarding A&O’s financial performance prior to the mega-merger going live earlier this year.

They show that the average profit per equity partner (PEP) increased from £1.8 million to £2.2 million, thanks to a healthy 17.2% rise in pre-tax profits, reaching £1.05 billion.

Revenues increased a more modest 3.4% from just over £2.1 billion to £2.2 billion.

Commenting on the results, Hervé Ekué, global managing partner at A&O Shearman, said:

“In the year leading up to the completion of our merger, we’re pleased to report positive growth for the firm. This is testament to our strategic focus on diversification across regions, practices, and sectors.”

The results come after A&O Shearman initially set newly qualified (NQ) associate pay at £125,000, before upping this to £150,000 a month later following similar moves by its Magic Circle counterparts.

Earlier this week the newly-formed firm posted its combined retention score, with 37 its of 56 (66%) final-seat trainees staying on.

Fellow Magic Circle player Linklaters published its results this week, reporting a 10% increase in revenues, surpassing the £2 billion mark for the first time in its history. PEP also saw growth, climbing 8% up to £1.9 million.

66%

A&O Shearman has recorded its first post-merger retention score, with 37 of its 56 trainees staying put.

The new outfit confirmed it made 39 offers to the 48 trainees who applied for newly qualified roles. Thirty-seven offers were accepted, all on permanent deals.

Before the tie-up, Allen & Overy offered significantly more training contracts than Shearman, with 80 each year compared to Shearman’s 12.

Combining the trainee intakes of both firms has resulted in a larger-than-usual qualifying cohort, making the lower score — in this case 66% — somewhat expected.

Both outfits were typically strong retention performers prior to the merger, with A&O posting a result of 77% earlier this year and Shearman regularly chalking up results of over 80%.

The firms officially joined forces on May 1, creating a new global mega-firm with nearly 4,000 lawyers across 48 offices in 29 countries and combined annual revenues of approximately $3.5 billion (£2.9 billion).

James Partridge, early careers partner and training principal London, commented:

“This is the first qualifying cohort of A&O Shearman, and we are pleased that 37 trainees from both legacy firms have chosen to remain and progress their careers with us at this exciting time for the firm.”

“At A&O Shearman we remain committed to investing and developing our people and extend our congratulations to our first combined intake of qualifying solicitors,” Partridge continued.

The Legal Cheek Firms Most List shows the new recruits will start on a recently-improved salary £150,000.

Just Slaughters left to increase

A&O Shearman has become the fourth Magic Circle law firm to boost pay for newly qualified lawyers (NQs), taking its starting salary up to £150,000.

This is an increase of £25,000, or 20%, from the outfit’s previous salary of £125,000, and comes within weeks of identical raises at Freshfields, Linklaters, and Clifford Chance.

Having officially merged just this month, the new A&O Shearman NQ salary marks an increase from both pre-merger figures, including the former Shearman & Sterling pay of £145,000.

This latest increase is effective of 1 May.

Trainee salaries have also increased from £50,000 to £56,000 in year one and £55,000 to £61,000 in year two.

Denise Gibson, London managing partner, A&O Shearman said:

“With A&O Shearman we have created a unique law firm and our ambition is to be the firm of choice for the best, most diverse talent. Our compensation structure gives us flexibility to reward expertise, performance and wider contribution and is designed to be highly competitive to reflect the markets in which we operate. Trainees and NQs are a key part of the firm’s future and A&O Shearman provides unmatched opportunities for them to build successful careers. Our people are fundamental to our success and, in addition to offering a competitive remuneration and excellent benefits package, we are committed to nurturing a rewarding and supportive culture, which includes important elements such as a focus on wellbeing and engendering an environment where people can be themselves and excel.”

The Legal Cheek Firms Most List 2024 shows that Slaughter and May is the only Magic Circle firm not to increase the salaries of its junior lawyers, currently remaining at the previous standard of £125,000.

Increase on both firms’ pre-merger offerings

Magic Circle mega-firm A&O Shearman is offering £20,000 in financial support to future trainees as they undertake the Solicitors Qualifying Examination (SQE).

This equates to an increase of £3,000 compared to the £17,000 previously provided to trainees by both firms before the merger, which completed on 1 May.

The Legal Cheek Firms Most List 2024 shows maintenance grants at leading City law firms typically sit between £20,000 and £12,000, although some firms offer much less.

Trainees at the firm complete their SQE studies with BPP University Law School.

Before the merger, A&O recruited approximately 80 trainees annually, whereas Shearman took on around 12 in London. It remains unclear what the new intake will be now the firms have combined.

What we can tell you, however, is their pay; Legal Cheek revealed last month that trainees earn £50,000 in year one, rising to £55,000 in year two, while newly qualified associates start on £125,000. These rates are in line with those previously offered at A&O, but slightly down on Shearman’s before the merger.

Historic tie-up goes live today

The hotly anticipated mega-merger between Magic Circle law firm Allen & Overy and US outfit Shearman & Sterling officially goes live today.

The newly established firm, Allen Overy Shearman Sterling, known as A&O Shearman for short, comprises nearly 4,000 lawyers across 48 offices in 29 countries, with a combined annual revenue of around $3.5 billion (£2.9 billion).

The firms first went public with their intentions to merge in May 2023, with more than 99% of partners going on to vote in favour of the move.

Last month, Legal Cheek exclusively revealed that newly qualified associates at the firm will start on a salary of £125,000, with trainees receiving £50,000 in year one, which will increase to £55,000 in year two.

While these rates align with those previously offered at Allen & Overy, juniors joining the new firm from Shearman find themselves earning less than they had initially expected. This is because the US outfit paid £55,000 in year one, £60,000 in year two, and £145,000 on qualification.

Pre merger, A&O recruited around 80 trainees each year year, while Shearman took on 12 or so in London. It’s unclear what the new intake will be now that the firms have merged.

A&O Shearman’s headquarters is currently located at One Bishops’ Square in London (formerly A&O’s office), with plans to relocate to a much smaller space at 2 Broadgate near Liverpool Street station by 2027.

Denise Gibson, a banking partner based in London, has been appointed as the managing partner for the UK. Dave Lewis, who previously managed A&O’s New York office until earlier this year, has been appointed as co-managing partner for the US. He will share this role with Shearman’s Doreen Lilienfeld.

The firm’s new senior partner, Khalid Garousha, based in Abu Dhabi, has been serving as A&O’s interim global managing partner since July 2023. Meanwhile, Hervé Ekué, formerly head of the A&O office in Paris, has assumed the role of managing partner.

Meanwhile, former Shearman senior partner Adam Hakki has assumed roles as co-chair of the global A&O Shearman board and executive committee, along with chairing the firm’s US business. Doreen Lilienfeld, former global managing partner at Shearman, now serves as co-managing partner of the firm’s US business.

New Magic Circle mega-firm opts for Allen & Overy-level salaries

Newly qualified solicitors at the soon-to-be A&O Shearman will start on a salary of £125,000, Legal Cheek can reveal.

At the same time, first-year trainees will earn £50,000, while second-year trainees will receive £55,000.

While these rates mirror those already on offer at Allen & Overy, newcomers joining the new firm via Shearman will find themselves earning less than they had initially expected.

The Legal Cheek Firms Most List 2024 shows that Shearman & Sterling trainees receive £55,000 in their first year of the training, £60,000 in the second, and £145,000 on qualification.

This means that the salary bands at the new global firm are £5,000 lower than those at Shearman’s at each stage of the TC, and £20,000 less at NQ level.

While it remains to be seen how these shortfalls will be dealt with, some may look beyond the money and see the broader career benefits of joining a new Magic Circle mega-firm.

The new firm adopting A&O’s rates is perhaps unsurprising, considering its significantly larger size compared to Shearman, with 80 trainees each year as opposed to Shearman’s 12.

While the firms will officially join forces on 1 May, the new salaries don’t come into effect until September. Legal Cheek understands there will be performance-related bonuses on top of base salaries.

In a join statement, Allen & Overy and Shearman & Sterling told Legal Cheek:

“In light of our merger to create A&O Shearman, we will be aligning our trainees and newly-qualified (NQ) compensation models from September 2024. Attracting and retaining the best talent at all levels will be a priority for A&O Shearman. Trainees and NQs are a key part of the firm’s future, and we are determined to develop their talents and help them realise their full potential at A&O Shearman, and to reward them competitively while doing so.”

The prospect of a merger between the duo first hit headlines in May 2023, with 99% of partners confirming their approval of the tie-up later that year in October.

Follows similar moves by Kirkland & Ellis, HSF and Clifford Chance

Allen & Overy has become the latest international law firm to plant its flag in Saudi Arabia, consolidating its Middle Eastern presence.

The firm’s Riyadh office is its third Middle East outpost, with existing offices in Dubai and Abu Dhabi. The long-anticipated mega-merger with Shearman & Sterling, to create A&O Shearman, is said to be on track for 1 May. Shearman’s Riyadh team will be joining A&O’s Saudi lawyers post-merger.

Put together, the A&O Shearman team in Riyadh will cover matters including corporate and commercial, M&A and capital markets, and restructuring and insolvency.

The move to open a new office in Saudi Arabia has been made possible by a change to the Saudi Code of Law Practice in March 2023, which made it possible for foreign law firms to apply for a licence to practice in the country from the Saudi Ministry of Justice. Prior to that, foreign outfits were only able to operate in the country through associations with local law firms.

Legal Cheek has previously reported on other law firms securing an on-the-ground presence in Saudi Arabia, including Kirkland & Ellis, Clifford Chance, Herbert Smith Freehills and Squire Patton Boggs.

A&O regional managing partner for the Middle East and Turkey and interim global managing partner commented:

“We are thrilled to announce the opening of our office in Riyadh as we look forward to supporting the Kingdom further on its ambitious diversification programme as part of Vision 2030. A&O has had a strong presence in the Middle East since 1978, including a long history of advising clients in the Kingdom, and as A&O Shearman we look forward to continuing to combine the best of global and local to offer our domestic and international clients a full-service offering, bringing a breadth and depth of resource that we believe is unmatched. We are delighted to have established an independent office in the Kingdom and we look forward to the opportunities ahead.”

Mega tie-up edges closer

Allen & Overy (A&O) and Shearman & Sterling have confirmed the names of the lawyers who will assume the top post-merger leadership roles.

It was confirmed late last week that Khalid Garousha has been elected as senior partner of A&O Shearman and Hervé Ekué has been elected as managing partner. 

Abu Dhabi-based lawyer Garousha has been A&O’s interim global managing partner since July 2023 while Ekué currently heads up the Magic Circle player’s Paris office.

Meanwhile, Shearman senior partner Adam Hakki has been appointed co-chair of the global A&O Shearman board and executive committee, as well as chair of the firm’s US business.

Shearman’s global managing partner, Doreen Lilienfeld, will serve as a co-managing partner of the US business. 

The appointments will take effect on 1 May with more leadership announcements expected in due course.

A&O and Shearman first went public with their intentions to merge in May 2023, with more than 99% of partners going on to vote in favour of the move. The combination, set to complete in May of this year, will create a new legal giant with 3,950 lawyers, including 800 partners, across 48 offices and approximately £2.8 billion in combined revenues.

Merger gathers pace

Allen & Overy (A&O) and Shearman & Sterling have revealed where their UK and New York lawyers will be based once the mega-merger is finalised later this year.

A&O’s City office will take on Shearman’s UK team while A&O’s New York lawyers will move across to Shearman’s building on Lexington Avenue.

A&O’s London HQ is located at One Bishops’ Square, but is set to move to a significantly smaller premises at 2 Broadgate near Liverpool Street Station in 2027.

The firms first went public with their intentions to merge in May 2023, with more than 99% of partners going on to vote in favour of the move. The combination, set to complete in May of this year, will create a new legal giant with 3,950 lawyers, including 800 partners, across 48 offices and approximately £2.8 billion in combined revenues.

The new outfit will be called Allen Overy Shearman Sterling, or A&O Shearman for short.

“One of the exciting aspects of our combination is bringing our people together into a single office in each jurisdiction where we operate, which will accelerate our integration, foster collaboration and create powerful financial synergies on the real estate side,” the firms said in a joint statement.

It continued: “Whether we will be in the legacy Allen & Overy or legacy Shearman & Sterling space — or entirely new space — will vary by location, but we are pleased to confirm now that for our two largest offices, New York and London, we will be together. In New York, in Shearman’s current offices at 599 Lexington Avenue, which were transformed by a comprehensive and sustainable renovation recently, including state of the art conference and dining facilities for our clients and people. In London, in One Bishops Square — A&O’s current office with plans to move to a new and more sustainable office at 2 Broadgate on the Broadgate campus in the City of London by early 2027.

“We will be providing information on office integration in other cities in due course,” it added.

A&O currently recruits around 80 trainees each year year, with Shearman recruiting 12 or so annually in London. It’s not yet known what the total will be after the merger has gone live.

‘Shearman & Sterling partners will hold very significant leadership positions globally and regionally’ but the top jobs will go to Allen & Overy lawyers for now

All Allen & Overy shortlists have been announced for the new senior and managing partner roles at A&O Shearman.

In anticipation of the current A&O senior and managing partners coming to the end of their terms in April 2024, a month before the mega-merger with Shearman is expected to come into effect, the Magic Circle firm has put forward a number of candidates for the two positions and confirmed the chosen pair will lead the new combined firm.

The shortlisted lawyers include partners from London, New York and Brussels, along with the current managing partners of the Paris, Hong Kong and Abu Dhabi offices.

The winning duo will be announced in March, with the two leaders holding their posts until 2028.

A&O currently takes on 80 trainees a year, with Shearman & Sterling recruiting 12 solicitors-to-be annually in London. It’s not yet known what the total will be after the merger has gone live.

While there are no Shearman candidates up for the top spots this time around, an A&O spokesperson confirmed that:

“Shearman & Sterling partners will hold very significant leadership positions globally and regionally in the combined firm, including within the firm’s executive committee, board, practice group and regional leadership. These positions will be announced in due course.”

The proposed merger between the two global giants was announced earlier this year, with 99% of partners voting in October to confirm the move. The new firm will house nearly 4,000 lawyers, with a 48 offices around the globe.