Berwin Leighton Paisner's merger talks with Greenberg Traurig have collapsed because the US firm wanted its board to have total control over how much BLP partners were paid.

News of the discussions were revealed last month and the deal looked like it might have some legs. Both firms are well known in their domestic markets but largely unknown outside them, and a merger would have brought a solid presence for each in large markets. There were differences in size (GT has 1,800 lawyers compared to BLP's 700) and profitability (GT has PEP of $1.42m as opposed to BLP's $1.09m), but they are problems that generally plague UK/US mergers and insiders tell RollOnFriday they were surmountable. The real sticking point was the basis for partner remuneration.

Most UK-headquartered firms (including BLP) operate on a modified lockstep basis, under which partners' remuneration is decided to a significant degree by how long they have worked as a partner. Not so GT, which uses the ominously-named "black box" system. The firm's executive committee decides in its absolute discretion how much each partner gets paid. And it wanted to extend this mechanic across the merged firm. One can see why BLP's London partners would be less than delighted at having their remuneration set entirely at the whim of a handful of partners in Miami whom they'd never met:

Hiram Humpengrind III: "Next up is Joe Blogs, employment partner in London. Anyone know him? Anyone?"
Trey Butkiss Jr: "Never heard of him Mr Humpengrind."
HH: "He was on $1.2m last year. That seems like a lot. What is employment law anyway? Can't these people just fire at will like we do?"
TB: "Europe is crying out for a Donald Trump Mr Humpengrind."
HH: "Someone told me that Skadden was courting that finance partner we recently made up in New York. Let's bump him up $400k and take it out of this idiot's pocket. Agreed?"

    The special relationship. How Neville Eisenberg at BLP saw it.
     
    The special relationship. How GT saw it.

So it's back to the drawing board for BLP. Greenberg Traurig chair Richard Rosenbaum said the US firm had never completed a large merger “because of our basic belief that ‘culture eats strategy for lunch’", and that while BLP offered an "exciting" opportunity to enhance its practices, GT would not merge "at the risk of materially diluting our cultural, financial and other priorities".
 
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Comments

Anonymous 18 March 16 09:47

Hang on, I thought BLP's culture was all about nepotism and promoting untalented people with wealthy but slightly dubious family connections with to positions of authority, isn't it?

Anonymous 18 March 16 10:15

I am not in anyway connected to either of these two firms and never have been. I love ROF and it's humour but putting this partner's head on a cartoon of spanking is taking it a bit far. I would hope ROF exercises better judgment next time.

Anonymous 18 March 16 10:39

‘culture eats strategy for lunch’

What does that mean exactly? Is it like rock-paper-scissors?

Anonymous 18 March 16 10:45

‘culture eats strategy for lunch’

What does that mean exactly? Is it like rock-paper-scissors?

Anonymous 18 March 16 11:29

Culture eats strategy, lunch is for wimps, greed is good ... what is it with septics and catchy but ill considered jargon? Such shallow creatures.

Anonymous 21 March 16 05:00

A bit cheeky using poor old Neville E. I think the current Managing partner was the driving force on this one. Anyway, it was clear to anyone with an inkling of the cultural differences that this was a non starter. Sadly it does mean we won't end up with "Berwin's G&T" as a name.

Anonymous 09 February 19 23:03

GT largely unknown in London? Their London office Greenberg Traurig Maher has revenue of $50 million dollars a year.