© 2012 The Texas Lawbook.
By Mark Curriden, JD
Senior Writer for The Texas Lawbook
For the past decade, Texas-based Fulbright & Jaworski and London-based Norton Rose had been rumored to be in merger talks, even though lawyers at the two law firms contended they were merely “best friends” with benefits.
On Wednesday, the firms made their relationship official and permanent, announcing a merger that makes the new firm, which will be called Norton Rose Fulbright, one of the 10 largest in the world.
The new combined law firm will boast 55 offices and 3,800 lawyers around the globe with annual revenues approaching $2 billion. The merger, which is legally structured to allow the finances of the two law firms to be calculated separately, is expected to be completed by June 1.
Kenneth Stewart, who has been the partner-in-charge of Fulbright’s Dallas office, will lead the new firm’s operations in the U.S. Fulbright has about 535 lawyers in Texas, including more than 250 in Houston and 150 in Dallas. Leaders of the two law firms say there will be no layoffs.
“We are the same law firm with the same integrity and the same quality serving our clients but on an expanded global basis,” said Stewart, who practices corporate law. “This is a smart combination of two groups whose geographic presence, capabilities and client service cultures are strongly complementary.
Stewart said that he and other Fulbright partners started notifying clients, which includes ExxonMobil, AT&T, Shell Oil, and Dell Inc., Tuesday evening about the merger. He and other lawyers at Fulbright said that the response has been overwhelmingly favorable.
Fulbright, which was founded in Houston in 1919, had been approached during the past several years by several other law firms about a possible merger, but Stewart and others said that none matched Fulbright’s needs or culture as much as Norton Rose.
“Our team kicked the box over and over, and we were pleasantly surprised at how well we fit together,” says Stewart, who led Fulbright’s due diligence effort. “We didn’t bump into any meaningful obstacles.”
Stewart and others described Fulbright’s decade-long romance relationship with Norton Rose as “best friends” that shared common client interests. Lawyers say intense merger discussions started in June.
Fulbright’s venture with Norton Rose means that the Texas firm joins a growing number of global law firms using an unique business structure called a Swiss Verein, which allows each of its various offices to operate financially independent of each other.
Lawyers at Fulbright say the Swiss Verein structure allows Fulbright to maintain its defined retirement plan, which has caused problems for other law firms interested in merging with Fulbright. While Fulbright lawyers say that the current plan is “fully funded”, they say that the long-term and future liabilities of the plan scared away other suitors.
Another issue, according to Fulbright insiders, is that firm financials were dismal in 2011 (Texas Lawyer reported that Fulbright’s 2011 net income was down 9.4 percent and profits per partner dropped 8.4 percent) and that 2012 projections have been disappointing, too. However, those numbers are compared with 2010, which was a record year in revenues for Fulbright.
As part of the merger agreement, Fulbright agreed to drop legendary lawyer Leon Jaworski’s name from the firm’s brand. Jaworski, who joined Fulbright in 1931 and saw his name added to the firm’s brand in 1974 when he returned to the law firm after leading the Watergate prosecutions.
Ward Bower, a legal consultant and principal at Altman Weil, said that the merger “reinforces the importance of Texas in any global law practice” and adds great depth to Fulbright’s energy practice outside the US.
Bower says the new mega-law firm still faces significant obstacles in being successful, including ownership structure, compensation methodology, management organization, and use of the firm’s new name.
Peter Martyr, Global Chief Executive, Norton Rose, said, “We have been looking at the US market for a number of years, seeking a firm that meets our requirements for excellence in law, good business synergies and a compatible culture. Fulbright & Jaworski meets all our criteria; it is financially strong, with forward-looking management and similar strategic growth aspirations.”
© 2012 The Texas Lawbook. Content of The Texas Lawbook is controlled and protected by specific licensing agreements with our subscribers and under federal copyright laws. Any distribution of this content without the consent of The Texas Lawbook is prohibited.