Why is Shearman & Sterling reportedly looking for a merger partner?
Shearman & Sterling didn’t keep up with its BigLaw counterparts after the 2008 financial downturn.
Shearman’s head count and gross revenues lagged behind that of growing competitor law firms, according to stories by Law.com here and here.
In the mid-1990s, Shearman was ranked No. 9 for gross revenue with 546 lawyers in the Am Law 100 ranking. In 2021 data from the 2022 Am Law 200 ranking, Shearman was No. 50 based on gross revenue with 727 lawyers.
During that period, Shearman’s head count increased by 33%, according to Law.com. Paul, Weiss, Rifkind, Wharton & Garrison, on the other hand, increased its head count by 207%; Simpson Thacher & Bartlett by 192%; Milbank by 150%; and Weil, Gotshal & Manges by 105%.
Now, Shearman is looking for a merger partner and is reportedly in talks with Hogan Lovells.
Law.com examined the data and spoke with several sources, most of them anonymous. The publication came to these conclusions:
• Shearman was particularly affected by the 2008 financial crisis because of a decrease in its representation of big-name banking clients. During that time, there were several bank mergers, and a few of them sent more of their work to other firms.
• Other large firms began to develop private equity practices, but Shearman didn’t make the same investment.
• Shearman relied more on reputation than on advanced marketing and business development.
• Shearman has been seeing a net loss in partners lately.The firm has to pay well to attract laterals, while some existing partners are leaving for more money elsewhere.
• Several of Shearman’s international offices are underperforming.
Law.com added that Shearman still has several highly ranked and respected practices. They include antitrust, general litigation, employee compensation and benefits, securities litigation, and white-collar and government investigations.
Shearman did not provide a comment to Law.com, other than to issue the same statement it made amid reports of merger talks.
“We continuously consider the various levers of growth that are accessible to us as part of our strategic planning process,” the firm said. “These include both internal and external opportunities that would benefit our firm and our clients.”