Leaders of the Canadian and European firms poised to create a 2,500-lawyer behemoth by joining forces with SNR Denton said Thursday they view the proposed combination as a potential powerhouse in the natural resources, banking, insurance, and real estate sectors that will give them instant entree to an increasingly globalized legal marketplace.
In separate interviews, Christopher Pinnington, chief executive of Canada’s Fraser Milner Casgrain (FMC), and Salans managing partner Dariusz Oleszczuk told The American Lawyer they believe the legacy firms enjoy complementary geographic networks and supplementary practice strengths. Both expect the combinationwhich has already received the unanimous blessing of SNR Denton, FMC, and Salans managementto be approved. Firm leaders will formally recommend the three-way deal to their respective partnerships on Tuesday, with November 28 set as the deadline for final approval.
Slated to operate under the single-word moniker Dentons and the Swiss verein structure already employed by SNR Denton, the new entity would combine a trio of firms with geographically complementary networks. SNR Denton itself is the product of a 2010 tie-up between one firm with a robust U.S. presence (Chicago-based Sonnenschein, Nath & Rosenthal) and another (London-based Denton Wilde Sapte) considered strong in the Middle East and Africa. Paris-based Salans, meanwhile, has strength in Central and Eastern Europe. FMC, the product of a merger between two Canadian firms, is especially coveted for its Calgary office.
Pinnington says FMC’s talks with SNR Denton began in the wake of a broad strategic review of his firm’s future prompted by its mining and energy clients’ growing focus beyond Canada’s borders. That review, he says, began in early fall 2010two months before Ogilvy Renault announced that it would unite with London-based Norton Rose to become the first Canadian firm to join forces with an international firm.
“We concluded that the path forward did not include green-fielding offices internationally,” says Pinnington. Since then, he says, FMC has had talks with multiple U.S. and foreign firms about a possible combination or alliance, though he declined to say which firms or how many. Early last December, Pinnington says that he and the firm’s chief operating officer met for the first time with SNR Denton global CEO Elliott Portnoy and global chair Joseph Andrew. “We recognized the four of us had not only an affinity of culture and approach, but also an alignment between the way they saw the Canadian market and its role internationally and [our view],” he recalls.
Pinnington insists that the tie-up now being proposed is fundamentally different from the one that joined Ogilvy and Norton Rose: “This is truly three firms coming together as equal foundation partners to build a new firm. It’s not us being subsumed into a new firm.” In fact, FMC, which currently has 546 lawyers, will fill three of the 14 seats on the new firm’s board of directors, which will be apportioned to the firms according to size. SNR Denton, with 1,140 attorneys, will control eight board seats, while Salans, with 770, will fill the remaining three.
Like Portnoy and Andrew, Pinnington uses the word “polycentric” to describe the new firm because of the way it encompasses an array of geographies, languages, and legal systems. The lack of a dominant national culture is particularly appealing to Canadians, he adds, given Canada’s diversity of languages, provincial governments, and legal systems. All told, the new firm will have Dentons-branded offices in 25 countries, with affiliated or associated firms in an additional 27. It will have offices or affiliated or associated firm offices in 79 locations, according to a map included in a joint press release issued by the firms. (By comparison, Baker & McKenzie has its own offices in 44 countries according to The American Lawyer‘s Global 100 survey.)
The proposed combination would also be the first large-scale union to connect a Canadian firm and a major firm with deep roots in the United States. In 2000, Toronto-based Torys merged with a small U.S. firm, 75-lawyer New York firm, Haythe & Curley, to establishing a U.S. beachhead. Historically, the primary deterrent to such tie-ups has been the fear on the part of Canadian firms that they would lose referrals from their U.S. counterparts. Pinnington says FMC performed a cost-benefit analysis on the loss of referral income versus potential benefits of a globalized platform, and that “we’re fundamentally looking at this in terms of future opportunities” created by the megamerger. He added that Portnoy convinced him and others in FMC management that, based on Sonnenschein’s experience in its merger with Denton Wilde, “that apprehension [of lost referrals] was not realized, and in some cases referral relationships continued to grow.”
Salans’s Oleszczukwhose firm began serious talks with SNR Denton’s Portnoy last yeartouts the proposed tie-up’s complementary nature. From his perspective, the deal essentially united a national U.S. firm (SNR), a national Canadian firm (FMC), and two undersized international firms with networks that don’t overlap (Salans and Denton Wilde Sapte).
With critical mass in the U.S. and the United Kingdom, SNR Denton would give Salans an immediate presence in markets it has been hungry to enter for two decades. Salans, meanwhile, would supply stronger offices in France, Russia, and Turkey, while filling network gaps in Germany, Poland, and Azerbaijan. Given that both his firm and SNR Denton are strong in Kazakhstan, Oleszczuk says the combined entity will have a commanding market position in that country. He views Salans’s offices in France and Germany as a particular boon to the new firm because both SNR Denton and FMC have significant French and German clients, and because Canada has extensive ties to France. Just as global clients are investing in North America, he says, North American clients are investing around the world.
Perhaps of greatest importance, Oleszcsuk sees the three firms as amplifying one another’s sector and practice strengths. In terms of specialities, he says finance, bankruptcy, international trade, and environmental law are among the stronger groups at each of the legacy firms.
Looking forward, Oleszczuk sees the new firm as focusing initially on growing in mature markets. He would not comment on particular options, but Texas is the obvious gap for a firm aspiring to a dominant energy practice, and The Am Law Dailyciting an exSNR Denton partnerreported Wednesday, SNR Denton has already flirted with Texas-based firms Haynes and Boone, Locke Lord, and Thompson & Knight. Ultimately, something may still be in the offing in the Lone Star State. “This is not the end of the journey we are embarking on,” says Oleszczuk. “Together, the three firms will achieve more.”
American Lawyer senior international correspondent Michael D. Goldhaber contributed reporting to this story.
