A&O Shearman Cut Back Equity Partners

It’s not the sort of news they would want after a high-profile, big law merger, but A&O Shearman has announced significant post-merger changes including partner reductions and office closures.

The merger of Shearman & Sterling and Allen & Overy created one of the largest transatlantic law firm combinations in recent years, with nearly 4,000 lawyers across 47 offices in 29 countries and combined revenues of approximately $3.5 billion.

Although changes occur following mergers, in the interests of efficiency and to reduce overlapping operations, the cuts have taken some by surprise, with the firm saying – unsurprisingly – that they are “difficult but necessary”.

No further cutbacks are planned, they say, with the firm’s current plans to cut 10 percent of its global partnership, which currently stands at around 800 partners, by April 2025.

Already both of the merger partner firms had lost significant partners, with around 20 departing from each firm.

The current moves aim to reduce overlaps and create space for new hires and promotions in growth areas.

A&O Shearman will be closing its Johannesburg office by the end of 2024. The office, which opened in 2014, currently employs 32 lawyers specializing in corporate, M&A, finance, and tax matters. 

The firm stated that while priorities have shifted, it will continue to support clients in the region and the firm is also shutting down its consulting practice, which offered combined legal and advisory services. 

The consultancy closure is expected to affect about 30 lawyers and staff.

These changes come just four months after the merger between Allen & Overy and Shearman & Sterling, which was completed on May 1, 2024. 

Hervé Ekué, managing partner of A&O Shearman, acknowledged the difficulty of these decisions but emphasized their necessity for the firm’s future. Industry consultants note that such changes are common following major mergers, often used to address overcapacity or underperformance.

The merger and subsequent restructuring reflect ongoing trends in big law firmswhere firms are seeking to expand their global reach and optimize their operations. However, these changes also highlight the challenges of integrating large organizations and balancing growth with efficiency.