Is a $2 Billion Megafirm at Stake?
As Herbert Smith Freehills (HSF) and Kramer Levin Naftalis & Frankel prepare for a pivotal partner vote this month on their transatlantic merger, newly filed accounts reveal HSF’s U.S. operations posted a combined $11.2 million loss over 2023-2024.
But with the creation of a $2B revenue legal titan hanging in the balance, industry analysts say the red ink is little more than a footnote.
The Numbers Behind the Deal
- U.S. Losses: HSF’s New York LLP reported a $5.9M 2024 loss, up from $5.3M in 2023, despite revenue climbing 4% to $50.8M according to American Lawyer.
- Global Scale: The combined HSF Kramer would boast 2,700 lawyers across 19 offices, positioning it among the world’s top 25 firms by revenue.
- Profit Potential: Post-merger, U.S. operations are projected to drive 25% of global profits, per HSF leadership.
Strategic Imperatives Over Short-Term Losses
HSF Chair Rebecca Maslen-Stannage has repeatedly called the merger “transformational,” emphasizing Kramer Levin’s litigation and corporate prowess in key U.S. markets. While the losses highlight integration challenges, they pale against the deal’s long-term stakes:
- Kramer Levin’s three U.S. offices would anchor HSF’s expanded North American footprint.
- The merger follows a wave of transatlantic unions, including Allen & Overy’s tie-up with Shearman & Sterling [LawFuel Merger Watch].
What’s Next?
Partners at both firms will cast votes by February 20, with a May 2025 launch pending approval. Observers note HSF’s continued investment in U.S. talent—including last year’s 12-partner hiring spree [Law360]—signals confidence in bridging profitability gaps.
“The U.S. is a strategically critical market,” an HSF spokesperson told The American Lawyer, underscoring plans to leverage Kramer Levin’s Wall Street pedigree.
Lawyers will keep an eye on this vote, the message is clear: $11M is a price worth paying for a seat at the global top table.
