Lovells’ Crispin Rapinet and Hogan & Hartson’s Jun Wei make the case for the merger of their two firms and explain why they feel theirs will succeed where others have faltered.

That Asia and the Middle East are key pillars in the strategy of the firm soon to be known as Hogan Lovells is no secret- so much is obvious from even the most cursory glance at the firm’s numbers on the ground in the extended region.

The merged firm will have a total of 45 partners, 198 lawyers and 11 offices in the region- dwarfing all but a few of its international rivals and only the brave would bet against the firm either adding lawyers to its ranks or opening further offices in the region over the next twelve months.  

But as easy as it is to be distracted by the impressive numbers, a look at what each firm brings to the table provides a more accurate indication of where the firm’s fortunes lie in the region. ALB discusses how Hogan Lovells will go about living up to its billing as the region’s new legal leviathan with Hogan & Hartson’s Jun Wei and Lovells’ Crispin Rapinet.

The merger of equals

As one avid legal market watcher told ALB last year, “the term ‘merger of equals’ is an often overused in the context of large law firm mergers, but Hogan Lovells, may be the closest we have seen yet. ” But while this may be true when weighing the strength each firm’s operations in their home markets, just how true is this statement in Asia and the Middle East?

On paper, one could be forgiven for assuming that in our region the merger may be more disparate than equal. After all, Lovells brings three times as much manpower to the merger, five more offices and stronger credentials in almost every practice area.

But to distil the union down to what each firm brings to the table would be to miss the raison d’etre of the merger- synergy.

“For a merger of this size to work it can’t be an up and down full-service merger, it has to be about seeking out synergies and identifying complimentary areas of practice,” said Rapinet. “The two firms are committed to improving in areas through a merger which would not have been possible as two separate law firms.”

 “With the merger of our firms in Asia and the Middle East we believe that we are achieving exactly this. While we are contributing offices in South East Asia and the Middle East and our strengths in IP, finance and dispute resolution Hogan & Hartson is bringing with them their expertise in private equity and venture capital plus their very strong mainland China regulatory practice,” said Rapinet. “These are all areas which we have been looking to build up in the region.”

While Rapinet says that the remaining months leading up to the merger will be about “strengthening the practices at a high level,” one can’t help feeling that Rapinet, Wei and their fellow partners are already looking beyond this stage- busy identifying where the best prospects for the growth of their merged firm lie .

“The ideas we have in relation to investment opportunities will be discussed formally when the partners meet later on, but one area which is interesting for us is dispute resolution in the Middle East,” said Rapinet.  Wei adds a number of areas to Rapinet’s list. Mainland regulatory work, private equity,  real estate and outbound investments by Chinese companies.

“We’ve always had the aspiration to grow these practices as Hogan & Hartson but lacked the resources,” Wei said. “Now we have those and I look forward to working with my partners to build our practice in these areas as Hogan Lovells.”

Logistics

As much as Wei and Rapinet are noticeably excited about the resources that the merger will bring to their respective practices, they are also well aware of the logistical hurdles that await them in the lead up to 1 May 2010 when the merger comes into effect.

“The next few months will present organisational challenges to everyone concerned,” said Rapinet. “For one, there are new management structures which will and are being created but the fact that these take elements from the existing management structures of both firms means that the impact on the firm and its people will be lessened.”

Earlier this year Wei was elected to the Hogan Lovells board which will have a supervisory responsibility for overseeing the affairs of the firm ostensibly in relation to the partnership. Rapinet was appointed to the firm’s international management council which will be charged with leading the strategic direction of the firm and managing its day-to-day operation. Both are borrowed from Lovells’ current management structures.

Taken from Hogan & Hartson is the combined firm’s compensation system. Under the arrangement Lovells will move on from a managed lockstep compensation system to one that is more merit based.

But arguably the larger headache is that of conflict of interests arising between the two firms’ respective client bases. In the UK, the combined firm faces problems with several clients- of which Hogan’s representation of Rupert Murdoch’s BSkyB and Lovells’ relationship with ITV have been covered most widely.

But according to Rapinet, there aren’t any client conflicts of this magnitude looming for Hogan Lovells in either Asia or the Middle East. “As you would imagine, we have been examining the potential for client conflicts and this process got underway long before we decided to merge,” he said. “In Asia and the Middle East, it’s looking like this won’t be an issue and we won't have any serious client concerns to address.”

Expectations and legacy 

Wei and Rapinet stress that no targets- performance, headcount, financial or otherwise- have been set although both sets of partners are keen to push the merger through as quickly as possible so integration can be achieved.

“The biggest challenge for us is integration,” he said. “It would be premature of us to set financial goals and other targets at this stage; although it’s clear that we are looking for increases in key areas otherwise we would not be merging in the first place… integration is the key to making the merger work. It will only work if we come together as one firm as quickly as possible."

While the firm has not yet set itself benchmarks or targets that need to be met, it seems the market most certainly has. To say that Hogan Lovells will prove something of a litmus test for big law mergers is an understatement- a number of managing partners on both sides of the Atlantic are understood to be watching with interest to see if the melding of people, cultures and management that Wei and Rapinet speak of can be successfully pulled off, and perhaps more importantly, what clients make of it all.

But Hogan Lovells need not only be a test case for the revival of the Trans-Atlantic merger. If anything, the union provides ample proof of just how important emerging and nascent legal services markets like those in China, South East Asia and the Middle East are in any expansion equation. Judging by the various alliances, tie-ups and best friends agreements between international and domestic law firms in Asia, the first Asia merger of equals could be just around the corner. ALB