Editor’s Note: The author of this post is based in Dallas.
By Timothy Powers, Managing Partner, Haynes and Boone
Haynes and Boone, LLP began merger discussions last year with London’s Curtis Davis Garrard (CDG) in the shadow of a major news event – the looming U.K. referendum on the European Union.
Mergers between established U.S. and U.K. law firms are challenging under any circumstances. It’s hard to find choice merger partners in a hyper-competitive market like London. Haynes and Boone regarded CDG as a spot on match — a leading boutique serving the energy and shipping industries that shared our commitment to teamwork and client service. Happily, we finalized the merger on September 1, opening our London office.
But reaching that milestone required us to first navigate some potentially tricky geopolitics.
Early in the merger talks, we decided to confront head on the possibility that the U.K. would vote to exit the E.U. What impact might Brexit have on our clients? Sitting across the table from CDG lawyers, we openly discussed our various practice areas, client bases and our long-term strategy and approach.
While neither side believed that Brexit would occur, we believed that an exit vote would likely lead to short-term uncertainty in the financial markets but not alter the strategic case for the merger. With that confidence, we agreed to specifically exclude Brexit from the material adverse event clause in the merger agreement.
English law has become the preferred choice of law in cross-border transactions and international arbitrations. A merger with CDG would instantly offer our clients enhanced English law expertise, as well a vital foothold in the heart of a city that — Brexit or not — will remain one of the world’s preeminent hubs for commercial and legal services.
We were undeterred by Brexit for another fundamental reason: large law firms like ours are far-reaching organizations, increasingly exposed to but also buffered from regional political and economic trends. Our clients hail from roughly 30 countries and boast a combined market capitalization in excess of $5 trillion dollars. Many operate in industries and jurisdictions that are not dependent on the U.K’s trade relations with the E.U. Similarly, CDG has built a practice over the last 20 years that is based on the use of English law for projects and disputes not centered in Europe, thereby insulating the firm from Brexit fallout.
UK voters asked for Brexit this summer, mere days before we were set to publicly announce the merger. The vote dominated headlines worldwide, with countless pundits offering dire warnings for the U.K. and the E.U. Moving ahead with the merger required a steady hand; the management of Haynes and Boone and CDG addressed the Brexit vote in our internal and external communications, clearly explaining to our lawyers and clients that we remained undaunted in pursuing the merger. Even Above the Law took note of our firm’s resolve, commending Haynes and Boone for keeping “its wits about it” in the wake of Brexit.
As we anticipated in the merger talks, Brexit indeed created economic headwinds. Some companies are reportedly reducing spending and laying off staff in the U.K. due to lingering uncertainty about the impact of the vote. Many economists, meanwhile, predict that that the U.K. economy will grow at a sluggish pace in the near term.
Still, the dour news has not dampened our enthusiasm for Haynes and Boone CDG, LLP, our newly christened London office. Our next endeavor: growing the office, hopefully in short order. We remain bullish about the office — and London— for a simple reason: our clients need expert legal advice in London. We plan to deliver it, however the Brexit saga ultimately plays out.