Linklaters holds talks with Australian leader over strategic tie-up

Linklaters partners have confirmed that the City firm has held discussions with Australian leader Allens Arthur Robinson (AAR) about a potential tie-up.

The pair started discussions about a strategic union late last year according to senior lawyers within the magic circle law firm, with one Linklaters partner indicating that an alliance is likely to be the preferred strategy.

An alliance rather than a merger would avoid problems associated with the disparity in profitability between the UK and Australian firms.

AAR, which is an established referral partner of Slaughter and May, posted revenues of $459.5m (£291m) in 2010 with profit per equity partner (PEP) of $1.1m (£696,000), according to the most recent global 100 compiled by The American Lawyer and Legal Week. Linklaters' revenues for 2010-11 stood at £1.2bn alongside PEP of £1.225m.

News of the talks, which had previously been reported in December on an Australian website, comes after Linklaters' Singapore joint venture partner Allen & Gledhill entered into merger discussions with magic circle rival Allen & Overy last year. Allen & Gledhill had previously approached Linklaters about a closer union but the magic circle declined due to a lack of demand for Singapore law advice from its international clients.

The AAR discussions make Linklaters the latest UK law firm to target the Australian legal market in recent months. Herbert Smith is currently pursuing merger talks with Freehills, while Ashurst is to unite with Blake Dawson under the Ashurst banner from 1 March.

Meanwhile, China's King & Wood last year agreed a merger with Mallesons Stephens Jacques, another of Australia's leading law firms.

Clifford Chance, Allen & Overy, Norton Rose and DLA Piper have all also moved into the market since 2010.

AAR, which has been linked in other press reports to a tie-up with Mayer Brown, has indicated recently to Legal Week its international strategy is in flux with the firm currently considering whether to align itself with a foreign law firm amid a period of dramatic upheaval in its home market.

Separately, one Mallesons partner told Legal Week that his firm had been approached last year by Linklaters regarding an exclusive alliance before Mallesons had secured its deal with King & Wood. However, the Australian firm regarded the terms on offer by Linklaters as unattractive.

A Linklaters spokesperson said: "Linklaters has a large Australian client base and we do a lot of work for international clients in relation to Australia. We work closely with all the leading Australian law firms and frequently meet them all around the world."

By Friederike Heine, Suzi Ring

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