Wim Dejonghe: The Belgian Rainmaker Closing Allen & Overy’s Deal With Shearman

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When troubled New York law firm Shearman & Sterling’s merger talks with its transatlantic rival, Hogan Lovells, collapsed in March, Shearman’s Adam Hakki knew who to call.

Days after assuming his role as senior partner last month, Hakki picked up the phone to call Wim Dejonghe, the head of Allen & Overy, one of London’s elite magic circle law firms. Within weeks, the two were holed up in a Manhattan office discussing a $3.4 billion mergerwhich, if voted on, will be one of the largest the industry has ever seen.

For Dejonghe, born in Belgium: A&O first foreign majority partner and before that, managing partner: An alliance with a Wall Street firm will be the fruit of a two-decade-long project to break into the world’s most lucrative legal market, leaving British rivals behind. For Shearman, it offers a way out of a torrid period of partner departures and difficult restructuring.

“I have known Shearman for a long time. [Hakki] got into the role [and] he knew we were interested,” Dejonghe, 62, told the Financial Times. “The initial conversation was between him and me. After several meetings between the two of us, we thought: ‘this could work, actually’.”

Shearman, a storied 150-year-old firm that once advised the cream of corporate America, is the much smaller entity, with $907 million in revenue last year and about half of A&O’s 40-plus offices. But it has long been on Dejonghe’s dance card as a potential suitor due to crossovers in banking and finance.

Both firms had also learned lessons from previous failed mergers: in the case of A&O, talks with California-based O’Melveny & Myers collapsed, which stopped in 2019 after 18 months of negotiation.

“we knew [if] this is leaked before we go to our partners, we are dead,” Dejonghe said. “So we agreed that the only way we could deliver something to [partners] it was sitting in a room together for weeks and working out all the details.”

Shearman declined to comment.

With a small core team, including advisers from Wall Street heavyweight law firms Simpson Thacher & Bartlett and Davis Polk & Wardwell, Hakki and Dejonghe headed to the Manhattan offices of investment bank Lazard to put together what it would land on Sunday as a witty, comprehensive ad. with website, customer FAQ and video.

Dejonghe’s predecessor, David Morley, credits him for the speed of Shearman’s talks, which were executed in a matter of weeks. “Very few people could have done this, but Wim has had this clear strategic vision for a long time.”

Morley, who led the company with then-managing partner Dejonghe for eight years until 2016, says: “Wim didn’t wake up yesterday and say ‘it would be great to do a merger’… The firm has been thinking and discussing it for at least two decades, and looking for options. . . So they were ready to move very quickly when this came up.”

Morley and Dejonghe, seen as a modernizing force at A&O, spent years walking the sidewalks of New York and the US West Coast in the aftermath of the financial crisis, dining with law firm leaders at the brokerage hotspot. bag Milos Estiatorium in Manhattan.

“Some people would see us,” Morley says. “Others were even afraid of being seen in a restaurant with us in case their partners saw us or it was reported in the press. . . We weren’t asking people, ‘Do you want a merger?’ — simply building relationships and gaining knowledge.” He said this meant that Dejonghe had created a “pretty good rolodex of American companies.”

A&O has long had offices in the US But growing there hasn’t been smooth sailing. Like its international rivals, A&O has struggled to enter a market dominated by a group of highly profitable domestic companies with more firepower to pay star partners. The top Wall Street firms tend to be very focused, with only a handful of international offices and a portfolio of lucrative private equity and financial jobs.

By contrast, A&O and its magic circle peers in the UK have sprawling global networks, offering clients a much wider variety of work. That has made them one-stop shops for many corporations, but less profitable than their US peers. Partners at Wall Street firms like Simpson Thacher and Davis Polk took home more than $5 million on average last year, for example, while partners at Wachtell Lipton Rosen & Katz, the M&A powerhouse, pocketed more than $7 million. By contrast, A&O partners took home £1.95 million ($2.4 million) on average last year.

Tony Williams, a consultant who was managing partner at Clifford Chance when it merged with US firm Rogers & Wells in 2000, said: “The magic circle has been challenged in the last decade by the strength of the US economy. . . And Brexit didn’t help: sterling is now at $1.23.”

A former senior A&O partner said: “All the magic circle firms have sought to enter the US market for the last 30 years, and a merger has always been the most logical way, but it is extremely difficult to achieve. The major American companies have always been much more profitable, which for them is an indicator of excellence.

He added: “Shearman has had some difficulties in recent years, and suddenly they were available and there is an opportunity for a match.”

Large differences in partner pay made it difficult for UK companies to compete in the US, a problem exacerbated by the strong dollar. As a result, under Dejonghe, A&O has been phasing out its so-called fixed-step pay structure, where partners are paid according to time served, in order to pay star workers more.

Dejonghe, described by another former partner as “charismatic and entrepreneurial”, is no stranger to overseas mergers, where marrying two different cultures is vital to success. The corporate lawyer, who has five children, joined A&O when he linked up with part of Loeff Claeys Verbeke, a Brussels-based firm that Dejonghe ran as managing partner.

He said the Shearman merger is a “fusion of equals” in the same way as that deal. “You can’t tell your future colleagues, we’re acquiring you,” she said. “That is not the mentality. . . It does not work like that.

Becoming a managing partner of A&O meant leaving the cobbled streets of Belgium and its many cycle races. Dejonghe, who cycles to A&O’s Spitalfields office every day, is a veteran of amateur events including the Etape du Tour and the Tour of Flanders.

“I have sat in its wake going up and down mountains for many years,” Morley said. “We used to joke with him because he was good on the floor. . . He used to retort that in Belgium you always go against the wind. We always joked with each other; it was kind of a metaphor for the way we work together.”

“To be honest, the hills are not my favorite,” Dejonghe admitted. “Give me the Tour of Flanders anytime.”

The Shearman deal ahead of him is likely to be a challenge of a very different kind and potentially the pinnacle of his 15 years at the top. But Dejonghe is optimistic: “I have always had a progressive mentality. I’m probably a little more optimistic than some lawyers.”