A&O Shearman

The newly merged A&O Shearman, formed in May 2024 from Allen & Overy’s merger with Shearman & Sterling, marks a major transformation in the global legal market. Transitioning from a banking-focused Magic Circle firm, A&O Shearman is positioning itself as a top-three “global elite” with a strategic focus on private capital. The merger has created significant synergies, particularly in London across projects, banking, capital markets, and financial services regulatory practices, where both firms had strong pre-merger footprints. The combined firm boasts a 24-partner project finance & development bench (the largest team in the London office) and Band-1 Legal 500 practices in acquisition finance, property finance, trade finance, and securitisation. What truly distinguishes A&O Shearman’s banking and finance practice is its partners’ deep involvement in policy-making and regulatory consultation. The firm plays a pivotal role in bridging the gap between its banking clients and regulators, with partners sitting on bodies like the Banking Liaison Panel (a working group established by HM Treasury to consider bank and investment failure), the UK Parliamentary Commission on Banking Standards (in relation to proposals for the ring-fencing of retail banking activities in the UK), and the IIF Special Committee on Effective Regulation. A&O Shearman’s deep expertise in banking regulation and operations enables it to stay on top of and set precedents for the implementation of new regulations. For instance, in 2024, the firm advised Banking Circle S.A. on the issuance of Eurite, one of the first markets in crypto-assets (MiCA)-regulated stablecoin issued and backed by a bank in the EU, paving the way for the integration of stablecoins into the EU’s highly regulated financial system. A&O Shearman’s strong relationships with banks enables it to secure the City’s largest capital market mandates, both in equity and debt. As with banking, A&O Shearman has been instrumental in many of the major developments in the modern financial markets, from launching the first Eurobond offering in the 1960s through to shaping the evolution of digital bonds and ESG regimes today. In 2024, the firm advised BNP Paribas, HSBC, and RBC Capital Markets on the European Investment Bank’s first GBP-denominated digital bond, which made its first public issuance on HSBC Orion, HSBC’s tokenisation platform. On the equity side, and upon a true showcase of the transatlantic strengths of the newly merged firm, A&O Shearman advised Liberty Global Ltd. on the spin-off of its Swiss telecommunications business, Sunrise Communications AG, Switzerland’s second-largest telecommunications provider. As a result of the transaction which lasted for nearly a year, Sunrise became a separately traded public company with shares listed on the SIX Swiss Exchange and American depositary shares listed on the Nasdaq, making an initial market capitalisation of USD3.2 billion. The newly merged firm has made growing its private capital capabilities a key priority. In fact, A&O’s merger with Shearman & Sterling was driven by the very need to gain traction with US heavyweight asset managers who are predominantly counselled by US law firms. While it’s still A&O Shearman’s early days in an already saturated market, early signs are encouraging. The merger was completed as the M&A market revived on both sides of the Atlantic, with A&O Shearman London scoring a few notable mandates of 2024 in financial services private equity. These include advising Cinven in its acquisition of 50% interest in Policy Expert (a UK-based insurtech) from the Abu Dhabi Investment Authority, Helios Investment Partners on its minority investment in M2P Solutions (an Indian fintech), and NXMH on the sale of Bitstamp Ltd. (a cryptocurrency exchange) to Robinhood Markets. In recent months, the combined firm has also added about 10 lateral partners in private equity, M&A, debt finance, and restructuring, including a private equity duo from Sidley Austin London. The merger has brought substantial cultural shifts which are still panning out. While leaders speak of cultural alignment, which is certainly true for the merger to have been completed, significant changes to incentives and remuneration have had an impact on culture. A&O Shearman recently adopted a pure equity ownership model, with 800 partners being assigned to one of three equity levels – ‘entry’, ‘core’ and ‘super’. This will make partner promotions more challenging in a firm which is already more hierarchical than its peers, affecting talent retention. This came after the firm implemented a 10% cut in equity partnership in September 2024, raising concerns among legacy Shearman partners about the swift and concentrated decision-making led by a legacy-A&O-dominant management team. In addition, associate pay, the firm’s largest overhead, has risen to £150,000 for newly qualified associates in 2024 - a 20% increase from the previous level and a 40% increase compared to just four years ago, while post-merger cost-cutting measures are being implemented elsewhere in the firm. The higher salaries are expected to bring intensified performance expectations for associates and can potentially lead to a slowdown in recruitment as the salary budget tightens.