The global legal market is undergoing a profound transformation marked by high-profile transatlantic mergers such as A&O Shearman, Herbert Smith Freehills with Kramer Levin, and the recent combinations involving Ashurst, Taylor Wessing, and Hogan Lovells with Cadwalader. These transactions are not only reshaping the Big Law landscape; they also coincide with the growing entry of investment funds into mid-sized law firms and professional services platforms such as Auren and Grant Thornton, driving selective consolidation in Spain and Latin America. In this context of concentration—where scale in the United States has become a prerequisite for survival—questions arise around governance, profitability, and the replicability of these models.

In this regard, our Managing Partner, Marc Gericó, analyzes transatlantic mergers and the influx of investment funds into the legal sector for El Confidencial, unpacking whether this represents a structural trend or a limited cycle.

MERGERS BLOCK

• Are we facing a structural trend of transatlantic mergers, or a limited cycle of very specific transactions?

With cases such as A&O Shearman or Herbert Smith as precedents, and the new combinations announced by Ashurst, Taylor Wessing, and Hogan Lovells, do you believe we will see more integrations of this kind in the coming years, or is this a phenomenon that is difficult to replicate due to culture, governance, and power-sharing issues?

From my point of view, this is not a limited cycle but a highly selective structural trend. Transatlantic mergers are not driven by fashion or a tactical window of opportunity, but by a reordering of power in the global legal market.

Transactions such as A&O Shearman, HSF–Kramer, or Hogan Lovells–Cadwalader are not explained by expansionist ambition, but by the fact that the market no longer tolerates global structures without real critical mass in the United States—particularly in New York. Scale has ceased to be a competitive advantage and has become a requirement for survival.

That said, the fact that this is a structural trend does not mean it is broadly replicable—quite the opposite.

These mergers are viable only for a very limited number of firms, namely those capable of simultaneously aligning three extremely complex elements:

1. A compatible economic model, particularly with respect to PEP (profit per equity partner), investment levels, and short-term risk tolerance.
2. Effective governance, with the ability to make centralized decisions without being blocked by internal political balances.
3. Explicit power sharing, where one party effectively accepts that growth requires diluting control in exchange for future viability.

As a result, we will see more integrations, but not a generalization of the model. “Truly global Big Law” is closing, not expanding. Each new merger raises the entry threshold and leaves more firms stranded in no-man’s-land: too large to be agile, too small to compete as an integrated platform.

In that sense, these transactions are not the beginning of an open wave but, as we have discussed on The Legal Podcast, the gradual closing of a club.

• To what extent are the major mergers already completed comparable to those yet to come?

From the outside, they are grouped under the same label, but do they really respond to the same logic of integration, ambition, and balance between the parties, or are we dealing with different models that merely share a transatlantic dimension?

I would not say they are fully comparable, even if they are presented under the same label from the outside. Grouping all of these transactions as “transatlantic mergers” oversimplifies very different strategic realities.

Completed integrations and those still to come do not follow a single logic; rather, they reflect different stages in each firm’s life cycle and very specific positioning needs.

In some cases, such as A&O Shearman, as we noted at the time, the merger reflects a symmetrical reinforcement strategy: two platforms with similar global ambitions seeking to close critical geographic gaps and gain density in key markets without substantially altering their DNA. Integration is complex—as evidenced by the departure of approximately 30% of Shearman & Sterling lawyers—but there is a clear narrative of balance and continuity.

In others, such as Hogan Lovells–Cadwalader, the logic is different. It is less about ambition and more about structural correction. One party contributes high profitability in certain niches but lacks the scale, balance sheet, and investment capacity required to remain independent in the new global landscape. The other contributes network, infrastructure, and risk-absorption capacity. The balance is not identical, nor is it intended to be.

There are also transactions that function more as functional integrations than as deep cultural mergers: the goal is to strengthen strategic practices, access certain clients, or consolidate presence in critical jurisdictions, without fully integrating the operating model. They share a transatlantic dimension, but not necessarily the same ambition for full integration.

Thus, while they may all appear to be “size-driven” moves from the outside, they actually respond to different problems:

• closing a structural weakness in the United States,
• gaining investment capacity and resilience, or
• securing future relevance in a market that penalizes fragmentation.

Geography is the visible common denominator, but the underlying logic is heterogeneous.

Confusing these dynamics leads to erroneous conclusions: not all of these mergers pursue the same objectives, the same degree of integration, or start from the same balance of power.

This explains why they will not all have the same trajectory, even if they share a headline.

• In these transactions, what weighs more: access to the U.S. profit pool or the need to gain scale to invest and compete more effectively? Are these mergers primarily driven by profitability, by technological and operational pressure, or by global client demand that no longer accepts fragmented structures?

I do not see this as a choice between profit pool, investment, or client demand; rather, it is a hierarchy that has shifted.

For years, access to the U.S. profit pool was the main driver behind these transactions. It remains relevant today, but it is no longer sufficient on its own to justify a merger of this magnitude. What we are seeing is a deeper shift: size is no longer sought merely to earn more, but to remain competitive.

First, there is investment capacity. Firms operating in the top global tier must invest continuously in technology, knowledge management, data, pricing, hybrid talent, and increasingly complex operating structures. This requires balance, scale, and financial stability. Without sufficient size, even highly profitable firms become vulnerable, as their profitability depends too heavily on cycles, individuals, or specific practices.

Second, there is global client pressure. Sophisticated clients no longer want to coordinate multiple firms, teams, and internal incentive structures. They want integrated platforms, a single point of contact, the ability to follow capital wherever it moves, and consistent execution. Mergers respond largely to this demand: less friction, greater predictability, and deeper service capability.

The U.S. profit pool remains key, but increasingly as a necessary condition rather than the end goal. U.S. exposure without local scale, real integration, and investment capacity has proven insufficient. Isolated profitability, without a structure to support it, is fragile.

In this sense, these mergers are driven less by the pursuit of immediate revenue and more by a logic of strategic resilience: gaining size to invest better, serve clients better, and sustain profitability over time. The implicit message is clear: in the new global legal market, it is not enough to be profitable—you must be structurally sound.

• What specific risks do you see in this new generation of mergers compared with major integrations of the past?

In terms of real integration, incentives, and talent retention, which classic issues remain latent, and which do you think these firms are managing better than in previous experiences?

The classic risks remain, but the context is different. Cultural integration, incentive alignment, and talent retention continue to be the main friction points in any large merger. None of these transactions is free from internal tension, especially when different economic models and professional cultures converge.

The difference compared with past integrations is that firms today are more aware of the real cost of poor integration and are addressing key issues earlier, such as governance, compensation systems, and cross-firm leadership. There is less faith that size alone will solve everything. Even so, the most significant risk remains the same: confusing deal closure with merger success.

The real challenge is not integrating structures, but getting partners to operate as a single platform, sharing clients, incentives, and strategic vision. That is where many large integrations have historically failed—and where the true success of this new generation will be decided.

• In an increasingly concentrated and global market, do annual revenue rankings still make sense as the primary benchmark? Do you believe aggregate revenue remains a useful metric for measuring a firm’s success, or is it losing relevance compared with indicators such as margin, practice-level profitability, or real contribution by jurisdiction?

Revenue rankings still matter, but they are no longer sufficient. Aggregate revenue remains a useful indicator of scale and relative positioning, particularly in a global market where size conditions access to certain clients, transactions, and mandates.

However, as a primary metric of success, it is losing explanatory power. Revenue says little about model quality, operational efficiency, or true financial strength.

In a more competitive and concentrated environment, indicators such as margin, profitability by practice, productivity per partner, or effective contribution by jurisdiction provide a far more accurate picture of performance. Two firms with similar revenues can have radically different risk profiles, investment capacity, and long-term sustainability.

Revenue remains critical as context, but real strategic analysis is shifting toward internal value-creation metrics—less visible, but far more decisive in understanding who is truly winning and who is merely appearing to do so in the short term.

• From the perspective of Spanish offices, what real economic impact do these mergers have beyond branding? Do these integrations typically translate into more business and higher local profitability, or is the value concentrated mainly in London and the United States, leaving Spain with more reputational than financial return?

For Spanish offices, the economic impact of these mergers is real but uneven and not automatic.

Beyond the immediate branding effect, the transfer of financial value to Spain depends heavily on the local office’s ability to integrate into the actual flow of global business.

In some cases, mergers do open the door to more cross-selling, international transactions, and greater exposure to global clients. In many others, however, value is concentrated primarily in London and the United States, where major strategic decisions, the most complex mandates, and the highest margins originate.

Spain risks being left with a more reputational than financial benefit if it fails to become a relevant node within the platform, rather than merely a well-positioned brand office. The differentiator is the ability of Spanish offices to originate business, lead cross-border mandates, and deliver strategic value—not simply to execute delegated work.

These mergers do not, in themselves, guarantee higher local profitability. They expand the playing field, but they also force Spanish offices to compete internally for relevance, visibility, and access to global business. That is where it is decided whether the merger translates into real revenue or remains an image enhancement.

FUNDS BLOCK

• Investment funds are concentrating on mid-ticket transactions: a structural limit or a preliminary phase? Do you think this type of investment is destined to remain within mid-sized firms and highly operational models, or could it evolve to the point where a fund takes an equity stake in a large Spanish law firm in the coming years?

More than a structural limit, this reflects a logical market learning phase. The concentration of investment in mid-ticket deals is less about a lack of ambition and more about model fit.

Funds are more comfortable with mid-sized firms and operational platforms because they offer three key elements:

(i) a clear corporate structure,
(ii) lower dependence on individual partners, and
(iii) obvious levers for improvement in processes, technology, and inorganic growth.

This reduces risk and facilitates value creation within reasonable timeframes.

That said, it is not inconceivable that the model could evolve toward larger structures. But for a fund to take an equity stake in a large Spanish firm, that firm would need to fundamentally transform its governance, incentive system, and concept of ownership. The issue is not size, but culture and control.

In the short term, investment will continue to focus on mid-sized firms and professional platforms. In the medium term, capital could reach larger structures—but only where firms are willing to behave more like companies than collections of partners. The limit is not financial; it is organizational.

• Will firms such as Auren, Grant Thornton, or other professional platforms lead a firm-acquisition process backed by financial capital? Rather than direct investment in a traditional law firm, does it make more sense to think of professional services platforms—with corporate structure and financial muscle—acting as legal market consolidators in Spain?

Yes, this is the most plausible and coherent scenario from a capital perspective. It makes far more sense to think of professional services platforms acting as consolidators of the Spanish legal market than of direct investments in traditional law firms.

Firms such as Auren, Grant Thornton, and similar structures have a clear advantage: corporate governance, financial capacity, standardized processes, and experience in inorganic growth. This makes them natural vehicles for integrating smaller or specialized firms without the friction inherent in the classic partner-ownership model.

From an investor’s standpoint, this approach significantly reduces risk. Instead of negotiating with multiple partners, cross-cutting incentives, and highly personalized cultures, capital enters structures with clearer decision-making and more replicable integration.

As a result, it is more likely that we will see these platforms leading consolidation processes—using financial capital as leverage—than funds investing directly in traditional law firms. The move is not ideological; it is practical. Capital seeks structures it can govern, scale, and ultimately exit in an orderly manner.

• From an investor’s perspective, what type of law firm is most “investable” today? Where is capital appetite strongest: high-volume firms with standardized processes, highly profitable niche boutiques, or mid-sized firms with strong management, technology, and scalability—even without a strong brand?

The most “investable” profile today is not at the extremes, but the hybrid.

Capital appetite is strongest for mid-sized firms with strong management teams, professionalized structures, integrated technology, and real scalability, even if they lack a major brand.

High-volume, highly standardized firms are attractive for their predictability and ease of efficiency gains, but they often offer thinner margins and less differentiation. Highly specialized boutiques can be very profitable, but they carry higher key-partner dependency risk and more limited, replicable growth potential.

The sweet spot for investors lies in models that combine profitability, corporate governance, and strategic runway: firms with solid margins, professional leadership, a data- and technology-driven culture, and a willingness to grow both organically and inorganically. That is where capital sees the greatest potential for sustained value creation—beyond brand and short-term results.

Do you want to keep reading?

You can read the full article in El Confidencial here.