Shearman & Sterling’s aggressive pursuit of a merger feels a bit like pressing a turbo boost button in a racing game. If it works, it eliminates the lead that competitors have gained and provides some momentum to get ahead. But done badly, it can just lead to a big crash.
The firm has certainly fallen behind. Its revenue, headcount and profit per lawyer has failed to keep pace with rivals since the turn of the millennium, according to Patrick Smith’s excellent analysis of its performance over the last 20 years. It missed out on the private capital boom and didn’t seem to recover very quickly from the financial crisis, which has led to the firm seeking a transformative merger.