Tax issues reportedly slow merger talks between Bryan Cave and UK law firm
Tax issues have reportedly held up merger talks between Bryan Cave and U.K. law firm Berwin Leighton Paisner.
The firms are discussing full financial integration rather than a merger using the looser Swiss verein structure, and that will create tax issues, the American Lawyer reports. The story relies on unidentified sources at the two law firms.
The tax hit could be in the tens of millions of dollars, according to legal consultant Tony Williams, a former managing partner at Clifford Chance. The BLP firm told the American Lawyer that the estimate was incorrect, but it did not comment further.
Law firms in the United Kingdom have to use accrual accounting while U.S. firms use cash accounting, Williams told the American Lawyer. “Converting one to the other has a significant cost element,” he said.
In a financial consolidation, the U.K. law firm would be liable for U.S. tax in a “one-off hit” to the current year’s budget, an unidentified partner at a transatlantic law firm told the American Lawyer.
Bryan Cave and BLP confirmed in October that they were discussing a merger.
