After an aggressive expansion into China earlier this year, reports have emerged that Dentons is looking to Gadens as its gateway into the Australian market.
On Friday the Australian Financial Review reported that the two firms were expected to announce a merger. This follows months of rumours that the firms were considering a deal.
Lawyers Weekly understands the two firms have been in contact for at least 18 months.
Following Denton’s merger with Beijing-based firm Dacheng in January, the firm is now the largest in the world with 6,500 lawyers across 50 countries.
Gadens is a national firm with seven offices, 135 partners and 1,100 staff. Many of the offices are integrated but Melbourne, Brisbane and Adelaide are independent and may not be included if a merger takes place.
Justin Whealing, a partner at Eaton Capital Partners, said mid-tier firms like Gadens would be “crazy” not to entertain overtures from international firms such as Dentons.
“When a firm like Dentons – which is well-recognised [and] has a large global network – looks to have a coffee, you're going to have that coffee if you are an Australian mid-tier firm,” he said.
“Because it can open doors that are just not available to those mid-tier firms when acting independently.”
Eaton Capital Partners has previously advised mid-tier firms, including Gadens, on international expansion strategy.
Mr Whealing said national firms were open to international opportunities as a means of differentiating themselves.
“That mid-tier space […] is very competitive,” he said. “When any big global law firm comes knocking [these firms] are very interested in that proposal because by having a global network you differentiate yourselves from the plethora of national mid-tier rivals.”
However, Mr Whealing said that not all national firms are interested in operating globally.
“I think some are but not all – and neither should they be," he said. “Clients want diversity in regards to law firm providers.”
Law firm leaders should be clear about whether international mergers are part of their long-term strategy, he added.
“You can be successful either way but you need to be clear about which path you are following.
“It is better to be a strong, independent firm rather than to enter a merger in haste just because you are responding to rivals.”
Over the past five years a number of domestic law firms have allied with international firms, including Blake Dawson (now Ashurst), Allens Arthur Robinson (now Allens), Herbert Smith (now Herbert Smith Freehills) and Mallesons Stephen Jaques (now King & Wood Mallesons).
Other firms have bucked the trend, including Corrs Chambers Westgarth, Minter Ellison, Clayton Utz and Gilbert + Tobin.
Lawyers Weekly contacted Gadens and Dentons, but did not receive a response before going to press.