Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Herbert Smith Freehills will combine with US-based Kramer Levin to form one of the top-20 global law firms by headcount, in the latest sign of consolidation among mid-sized groups on either side of the Atlantic.
The new firm will be known as Herbert Smith Freehills Kramer, abbreviated as HSF Kramer in the US, and will have more than 2,700 lawyers across 25 offices in America, the UK, Europe and Asia, the groups announcement on Monday.
The move by UK-based Herbert Smith Freehills — itself a combination of British and Australian firms — comes amid a wave of mergers in the legal sector, most notably UK “magic circle” firm Allen & Overy’s decision last year to join forces with the ailing Shearman & Sterling in the US.
Advertisement
A number of smaller firms within the US, such as Bryan Cave Leighton Paisner and Seattle-based litigation boutique Harrigan Leyh Farmer & Thomsen, have also merged in recent months.
Troutman Pepper and Dallas-based Locke Lord in September announced they will merge effective January 1, which analysts at research firm Fairfax Associates have said “indicates a higher level of activity for 2025”.
Herbert Smith Freehills’s announcement “is part of an accelerated pattern of consolidation”, said Kent Zimmerman, a consultant at Zeughauser Group, who advises leading law firms on business strategy.
“For a firm that aspires to global market leadership, the US is an imperative,” he added, citing increased profitability in the US. Meanwhile “for US firms, there is benefit in rapidly achieving transformative scale, while still maintaining a degree of independence.”
New York-based Kramer Levin recently lost the head of its litigation department, celebrated trial lawyer Barry Berke, who left along with a team of former assistant US attorneys.
Advertisement
One of the firm’s top transaction partners, Richard Farley, is also being floated as possible nominee to lead the US Securities and Exchange Commission in the new Donald Trump administration.
Herbert Smith Freehills chair Rebecca Maslen-Stannage said the merger would be “transformational”.
“We have long been committed to expanding our offering in the US and Kramer Levin is the perfect fit,” she said. “The combination delivers immediate growth for both firms from day one.”
Howard Spilko, co-managing partner of Kramer Levin, said joining forces with Herbert Smith Freehills was “a one-of-a-kind opportunity”.
He added the merger “provides us with a significant competitive advantage by bolstering our destination practices with a deeper bench, broader geographic reach and sector expertise”.
Events to look out for on Tuesday include speeches from the Federal Reserve governor, Home Depot earnings and Spotify results:
Fedspeak: Less than a week on from the central bank’s second rate cut of the year, Federal Reserve governor Chris Waller will deliver the keynote at the Clearing House Annual Conference in New York. Separately, Federal Reserve Bank of Richmond president Tom Barkin is scheduled to speak at a summit in Baltimore. At Carnegie Mellon University, Philadelphia Fed president Patrick Harker will deliver a lecture on “Fintech, AI & the Changing Financial Landscape”.
Home Depot: Investors will be eager to find out whether the Federal Reserve’s back-to-back rate cuts, which will have an effect on mortgage rates, have made a difference to consumer appetite for home improvement projects. Home Depot, which last quarter cut its sales outlook on weakened consumer spending, is projected to report a 4.3 per cent increase in third-quarter revenues, to $39.3bn.
Other earnings: Tyson Foods will announce fourth-quarter earnings before the opening bell. Flutter and Spotify will post quarterly results after market close.
President-elect Donald Trump’s newly picked “border czar” Tom Homan addressed his forthcoming deportation plan and state leaders who have objected to sweeping immigration policies.
During an appearance on Fox News on Monday, Homan issued a warning to so-called “sanctuary” states and cities to “get the hell out of the way” of the Trump administration’s mass deportation plans.
“I saw today numerous governors from sanctuary states saying they’re going to step in the way. They better get the hell out of the way. Either you help us or get the hell out of the way, because ICE is going to do their job,” he warned, referring to the U.S. Immigration and Customs Enforcement, where he formerly served as director.
“I’ll double the workforce in that sanctuary city. We’re going to do our job despite the politics. We’re doing it. So get used to it, because we’re coming,” Homan said.
Advertisement
When asked if he plans to deport American citizens, Homan said, “President Trump has made it clear we will prioritize public safety threats and national security threats first, and that’s how the focus would be.”
Olaf Scholz has just pulled the plug on his coalition and lost his parliamentary majority, with polls suggesting his party will be defeated in Germany’s upcoming snap election. Yet he still looks likely to be crowned as his party’s candidate for chancellor.
The government crisis that culminated last week with Scholz calling time on the three-party alliance plunged Germany into a new phase of turbulence. But Social Democrat leaders have rallied round him, steadying his status in a party that long nurtured doubts about their chancellor.
Some Social Democrats would still prefer to see him replaced on the ballot by Boris Pistorius, the popular defence minister. But they are the minority. Most expect an SPD congress to be held in the coming weeks to anoint Scholz as the party’s Kanzlerkandidat — regardless of his approval ratings.
The support for Scholz was on full display at an emotional meeting of the SPD parliamentary group last week when he was given a standing ovation by MPs.
Jens Spahn, an MP for the opposition Christian Democrats (CDU) and a former health minister, described the scene as “surreal”.
Advertisement
“Here is Olaf Scholz, a failed chancellor, his coalition has just broken down, he’s sacked his finance minister and his SPD thinks it’s a cause for celebration?” Spahn told the Financial Times.
The incredulity in opposition ranks increased after a television interview with Scholz on Sunday evening in which he refused to admit mistakes and, in the view of some commentators, came across as cold and unsympathetic.
Some have openly questioned why the party still backs Scholz. TV presenter Micky Beisenherz compared him to Bruce Willis in the film The Sixth Sense. He “goes to work every day even though he’s long dead,” he wrote on X. “He just doesn’t know it yet.”
Just months ago, Scholz’s position was precarious. Some in the SPD blamed him for the party’s slump in support, with polls putting it at between 14 and 16 per cent over the past year, way behind the CDU on 30 to 32 per cent.
But Scholz’s standing among some of his party colleagues has paradoxically improved since the government’s collapse. They have hailed him as a hero who finally lanced the boil, ending a dysfunctional government riven by ideological conflict.
Advertisement
For them, the sacking of finance minister Christian Lindner, leader of the pro-business Free Democrats (FDP), was the inevitable climax of months of provocation.
“There is relief that we will no longer be subjected to endless humiliation by Lindner and the FDP,” said one SPD MP.
Scholz said he fired Lindner because he refused to suspend the “debt brake” — Germany’s constitutional cap on new borrowing — to allow for more funding for Ukraine. The issue has taken on greater urgency since US voters re-elected Donald Trump, who has questioned western aid to Kyiv.
The dismissal played well in the SPD’s grassroots. “It was a kind of liberation — long overdue,” said Dirk Smaczny, head of the party’s local branch in Rheinhausen-Mitte, near the Ruhr industrial city of Duisburg. “We’ve been waiting a long time for Scholz to show strong leadership, and he finally delivered it.”
“He could have said ‘let’s just muddle through another year’,” said Johannes Fechner, a senior SPD MP. “The fact he accepted that the country needed a new government, even though it might mean he’ll lose his job — the SPD rank-and-file really respect him for that.”
Advertisement
Yet Scholz remains controversial in the party. Closely associated with the labour market reforms of chancellor Gerhard Schröder in the early 2000s that alienated working-class voters, he lost his bid for the party leadership in 2019 in a humiliating defeat.
He staged a remarkable comeback two years later, running for chancellor in 2021 and winning the election. He then brought together the SPD, FDP and Greens in a coalition that was unique in Germany’s history.
But his record has been clouded by countless internal rows over economic policy that he tried — and ultimately failed — to mediate. Scholz has seen the worst approval ratings of any postwar chancellor.
On Monday two SPD politicians from the chancellor’s home town of Hamburg, Markus Schreiber and Tim Stoberock, said he should make way for the defence minister.
“Our chances of winning the election or at least performing a lot better are much greater with [Pistorius], who has long been Germany’s most popular politician,” they wrote on Instagram.
Advertisement
Scholz spent too much time cobbling together compromises “in technocratic language” which were then rejected by his coalition partners. “We believe the negative image the people in this country have of him can no longer be repaired,” they wrote.
Privately, some SPD lawmakers agreed that Pistorius might be a better bet. “But politics doesn’t work like that,” said one. “Scholz’s huge strategic advantage is that he holds the reins of power. He’s the one who took this step. He’s the one who announced early elections. That gives him a certain strength.”
Scholz has shown no inclination to stand aside — nor does he intend to put his candidacy to a party vote.
His spokesperson Steffen Hebestreit on Monday defended the absence of a formal selection process, saying there was no need — and also no time.
“First of all, he’s the natural candidate because he’s chancellor,” he told reporters. “Secondly, look at the clock . . . We’re going to have snap elections quite soon, if he loses the confidence vote. We all need to focus on that right now, and you can understand why.”
Advertisement
Observers said that approach made sense, especially in light of what just happened in the US.
Wolfgang Schroeder, a political scientist at Kassel University, noted that the Democrats had hoped to improve their fortunes by substituting Joe Biden for Kamala Harris just months before the election.
“It injected some momentum, but it didn’t turn out to be long-lasting or effective,” he said. “For that reason I would advise the SPD against carrying out any grand experiments right now.”
MPs from the opposition CDU say that suits them, predicting that Scholz will be soundly beaten by their leader Friedrich Merz. “Olaf Scholz is the face of failure,” said CDU’s Spahn. “As such, we couldn’t wish for a better opponent.”