A planned law firm merger between San Francisco's Orrick Herrington & Sutcliffe LLP and Dewey Ballantine LLP has been scrapped.

The aborted deal is a blow to both firms on two fronts. Law firm executives wanted to combine Orrick's bond practice with the merger and acquisition expertise of New York's Dewey to attract more big-dollar case work. A union also would have greatly expanded the Orrick-Dewey presence in the Big Apple, the world's financial capital.

 
Orrick has an office in Menlo Park, San Francisco, and 16 other places in seven countries. Dewey Ballantine has California offices in East Palo Alto and Los Angeles.

Orrick and Dewey "jointly decided" to end merger discussions, according to a statement released Thursday. Both firms saw great potential in a combination, the statement said, but "a combination of this size and scope posed significant challenges."

Sources said those challenges included defections of some big name Dewey lawyers after merger talks between the two firms gained steam. In recent weeks top Dewey M&A attorney Michael Aiello joined Weil Gotshal & Manges. Last month Jack Bodner, another leading M&A counselor, left Dewey for Covington & Burling. At least 10 Dewey partners left the firm since news of the proposed Orrick-Dewey deal spread last September. Whether all those defections are tied to the planned union is not clear. But sources said those attorneys' moves made the merger less appealing to Orrick.

Leaders at Dewey had concerns, too, sources said. Some Dewey partners objected to the potential makeup of the executive committee of the combined firm, which they felt would have weighed too heavily in Orrick's favor.

A merger with Dewey would have been a blockbuster deal for Orrick, which has been on a rapid growth clip under chairman Ralph Baxter Jr. A united Orrick and Dewey would have had an estimated $946 million in annual revenue generated by more than 1,200 attorneys around the globe. That would have made the combined firm the 10th biggest in the United States based on revenue. It also would have resulted in a New York office of nearly 500 lawyers, making it the fifth largest law office in the world's financial capital.