Shearman & Sterling’s pension liability and its ability to retain key partners are two of the main hurdles in the way of the US law firm’s mega-merger with Allen & Overy.

The pair announced on 21 May that they had agreed to merge in a deal that would create a $3.4bn legal powerhouse. The deal is subject to partner votes on both sides which are set to take place in September or October, according to people familiar with the situation.