9 April 2012 | By Lucy Burton
Do associates still cleave to the stereotype of US firms, or is their American dream about more than busloads of cash? Our survey reveals some surprising findings
”They’re hellholes where you don’t escape the office - you might as well be in jail,” said one impassioned, unnamed, associate.
The lawyer was referring to US firms in general and was responding to one of our two surveys of nearly 600 associates in the UK (aimed at associates at UK firms) designed to accompany this year’s The Lawyer top 30 international firms. This annual list of the largest non-UK headquartered firms in the country is ranked by revenue. It tells you who’s largest, but not who’s most - or least - liked.
The associate’s view is not one shared by most UK associates at US firms, the target of our second survey. Although 23 per cent of these respondents said they joined their firm for the money, more than 50 per cent said they worked the same number of hours each year at their US firm as they did at their previous home.
But that’s not the surprising bit. The aim of the first survey, sent out to associates at UK firms between 15 and 29 March, was to find the answer to a simple question - which US law firm would you join if you were considering moving?
Baker & McKenzie won the popularity contest, a surprise for anyone who believes lawyers join US firms for the money (see box, page 23).
But there was also this: more UK associates said they would consider working at embattled New York firm Dewey & LeBoeuf than Wall Street giant Skadden Arps Slate Meagher & Flom, one of the most prestigious of all US firms.
Don’t show me the money
That was a surprise, but the research also confirmed some truisms - after all, they exist for a reason. Take the aforementioned old saw that lawyers only join US firms for the money.
For most, the stereotype that US firms are hard-working, big-paying places remains. More than 23 per cent of associates currently at a US firm said they joined for more cash - the highest-rated single reason proportionately. Similarly, 60 per cent of associates at UK firms said they would expect to work significantly longer hours if they jumped ship to a US or international firm.
But when asked to pick the international firm they would most consider joining, it was not one that could offer more money that won the votes of UK lawyers. Despite announcing a salary freeze for City associates last year, Bakers significantly outgunned its rivals in terms of popularity.
Nearly 20 per cent of respondents put the firm in the number-one slot for where they would consider joining if looking at a US/international firm, compared with just 2 per cent who opted for Bingham - a firm offering newly qualified (NQ) City lawyers a £100,000 salary.
Other statistics stand out too. Just one person plumped for O’Melveny & Myers when asked to pick the international firm they would consider joining, perhaps not such a surprising result for a firm that cut 75 support staff last year and laid off 200 staff and 90 lawyers across its US, Asia and London offices in March 2009.
Cuts and bruises
While it is now seen as inevitable that large firms will make cuts during a downturn - Latham & Watkins became the poster child of layoffs after it axed 440 staff in February 2009 - some have proved better than others at keeping their heads above water. Latham, for one, has bounced back from its bruising. The firm was neck-and-neck with Bakers in terms of UK revenue last year and is in fourth place in our list of overall most popular firms in London.
“It’s part of the Latham culture that associates are treated as key stakeholders in the firm and are represented in its management committees,” says Latham London head Nick Cline. “This plays an important role in generating a positive and truly collegiate working environment. In London, being part of an office that has seen growth in the past decade to more than 230 lawyers is exciting and provides all our lawyers with opportunities.”
Some of the firms that did not make our top 30 list also proved surprisingly popular among associates. Cadwalader Wickersham & Taft, for example, has gained attention by turning a corner. The firm is starting to shed its reputation as a structured finance sweatshop after diversifying its practice and putting significant effort into revitalising its London office in particular.
Last year the firm hired a nine-partner, 35-person team composed primarily of energy lawyers from McDermott Will & Emery, following the opening of a Houston office in January.
“We made significant investments in 2011, looking to hire while others are cutting back,” says the firm’s recently appointed London head, financial restructuring partner Greg Petrick. “We’re pursuing our goal to grow, with plans to double attorney headcount [in London] this year.”
Although Cadwalader has fallen out of our top 30, The Lawyer’s UK associates survey points to something astonishing: along with Dewey, the firm clocked up more ’would considers’ than transactional powerhouse Skadden.
While Cadwalader is regaining its status in the City, partners at Skadden are no doubt scratching their heads - particularly when it comes to gender-related issues.
Despite its world-renown and high UK salary, not one female associate named Skadden as their top choice for where they would consider joining.
Reactions to other firms raise more eyebrows. West Coast lifestyle and diversity favourite Morrison & Foerster (MoFo), for example, scored a high number of ’would-nots’ from UK associates - almost five times more than Wall Street titan Milbank Tweed Hadley & McCloy - while Texas-headquartered Akin Gump Strauss Hauer & Feld did even worse.
Despite recently boosting its London funds group and English law capabilities with the hire of two financial services partners from Simmons & Simmons (Tim Pearce and Ian Meade), the firm came secondas the destination associates were least likely to choose, after DLA Piper.
In response, Akin Gump’s London head Steve Blakeley pointed to the fact that the firm does not try to be all things to all people and instead focuses on core practice areas.
“The focused nature of our practice means there are many areas that are not for us and therefore lawyers who practise in those areas would not consider joining us,” insists Blakeley. “We have a high-quality practice focused on corporate and finance work in emerging markets,investment funds, disputes and tax. Our turnover levels are low and the feedback we receive from interviewees is uniformly positive.”
DLA Piper, last year’s biggest revenue generator in the UK on our list, this year scooped the booby prize for the firm UK associates would least consider joining. This is despite featuring highly - behind only Bakers and Hogan Lovells - in the list of firms UK associates would most consider joining. While the firm chose not to comment, the sheer number of votes both in favour (79) or against (86) joining the firm confirms DLA’s profile in the UK legal market.
“These firms have equal weight in all parts - not US or dominated by one practice,” said an associate when asked why DLA Piper and Hogan Lovells got their vote for firms they would most consider working at.
Both these firms, included in the survey for the first time following their mergers with US firms, have a distinguished heritage in the UK. Hogan Lovells, our respondents’ second most popular firm, has had a foothold in the London legal market since 1899, while another favourite, Mayer Brown, is, in the UK, legacy firm Rowe & Maw, established in 1895.
This is a big selling point for British lawyers - a point that was illustrated when associates commented on why they did or did not consider joining certain firms. Many said they did not vote for US firms simply because they did not know much, if anything, about them.
“I don’t know many firms on the list and of those I do know, I have no adverse impression,” insisted one.
But sometimes what is not said speaks as loudly as what is. Not a single associate chose Philadelphia-based Dechert as their number one ’would-join’, despite the firm’s high-profile City push in the past 12 months.
The results suggest the firm remains a mystery among associates, despite hiring aggressively in London. Last year saw the firm boost its UK disputes capability with a swarm of lateral hires from DLA Piper, most recently investigations and compliance partner Duncan Wiggetts, while this year saw the campaign continue with the hire of Norton Rose litigation partner Antony Dutton. Although the firm has pulled in a number of new litigation associates, our survey suggests its profile has further to go.
And now for our surprising twist. Dewey, despite currently standing smack-bang in the middle of a media storm concerning its finances and partner exits, gained more than twice the number of votes for ’would consider joining’ than Sidley Austin, Salans, Orrick Herrington & Sutcliffe or Paul Hastings. It also bagged more votes than Skadden, Bingham or Gibson Dunn & Crutcher, and was rated equal with global M&A powerhouse Sullivan & Cromwell.
Our survey did not just ask for overall impressions of firms. We also dug into the detail and filtered the responses between male and female, and senior and junior lawyers.
For example, we asked associates at UK firms if the recession had made US firms more attractive as places to work. We were curious to see if the lure of - presumably - better pay, smaller offices (and therefore more partner/client time) and the prospect of relocating abroad had caught their eye.
Forty per cent of junior associates said the recession had made US firms more attractive places to work, while just 15 per cent said they were now less attractive. On the flip side, nearly 70 per cent of that group recognising they would have to work ’significantly’ longer hours.
Senior associates, however, were less convinced. Only 26 per cent thought the recession had made US firms more attractive places to work, an unsurprising figure when stood next to the 3 per cent of senior associates who cited their motivation for moving to a US firm as ’job security’.
The question of moving abroad was also met by differing reactions from junior and senior associates. A quarter of senior associates said they would not be happy working in the non-UK office of a US firm, compared with a quarter of junior associates who said they would be ’extremely happy’ to do so.
Responses from associates currently at US firms supported this feeling. More than 17 per cent of junior lawyers in this category said they joined a US firm in the City for opportunities to move abroad. Of that group, more than 50 per cent said they would be prepared to move to China to further their career.
Responses between male and female associates pointed to the usual gender struggles in the legal market. While more than 20 per cent of female associates working at US firms said they joined for more money, female lawyers at UK firms opted for fewer of the top-paying firms when considering moving.
In contrast, twice as many men than women chose the firms offering London lawyers the highest salaries in the City, including Latham, Debevoise & Plimpton and Skadden. When ranking firms by preference, more than half the men named Debevoise, a firm that pays UK NQs around £94,000, in their top four to consider joining, while double that number put Latham, which pays UK NQs around £96,000, as their number-one would-join.
“After all, if you’re going to be asked to live in the office, you need to make sure you are being remunerated appropriately,” noted one associate.
When asked their main motivations for joining a US firm, almost twice as many men as women said they wanted to improve their chances of making partnership.
Female lawyers, of whom just 3 per cent ranked chances of making partnership as a motivation, were instead sold by increased access to clients and more responsibility. Double the number of women chose the former as a key factor when joining a US firm, while 23 per cent gave the latter - increased responsibility - as their number one reason.
Again, while both male and female lawyers voted for Bakers as their overall favourite firm, more of these votes came from women - a trend that may be explained by the factors detailed above.
The responses suggest that women, while less motivated by partnership opportunities than men, are likely to join a US firm that has an inclusive environment, where lawyers at all levels are given interesting responsibilities.
“We encourage a high-performance culture where we aim to recruit and retain the best while developing our people faster than our competitors,” says Bakers HR director Martin Blackburn. “Our culture recognises not only the importance of having a diverse group of people in our business, but also the commercial need to ensure an environment where people feel able to thrive. We believe we can’t bring agility and creativity to our clients unless we have an agile, creative and diverse staff mix.”
Another critical question we asked was which practice areas UK lawyers thought US firms were most interested in when recruiting in the UK. The answers were telling.
The perception among associates at UK firms was that the most sought-after practice area was litigation, but the impressions of associates at US firms tell a different story.
Nearly 60 per cent of those working at US firms pointed to corporate and funds as the number one area UK lawyers are most likely to be recruited, followed by finance and projects. The differing responses point to a disparity between perception and reality - almost a quarter of UK associates put litigation as the number one area they would hope to join a US firm for, despite the fact this comes third in the pecking order according to those currently at US firms.
Perception not tallying with reality is a common theme between US firms and UK associates (just as it may be between lawyers and their clients, on occasion). The view that US firms make you work longer hours persists, as does the image of lawyers only wanting to join US firms for additional cash.
As with anything, there’s usually a lot more to the story than at first glance.
The international top 30: methodology
This year’s international top 30 firms in London includes a couple of noticeable new entrants.
Nestling at the top of the revenue tree are global behemoths DLA Piper and Hogan Lovells, included in this US-dominated list for the first time by dint of their US mergers. The revenue figures for both firms relate only to their UK operations.
The data was compiled throughout February and March this year from a questionnaire sent to firms followed by numerous on- and off-the-record calls. In some cases revenue figures have been estimated, with those estimates put to firms for comment.
A nice place to work: Baker & McKenzie
Baker & McKenzie’s rise to the top of various trees may not have been meteoric - the firm is one of the longest-established US players in the UK market - but its performance in recent years has been little short of stunning.
The firm, for years characterised by its global breadth and depth, is rapidly becoming a fixture in the lists of the best places to work.
Last year Bakers topped a table of leading international law firm brands for the third year running, while earlier this year the firm was a clear winner in the Employer of the Year category at The Lawyer’s Workplace & Diversity Awards - largely because the firm is not afraid of the word ’nice’.
It’s a word that might make some of Bakers’ more aggressive City rivals wince, but it works for them.
“Nice is a term we have in our global framework in terms of what we want our partners to have - it comes down to respect,” said London managing partner Gary Senior. “We have a culture whereby the most senior partner relates to the most junior employee - the type of person working across Baker & McKenzie is recognisable.”
A whopping 97 per cent of Bakers lawyers said they were willing to go “over and above” what is required to make the firm succeed. That’s hard to argue with.
London is the largest office, employing around 10 per cent of the workforce to generate nearly $200m in revenue (far larger than most standalone UK firms), and it is where internal promotions are the main route to partnership. On top of that, retention rates are high. Indeed, as we reported earlier this year, Bakers estimates its attrition rate is 4 per cent lower than that of its competitors in London.
Clearly its global presence is a big incentive for both associates and partners, with secondments to other offices common.
Maybe this is the real reason an increasing number of rivals are willing to ape Bakers’ decades-long international expansionist model.
Whatever the reason, it’s working for Bakers.
Gender split of respondents (US)
Do you record more, fewer or the same number of chargeable hours each year since joining your (US) firm?
About the same
What is your perception generally of US firms as potential employers?
They look more attractive now than they did before the recession
They look less attractive
To what extent would you be happy to work in the non-London office of a US firm?
Not very happy
How many hours a year would you expect to work at a US firm?
more than I currently do
more than I currently do
The same as
I currently do
Fewer than than I
British associates’ views on US firms
Why associates would join…
“They are established US brands in the UK. This avoids spending time at a firm no one outside US law firm circles will know when applying for a new role”
“A balance between the least ’American’ and a good reputation in my practice area”
“These are the firms I’m most familiar with and the firms I perceive to have the strongest practice in my area of expertise”
“These firms have good reputations, established London offices and significant scale”
“Baker & McKenzie has a great employment team and similar clients to the clients I work for currently”
“Firms with equal weight in all parts of the firm - not US or dominated by one practice”
“I would only consider those firms with a more UK work ethos”
…and why they wouldn’t
“These firms either show a lack of commitment to international growth, fail to pay sufficient amounts to compensate for US attitudes to hiring and firing, or have no English law offering”
“Too much work - no life! Or bad reputation for bad treatment”
“Not visible enough presence outside the City”
“I know people who have been at these firms who have not been happy”
“They aren’t going anywhere fast”
“I’ve known others working there with negative comments”
“I’ve heard horror stories of 100-hour weeks”
Top 30 international firms in London
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Power and influence
Our annual list of the top 30 international firms in the UK not only shows some of the biggest revenue-generators in the City, but also highlights some of the most influential firms in the world.
Putting them in the spotlight for our UK associates survey gives an idea of how attractive each firm is to British lawyers.
This research did not exclude those that failed to make it on to this year’s list but have featured in previous tables - such as Akin Gump and Morrison Foerster.
Hands across the Pond
Much of the reason for their disappearance is the recent plethora of transatlantic marriages that brought some newcomers to the stage, most notably Squire Sanders Hammonds and SNR Denton. Neither of the legacy US firms pre-merger generated enough revenue to feature in our annual top 30. Both now stand shoulder-to-shoulder with some of the US’ most successful revenue-churners in the UK, including White & Case, Latham and Baker & McKenzie.
In contrast, Mayer Brown has been knocked down five pegs, to eighth in terms of UK revenue.
But Mayer Brown cannot pin all its problems on merger-mania. Despite being in bounce-back mode in 2010, when it posted a healthy 16 per cent revenue rise in the City, last year the firm lost several partners to Orrick, Eversheds and White & Case shortly before posting a year-on-year revenue drop of 7 per cent (in dollars - the sterling decline was 4 per cent).
After announcing five partner exits late last year more walked out the door earlier this year - real estate head Peter Sugden joined US firm Katten Muchin Rosenman as its London managing partner and debt capital markets chief Drew Salvest joined Jones Day.
The good news is that Mayer Brown and Orrick were the only two firms to see UK revenue drop last year, compared with seven
the year before.
It’s an upbeat signal for the UK legal market, with standout revenue increases coming from Latham, which saw fee income rise from $165m (£103m) to $192m, and Gibson Dunn & Crutcher, which saw turnover increase by a gobsmacking 32 per cent.
For the former firm, executive committee member Andrew Moyle said the year was characterised by the enhanced performance of Latham’s leveraged finance team, which secured work on Europe’s largest leveraged buyout in Europe since 2008, Polkomtel, following a spate of hires, notably from White & Case.
Meanwhile, Gibson Dunn, which recently announced it was eyeing the opportunity to enter the UK graduate recruitment market after seeing steady growth in the City, acted as primary deal counsel in both the US and the UK on Hewlett-Packard’s £7bn acquisition of UK software company Autonomy.
While noting the strong performance of the transactional team, Gibson Dunn partner in charge of London Tom Budd says the key to the firm’s robust performance was its disputes group. London litigation mirrored the success of Gibson’s firmwide litigation practice, where disputes accounted for 59 per cent of gross revenue in 2011.
“Our London disputes team has been involved in a number of significant arbitrations, investigations and court cases recently, both in London and internationally,” adds Budd. “We act as global counsel to one of our banking clients in relation to matters arising from the Madoff fraud, and a team from our London office led by Philip Rocher and Lord Falconer has been defending another banking client in a $200m claim brought in the courts in the Cayman Islands.”
So the majority of the UK’s international firms appear to be thriving in the City, but appearances can be deceptive. Dewey’s estimated $101m is a 2 per cent rise on 2010, but the current year’s results are likely to be starkly different.
At the head of the table Hogan Lovells and DLA Piper, newcomers in this year’s list, are the biggest income-generators, thanks to their large legacy UK practices. Each firm pulled in almost four times the revenue of its nearest US rivals in 2011 - $451m for Hogan and $433m for DLA Piper.