Charlotte: destination du jour
28 April 2008
K&L Gates' move into Charlotte signals major ambition
New York probably doesn't have to worry too much yet, but Charlotte is on the map now in a way it wasn't before.
America’s second-largest financial centre is getting a reputation as the destination du jour for the world's more ambitious law firms. And they don't come much more ambitious than K&L Gates. OK, Simpson, Sullivan and Cravath aren't quaking in their boots just yet, but K&L is moving up the food chain.
Yesterday (1 May), K&L unveiled its latest acquisition (sorry, ‘merger candidate’): Charlotte-based Kennedy Covington Lobdell & Hickman. By 1 July, the transformative K&L should be a 1,700-lawyer firm with 28 offices across the US, Europe and Asia.
What's more, the debt-free firm is doing it all out of its own pocket. True, that drives down PEP, but for the benefit of the more short-sighted members of the legal market, that's known as 'investment'.
For Kennedy Covington, the reality is that it's already been the target of bigger legal market fish such as Alston & Bird and King & Spalding, both of which have snared partners from the firm recently. Faced with the prospect of shedding more talent to marauding heavyweights, Kennedy Covington took Plan B: merge.
As law firm consultant Bruce MacEwen puts it, "one of the impacts of globalisation is that regional firms are finding themselves under assault from larger players."
As Kennedy Covington managing partner Eugene Pridgen said it himself in the joint statement with K&L: "The proposed combination would create a global platform and enable us to address our clients' legal needs across the nation and around the world."
In other words: if you can't beat them, join them.
Quinn Emanuel's uk launch Focus on plaintiff litigation pays off as downturn hits
Focus on plaintiff litigation pays off as downturn hits
Since last summer UK and US firms have said they are preparing for the impact of the credit crunch, bulking up in
restructuring and litigation and getting ready for when the full impact of the economic downturn hits.
But some firms have been preparing for longer than others. Take US litigation boutique Quinn Emanuel Urquhart Oliver & Hedges, for example. Its strategy has been seven years in the making.
After dedicating its growth strategy to securing major financial institutions, the firm decided to change tack completely and sever links with global banks to position itself for litigation against them.
"It's taken us about seven years because it's not easy to cut ties with banks," founding partner Bill Urquhart says. "These relationships have a life of their own and we wanted to be sure we changed direction effectively."
Originally a West Coast firm, Quinn Emanuel now has an on-the-ground presence in Los Angeles, New York, San Francisco and Silicon Valley - and very soon London.
The firm now has only one investment bank client in Morgan Stanley and is now almost solely dedicated to plaintiff litigation. In the climate of collateralised debt obligation (CDO) disputes regarding deal documentation and an illiquid market putting pressure on banks, being on the other side of these institutions is not a bad place to be.
"We've carved out a very specific niche in the litigation market and we hope to do the same in London," says Urquhart. "Many of the large US litigation firms are unable to win mandates in this area because they're completely conflicted because of their relationships with global financial institutions."
Quinn Emanuel has advised on some heavy-hitting disputes in the US in recent months. Last month counsel John Pickhardt led the firm on advising financial guarantee company XL Capital Assurance (XLCA) on its counterclaim against Merrill Lynch. Merrill, advised by Skadden Arps Slate Meagher & Flom, filed a suit against XLCA for terminating seven credit default swaps (CDSs).
In March this year Quinn Emanuel represented Monsanto spin-off company Solutia against Citigroup, Deutsche Bank and Goldman Sachs after the banks refused to fund the group's $2bn(£1.01bn) loan commitment.
"It's a very highly respected West Coast litigation boutique that's built a strong offering in its New York office," says a US litigation partner. "I question whether the firm will be able to be successful in the London market, because the environment of litigation is completely different."
Taking this viewpoint into account, how does the firm intend to build a successful London offering?"We'll be looking to recruit from the UK market," explains Urquhart. "It's important to build a UK offering based on UK lawyers. In our view that's the key to success."
The firm's first hire is restructuring and litigation partner Richard East. His experience at Kirkland & Ellis fits in well with the firm's wider strategy of advising corporates. In 2006 he advised on Sea Containers Group's restructuring, as well as the Collins & Aikman proceedings during the same year.
The firm's focus on plaintiff litigation and its determination to remain completely focused on its specific niche has caught the attention of the US elite and quite possibly soon that of the magic circle.
"After all, without these disputes against banks we'd be out of a job," says one US litigation partner. "There are other West Coast firms that focus purely on litigation, but none as dedicated to plaintiff as Quinn Emanuel."
Firms such as Susman Godfrey and Boies Schiller & Flexner have been strong players in the US litigation market. Now that Quinn Emanuel has taken the plunge and launched in the UK, perhaps other boutiques will see the benefit and follow suit.
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