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Clifford Chance funds chief in shock resignation for Simpson Thacher

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  • Good move.

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  • U.S. firms are now on the verge of a major breakthrough in London, driven by mergers with UK firms and lateral hires such as this.

    UK firms weakness in the massively bigger and more profitable U.S. market is going to finally start really hurting them over the next ten years. Merge or die.

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  • I can't help thinking anonymous (above) is being a bite melodramatic
    .
    This might hurt CC short-term, as Signy leaving did a year ago. But "merge or die"? Is there any suggestion that the firm's in serious trouble? If so, why would partners be so happy to let DC keep steering the ship into the iceberg?

    Personally, i don't see it as anything more than a blip, albeit not an isolated one.

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  • YUL ~ I suspect that the "happiness" (which you believe exists) is more a matter of lethargy combined with lack of any one standing to make a fight of the position.

    Remember no one on RMS Titanic believed it could sink either ..........

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  • @Anonymous 10.54: US firms have already had their major breakthrough in London when it comes to private funds.It's not just Jason Glover, but look at John Daglian at O'Melveny and Mark Mifsud at K&E. They left English firms for Americans because they saw the writing on the wall.

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  • The sad thing is, this couldn't have happened to a nicer bunch of people.

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  • While the CCs of this world will probably recover from losing people like Jason, the real threat from the yanks is to the mid-market funds boys.
    More trouble ahead for SJB?

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  • Perhaps he didn't like CC's hideous new orange and black web site, which is quite possibly the worst corporate site ever.

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  • @ Lee Van Cleef - True, but SJ Berwin do at least appear to be aware of the grave dangers of their position - and the looming threat from US firms and far bigger, global mega firms - hence their desire to merge with Proskauer.

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  • The white shoe firms' profitability in New York is something inherent to New York, and not something inherent to those firms. It lets them afford spectactular big name hires in London, but ultimately their London practices will always be at a similar level of profitability to their UK competitors.

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  • To anonymous @ 3.41pm: check your figures, Slaughter & May, Freshfields and Linklaters are all in the top ten worldwide for profitibility - they are certainly more profitible than Simpson Thacher, even if they can't keep up with the likes of Sullivan & Cromwell - and A&O and others are close too. Clifford Chance's profitibility is brought down by its shabby international network. London offices of the US firms in fact make more money than their NY offices.

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  • @ Anonymous | 20-Jul-2010 2:24 pm - The new CC website is the most vile and badly designed corporate website that I have ever seen. It is excerable.

    It is so bad that it really makes one question the quality of CC's management and their judgement.

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  • I think it is Anoymous and not @3:41 that needs to check his or her facts. Freshfields would be 13 and Linklaters 22 in the American Lawyer profit table if they were U.S. firms -- significantly below Simpson Thacher.

    I haven't seen profits for Slaugher this year yet but it is highly likely they would be in the top 10. The point is that there are 25 U.S. firms with profits per partner above GBP 1 million as against 4 in the U.K. There was a time, a year or two ago when it appeared the Magic Circle firms were closing the gap on Wall Street firms but in hindsight this was almost solely attributable to currency. (Did anyone really thing a pound to dollar exchange ratio of 2 to 1 was sustainable?) The gap is now growing again and will continue to do so.

    This partly because of dominance in the U.S. market -- by far the largest market for legal services in the world -- but also much higher revenue per lawyer and a more focused approach to strategic development. (They work harder and don't try to be all things to all people everywhere.)

    The statement that the London offices of U.S. firms make more money than the New York offices is obviously false as the London offices are such a small piece of any major Wall Street firm. It is true that the goal is to manage London offices in such a way that they are net contributers but the goal is missed more often than not and when achieved is usually the result of allocating work with a European component for U.S. clients to the London office rather than as a result of local business deveolpment.

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  • This is like watching football supporters get all righteous about whether Fernando Torres is better than Didier Drogba. Such commentators are invariably a million miles from the money themselves.

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  • Anonymous@9.36 am: I can see why you're a lawyer and not in the finance industry.

    The numbers in the American Lawyer and other charts use an average exchange rate for the prior year. If you do that, you would find that Freshfields and Linklaters would be top ten.

    Profits for Slaughters (guesstimates, as are the profits for every white shoe firm) are available freely in The Lawyer, Legal Week, and everywhere else. They would probably be number 4.

    Do you really think as low 1.5 dollars to the pound is sustainable? Again, thank your lucky stars you're not in currency trading.

    Having worked at both, I can confirm that your focus and harder work comment is absolute nonsense. Are you telling me that Linklaters is less focused and less hard working than Cleary? The reverse is obviously true.

    In your last paragraph, you again show off your stupidity. The point is that their London offices make more per head than their US offices. That is true for all of established quality white shoe firms in London. If LInklaters, Freshfields (or even Clifford Chance) were just their London offices, their profits per partner would be phenominal.

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  • The exchange rate American Lawyer uses is the annualized Federal Reserve rate which for last year was 1.55 -- that would result in the rankings above. Whether a 1.5 exchange rate is sustainable remains to seen but I sincerely doubt the U.K. economy will recover faster than the U.S. economy.

    Wall Street firms have significantly higher revenue per lawyer than Magic Circle firms (look it up either in the Global 50, the American Lawyer or the Lawyer) with lower hourly rates which means a lot more hours. The average billable hours per associate at any major Wall Street firm before the Financial Crisis was over 2000 whereas Magic Circle firms target 1700 - 1800.

    Yes, Clearly is most definitely smaller, more focused and more profitable than Linklaters.

    The statement that U.S. firms make more per head in London than New York is simply false.

    I am very familar with law firm economics having been an equity partner for 12 years, first at a Wall Street firm and now at a Magic Circle firm.

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  • This makes sense from a funds lawyer perspective because without a credible US practice Glover was always going to lose work. CC lost funds work to both O'Melveny and Fried Frank for this reason.

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  • Why are UK firms such as CC content to operate a model where freeriders are tolerated (and sometimes promoted)?

    Got to be annoying when you're a serious balla within those firms.

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  • From The American Lawyer's The Global 100: Profits Per Partner, Top 10:

    2009

    1. Wachtell
    2. Quinn Emanuel
    3. SullCrom
    4. S&M
    5. Freshfields
    6. Paul Weiss
    7. Cravath
    8. Simpson
    9. Kirkland
    10. Linklaters

    2010 isn't as rosy:

    "For the Magic Circle as a group, profits per equity partner (PPP) were up 4.1 percent. But this number masks sharply divergent performances, with double-digit increases by Clifford Chance and A&O (25 percent and 10 percent, respectively) balancing out single-digit declines by the remaining firms.
    From the perspective of partners with wandering eyes, the more interesting question is where in this new currency climate do the top U.K. firms fit in the American pecking order? Slaughter and May, with PPP of $2.412 million, roughly matches up with Simpson, Thacher & Bartlett, at number 10 in profitability on The Am Law 200. At the bottom of the Magic Circle, Clifford Chance, with PPP of $1.461 million, roughly matches up with Sidley Austin, number 32 on the second hundred ranking.
    In between, Freshfields would nudge out Skadden for fifteenth on The Am Law 200 profits ranking with $2.202 million PPP. Linklaters would closely follow Latham as number 23 in PPP on the second hundred--the firm's equity partners averaged profits of $1.901 million last year. And, with PPP of $1.723 million, A&O would slot in between Shearman & Sterling at 26 and Dewey LeBoeuf at 27.
    In terms of revenue per lawyer (RPL), Slaughter and May matches up well with any firm even with currency headwinds. Slaughter's RPL mark of $1.242 million would place it fourth on The Am Law 200, below Wachtell, Lipton, Rosen & Katz and Sullivan & Cromwell, and just a smidgen above its occasional friend Davis Polk & Wardwell.
    However, currency conversions knock the rest of the Magic Circle well down the list. Freshfields, with an RPL of $872,000, would place forty-second on The Am Law 200. An RPL of $725,000 puts Clifford Chance below average among The Am Law 100. Throw in the stronger Am Law 200 firms, and Clifford Chance would find itself in an embarrassing three-way tie for seventy-ninth in RPL among U.S. firms, along with Atlanta's Sutherland Asbill & Brennan and Minneapolis's Robins, Kaplan, Miller & Ciresi. Neither are household names in the London Square Mile.
    Perhaps last year's currency effects were distorting. Or perhaps the currency effects of the previous five years disguised the eternal truth that--lawyer for lawyer--Americans work too hard."

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  • Almost all of the comment on this story has focused on the comparative profitability of Magic Circle and Wall Street firms. But is that the real story? If you're on a million plus a year, are you really going to change firms (particularly from a firm where you started your career) for a hundred thousand or so more? Or are you leaving because the firm you are leaving is much different from the firm you joined? That, I think is the telling difference. How many partners left Wachtell, Cravath, Simpson Thacher, Davis Polk or Sullivan & Cromwell in the last couple of years? Probably fewer collectively from that group than from any one of the Magic Circle firms. Is that because those US firms are more profitable or because they have a stronger culture?

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