Did Clifford Chance go a partnership agreement too far?

Clifford Chance was forced into an embarrassing climbdown when it tried to stop one of its partners leaving. Robert Lindsay reveals the whole sad story. Details of deals should be sent to the City editor, Robert Lindsay. Please include all other law firms acting on deals and the value, where possible. A few days after Clifford Chance suspended its partner Andrew Wilkinson because he was about to join the US firm Cadwalader Wickersham & Taft, a man sidled into the foyer of Bastion House office block on London Wall, the US firms temporary home.

Ive got a client who would like to see around the offices, the mysterious character told the security guard. Theres a grand in it for you. The man, who Cadwalader assumes must have been a private detective, returned three times and was caught on the offices security cameras. At one stage it is believed he may have slipped past the guard into the offices.

Who had hired him and what was he looking for?

At the time Wilkinson was in the midst of a bitter legal battle with Clifford Chance over whether the firm was able to hold him on gardening leave for 12 months. The case was within a whisker of reaching the courts.

Could it have been Clifford Chance who hired him?

Clifford Chance has denied it hired a private eye. And although Cadwalader caught the man on film, it is not interested in endeavouring to identify him.

So it will probably never be known who hired him.

What is not in doubt is that relations between the two firms can only get better.

The story starts some months before Andrew Wilkinsons resignation. The insolvency department, founded in 1991, was apparently doing well, with five partners and around 15 senior assistants.

But sources say Wilkinson, who was the main non-contentious insolvency partner, did not get on well with Ashley Booker, head of the insolvency practice. Booker, a leading light in contentious insolvency, was one of the two partners knocked out of the first round for election to managing partner this March.

Tom Rose, Clifford Chance spokesman, denies this, however. Andrew and Ashley had a good working relationship, he says, citing one very lengthy deal they worked on together.

Nevertheless, the two partners decided they would be better off splitting the practice. Wilkinson headed one team, with young partner David Steinberg (described in legal directories as brilliant) and a team of seven non-contentious insolvency assistants. Booker stayed on the contentious insolvency side, with high profile partners Mark Hyde (outstanding), Alexander Shandro (extremely impressive) and four assistants.

The move may have contributed to a loss of morale among the assistants. Wilkinsons CV was said to have been on the market for some time before he finally resigned in June, but the resignation came as a bombshell to the other partners in the practice. He was off to the enemy, for a reputed guaranteed u400,000 salary, to help found the US firms new London derivatives practice. Two of his assistants, Lyndon Norley and Philip Hertz, were going with him.

The other partners were worried, particularly as senior assistant Adrian Cohen looked like going as well. There was a danger that all Wilkinsons assistants could leave.

Adrian Cohen was wooed intensively. Word has it he was taken to lunch by the senior partner and told he had a very good chance of being made up to partner when the next elections come around. In the end he decided to stay.

But the other assistants, perhaps worried about how much work they would get once Wilkinson left, were leaving in other directions: one asked to be transferred to the securities division, Louise Desborough left to go in-house at Nomura, Stephen Lansdowne went to Dibb Lupton Alsop in Liverpool, Alison Pascoe left for Simmons & Simmons, and Rosemary Sutherland moved to Paisner & Co in January. Wilkinsons non-contentious team was destroyed. Steinberg, Wilkinsons number two, was transferred back to Bookers insolvency team.

One source said the unit as a whole went from five partners and 11 assistants down to four partners and five assistants. At one stage there had been five partners and 20 assistants.

It faced a serious problem, although this is denied by Rose. He says the assistants left for their own different reasons, and the insolvency practice has recruited three assistants over the past three or four months. It now has seven assistants, he says, and two more join soon.

But the management committee clearly thought something needed to be done. In August, it introduced a stringent new partnership agreement, giving it the power to suspend resigning partners for a full 12 months. It also said that they were not to discuss their departure with anyone: clients, assistants or trainees.

When the agreement was brought into force, the firm suspended Wilkinson. He was not allowed to work for another firm, nor come into the office for his full 12-month notice period. Wilkinson was outraged Cadwalader was due to open in a few weeks, on 1 September. He protested that he had not signed the agreement. Clifford Chance argued that he was bound by it nonetheless.

Wilkinson instructed Herbert Smith to fight the issue.

Then a new front opened in Wilkinsons battle with Clifford Chance. When one of his clients, to whom he had been providing almost continuous advice, learnt he had been taken off its case, it kicked up a storm, and Clifford Chance realised that it stood to lose a lot of goodwill from clients.

Clifford Chance capitulated. Wilkinson now works part-time at the clients offices, with support from Clifford Chance, who will get the billings. When the work finishes in February, Wilkinson will finally be able to join Cadwalader.

And Clifford Chance? It will have to ensure its 260 partners can be bound by the stringent new agreement. Or maybe it has learnt a painful lesson: if high-flying staff really want to go, its best to let them.