Focus: Gide Loyrette Nouel, French redressing
29 March 2010 | By Tom Phillips
When Gide launched in London in 2003 it hoped to crack the City. Seven years on and its UK lawyers are feeling the pressure
A French firm in London? It just doesn’t happen. Apart from the bizarre hybrid that is Salans (which can no more call itself French than English), and a few niche outfits offering French law, no Parisians have dared to make the leap. Bar one.
In 2003, a flying Gide Loyrette Nouel took a team from the newly merged Sidley Austin Brown & Wood and landed in London with a fanfare. With a ready-made office of four partners and 25 lawyers, Gide had firmly planted a tricolour in the international banking and finance market.
But what now for this landmark office? The City can be cruel and Gide’s London contingent looks unsteady on its feet after the recession whipped the rug from under them. And for the firm’s French masters, what to do with a London office that started as a capital markets boutique and now has no discernable focus?
All of a sudden, London can feel a long way from Paris.
It all started so well. Seven years ago Gide Loyrette Nouel braved the Channel and opened in the capital. With booming capital markets and banking and finance practices back in France and an international strategy that was the envy of its French rivals, a UK office was the ’obvious’ next step.
So says the firm’s London managing partner Colin Mercer, who was one of four partners to join Gide from its US best friend Sidley.
He arrived with Michael Doran and US-qualified partners Scott Cameron and Christopher Mead, who launched the office with Gide partner Arnaud Duhamel from Paris. It was an exciting time for the firm. The London office quickly became Gide’s darling.
The office grew in lawyers and size, and in 2007 contributed around 9 per cent or e22m (£19.79m) to the firm’s overall turnover. This drove a move to plush new offices near the Royal Exchange in Bank, tripling its office space to 33,000sq ft.
“No matter how successful the firm was in the Paris market, it wasn’t able to leverage its position in banking and finance,” Mercer says of this heady period. “We had known Gide for many years and it felt natural for us to approach them.”
The team’s clients moved too. In fact, Mercer says, they all followed them to the new firm. All except Northern Rock, which stayed with Sidley. No great loss there then.
The timing of the original opening could not have been any more perfect, according to Gide senior partner Pierre Raoul-Duval. He has spent his entire career at Gide, joining in 1975 and witnessing it grow to 24 offices across the world.
Gide is France’s largest firm with 300 lawyers in Paris, but some 60 per cent of its lawyers are based outside the capital. Opening in London, however, was a bigger step than Gide’s other outposts.
“Strategically, opening in London was the biggest move for us,” confirms Raoul-Duval. “It was a quantum leap. Instead of being a French firm with an international network, we were perceived as an international firm. It was a success.”
Unfortunately, ’was’ is now the operative word. The London office has just completed an analysis into how it can benefit the rest of the Gide network. For the first time, Gide London has had to justify its existence.
“When we started, there was a deal of internal selling to do,” says Mercer. “It took us time to explain to our colleagues who we were and what we could bring to the party.”
The question is, has it done enough?
Gide’s new managing partner Christophe Eck, who took up the reins in January this year, agrees that when the honeymoon ended, London had a task to make itself visible to the rest of the network.
“The London office worked out the synergies it had with the other offices and found many,” says Eck. “In the short term it’s hectic but in the medium term it’s positive.”
Eck admits that it has taken Gide time to appreciate what it has in London but claims that has now changed and there are plans to develop its UK operation.
“People are totally in a London mood,” he says. “People are conscious we have the office now and that it’s an asset.”
Gide has a history of reinvention. Back in 2003 the London opening reflected how far Gide had come since its Paris office was battered by defections to London firms 12 years previously.
Gide watched magic circle and US firms open in France then, with devastating effect, plunder its M&A and banking teams. Some 15 partners left the firm in 1998-99, most to Linklaters and Allen & Overy, effectively bringing the partnership “to its knees”, as one magic circle partner in Paris put it.
But Gide fought back and with major corporate and state clients on its books, such as CNCE, Groupama, SNCF and the French state, the firm has forged its place at the top of the table in France and among the largest Continental law firms.
Jacques Buhart, head of corporate at Herbert Smith in Paris, describes Gide as a “huge powerhouse” in France with no competitor. The directories do not do the firm justice, he maintains.
“They may not appear that high in the rankings but that’s because they invest much less time in taking journalists to lunch,” says Buhart. “The firm is quite a remarkable success. They managed to succeed in restructuring themselves very well. They moved from being a typical French, haphazard law firm into a structured and well-managed law firm. Their documentation is absolutely excellent and can be compared to any firm in the world. Gide is the firm of choice French companies going out of France.”
Vive la différence
Big names at the firm include Xavier de Kergommeaux, a securitisation partner and the firm’s former managing partner, Antoine Choffel, competition partner and at 43 a younger member of the recently appointed management committee, and M&A partner Youssef Djehane.
However, back in London, some of that star quality is badly needed, although Paris rivals speak highly of London capital markets partner Arnaud Duhamel.
More broadly though, if the office has had to work so hard at making itself visible to the rest of its own network, what hope for boosting its visibility in the London market?
Just in terms of size, Gide faces an uphill battle. At its largest in 2008 the office had 55 lawyers. Following the crash, some 20 per cent left the firm in a mixture of redundancies and ’natural wastage’.
Now the headcount stands at 40 lawyers, eight of whom are partners. Of those, six work on English law (four transactional, one tax and one litigation and arbitration), with the remaining two working on US law.
“I don’t think we need to be a different type of office,” argues Mercer. “I don’t see us abandoning our core strength in finance. We’re developing a much more broad finance capacity.”
Mercer says the office will not undergo any rapid diversification with the next two years, but after that, “we’ll have to see”.
“It used to be in the good times that you knew what you’d be working on in two years’ time. Now it’s difficult to see very far into the future. You get random things thrown at you,” he adds.
The London office counts Deutsche Bank, General Electric Capital Corporation, European Bank for Reconstruction and Development, International Finance Corporation and BNP Paribas as key clients.
Mercer maintains that it finds itself opposite magic circle and US firms on transactions, but he adds that the office “doesn’t compete directly against London firms”.
“On the one hand our competitors are - on transactions - magic circle and US firms. On the Gide network side, our competitors are White & Case, CMS Cameron McKenna, Norton Rose and Denton Wilde Sapte - firms with offices in the emerging markets.”
Despite 73 per cent of the London office’s work being project finance, its large London rivals in that market say Gide is “not on our radar”, as one infrastructure and project finance partner at a top 10 firm puts it.
“We rarely see them,” confirms a partner at Denton Wilde Sapte.
Mercer says that cross-border litigation is one area where the London office can be a real boon to the firm as a whole. Always keen to emphasise the office’s inclusion into the Gide family, Mercer is fully aware that London now has to earn its place at the table.
“When we first started we were a finance boutique. One of the priorities is to diversify the office. It’s no good for us to sit in London and do our own work,” he admits.
Mercer has outlined the practice areas that will be the focus for the firm, such as litigation, that will help integrate London fully into the Gide network.
“We’re looking to increase the amount of cross-border lending work we do with Paris and our colleagues in Eastern Europe and other emerging markets, and to build up our project finance practice,” he reveals. “We have a strong track record in projects, acting mainly for sponsors, contractors and governments, and we aim to capitalise on that to get work on the finance side. We want to diversify our skillset but always as a part of Gide.”
Will this help the office pull itself back into the fold? Not everyone is convinced. Yves Wehrli, head of the Paris office at Clifford Chance, says that if Gide truly wants to have a credible cross-border finance practice it will need greater resources than it currently has.
“I’m full of admiration for how it coped with the situation 10 years ago,” Wehrli says. “The firm is a strong player in the French market. Other firms are now moving to a full service, so you could say it was a market pioneer and leader. However, there are question marks over its international strategy. To what extent the firm can really compete on the local level remains to be seen. Its Eastern Europe offices are very competitive, but I don’t think its London office is as competitive.”
Of course, a rival is unlikely to heap praise on a competitor, but Gide’s management is likely to take Wehrli’s comments seriously.
One way Gide could achieve significant growth in its London office would be for it to tap into Francophone Africa. The firm opened an office in Tunisia in 2001 and both Algeria and Morocco in 2003.
It is one region in the firm’s network that saw growth last year, and the London office has a mining, oil and gas practice that has worked on deals in Gabon, Morocco, Mauritania, the Democratic Republic of Congo, the Ivory Coast, Mali, Burundi and Guinea.
One partner at a French firm that has a Casablanca office says Gide is “amazingly strong” in the city.
“It’s a growing country and there’s a lot of PPP and finance work there,” says the partner. “Gide have good French and American clients and they are the market leader.”
“Mining, oil and gas are important to our future and is indeed the sort of practice area that fits well with our geographical spread,” confirms Mercer. “For example, we’re increasingly helping Chinese clients with their natural resources investments in Africa.”
For it to succeed and remain credible, it is essential for Gide’s UK office to stake its place in its wider international network. The firm’s decision to appoint Eck as managing partner showed its intent to capitalise on its international footprint as, over the past few years, he has overseen the firm’s expansion into new countries, including the openings in Abu Dhabi and Dubai in March last year.
While India and its obvious benefits hold a ’special’ interest for Eck (see box, above), will the UK command the same attention?
Gide’s 2009 figures are not available until April - in 2008 the firm posted a total revenue of e258m - but Eck is convinced they will be down, with London having an especially tough year.
“2009 was a crisis year for our clients; it wasn’t a successful year for us,” he admits. “The first six months weren’t very good for the UK or the firm as a whole.”
No one at the firm is more aware of Gide’s international success than Eck. Russia, Poland, Africa and China remain solid performers for the firm, but Eck will need some patience if London is to thrive.
Gide Loyrette Nouel: a passage to india?
In January this year, Gide Loyrette Nouel got a new managing partner in Christophe Eck. It also got a lawyer with a greater understanding of India than perhaps anyone at a Western firm.
Eck has some bad news for those managing partners who think that prising open the market is the hard bit.
“Will we see lots of firms moving in? Probably. They’ll be disappointed,” he says.
Eck is worth listening to. His love affair with the country began in 1993 when he travelled there on a deal for Gide. In 1996 he was back to marry his Indian wife, with whom he now has four children.
With strong family ties to the country, he has spent a month there every year for the past 10 years.
“It’s a country of lawyers,” he says. “It’s open to business and has a natural unity with law firms.
It’s also closer [in attitude] to Europe than China. Indians don’t see foreign exchanges like many other countries - they are intellectual and don’t see integration as a threat. Plus they speak English.”
Gide works with a number of firms in the country. Recent associations have been with Khaitan & Co, Crawford Bayley & Co, Desai & Diwanji, Amarchand Mangaldas and FoxMandal Little.
In the past it has also worked with Mulla & Mulla & Craigie Blunt & Caroe.
Five years ago Gide began a programme of recruiting and training Indian lawyers. The firm has taken a dozen associates and trainees on an internship for between two and six months.
Today, the firm has five Indian-qualified associates working in various offices across the Gide network but, Eck insists, this will “increase rapidly” in the near future.
“Over the past six months, lawyers from our Paris, London, Dubai and Hong Kong offices have been involved in Indian deals,” he says.
The firm’s Indian integration has seen some success. In January Gide’s London branch won a mandate to advise the Government of India on the sale of 8.38 per cent of its stake in the National Mineral Development Corporation, a deal worth around $3.8bn (£2.53bn).
For Eck, India is a country that clearly occupies much thought both at work and at home. He admits it is a vexing challenge. “There are a lot of Indian players,” he says. “It’s very competitive in terms of pricing. The model would have to be carefully looked at.”
Despite his misgivings, one suspects that he already has a plan.
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