Freshfields’ finance commitment in doubt with Howard missing Links

Banking star in shock return to previous site of thwarted partner ambitions. By Gavriel Hollander


Chris Howard
Chris Howard

They say you should never go back, but Freshfields Bruckhaus Deringer banking partner Chris Howard’s unexpected move back to his old stamping ground of ­Linklaters is proof that perhaps ’they’ are not always right.

Last week’s news sent shockwaves through the market.

“A stunning move,” is how one banking partner at another City firm described it, not only because it is a major statement about the differences between the practices, but also because of the complex mesh of personal relationships that came into play.

A brief history lesson is ­illuminating. Back in January 2004 Howard, then a senior associate, left Silk Street to go straight into the equity at Freshfields. It was a bold play and showed the value Freshfields saw in investing in a banking practice that had ­previously been playing second ­fiddle to that of its great magic ­circle rival.

The rehire, six years later, was to a large part engineered by another Freshfields alumnus, banking star David Ereira, who has known Howard since their days together at Wilde Sapte.

When he enticed Howard to Freshfields Ereira was aware of Howard’s frustration at being denied partnership at Linklaters. He also had the pull of having another Wilde Sapte alumnus in the shape of Brian Gray already being firmly ensconced at the practice. It is no coincidence that both Ereira and Gray have since moved to ­Linklaters.

And the Wilde Sapte ­connection does not end there. A recent ­gathering in the Samuel Pepys bar on London’s Upper Thames Street, held to toast the passing of the name (as Denton Wilde Sapte, the firm formed by the 2000 merger of Wilde Sapte and Denton Hall, has morphed into SNR Denton), would have seen invites darted off to half of Linklaters’ top finance partners. Nick Syson, Bruce Bell and Phil Spittal all cut their teeth at the firm, as did global banking head Robert Elliott.

David Ereira
David Ereira

Former Dentons banking head Graham Paine, a contemporary of Ereira’s and still a partner at SNR Denton, says that seeing such a strong stable of ex-Wilde Sapte lawyers at the City’s leading ­practice is a credit to the firm.

“It was a collective atmosphere,” he recalls. “We’ve always been at the top of the game with restructuring and insolvency and it’s always been a great place to train.”

Personal relationships are, as any senior management figure in the City will repeat ad nauseam, critical. It is that element of Howard’s move that Freshfields is understandably keen to portray as the main driver.

Indeed, the political ability of Elliott to convince someone who left with a slightly bitter taste in his mouth to return to the fold cannot be underestimated.

“It’s Robert showing that he’s among the best businessmen in any firm,” reckons one partner at another firm.

But to suggest that personal ­politics are the long and short of this would be simplistic. As the same partner adds: “What it says about the state of Freshfields is more interesting.”

And to many in the market, what it says is that Freshfields does not show its finance practice the same kind of love that Linklaters does. That might be the stuff of broad brushstrokes – and indeed it is something fervently denied by Freshfields – but there is an increasing weight of evidence.

Howard, of course, is not the first big name to jump ship. Ereira and Gray left in 2007, while ­Maurice Allen and Mike Goetz, hired to plug that hole in 2008, left a year after joining. The eternal cry is that the practice is very much behind the ­corporate group in the Fleet Street pecking order.

“Freshfields are always going to fall out with a good banking lawyer because they’re an adjunct to ­corporate,” says one ­former magic circle partner. “Chris would have felt like a second-class ­citizen.”

It is understood that the two main areas of frustration for Howard were the lack of support offered in terms of resources – “Ultimately, he was forced to turn down mandates,” says one source with links to Freshfields – and a conflict management system that saw him repeatedly lose work.

That was especially true in the restructuring space, as other ­practices would see him conflicted out when there was a chance of a ­mandate from a ­corporate raider.

“Even if the conflict issue was clear, he’d still need to get approval [from other practice groups],” adds the source. “He got squeezed on restructurings because ­ultimately at Freshfields corporate calls the shots.”

Freshfields does not comment on the specifics of how it manages conflicts, but a spokesperson says: “We look at each case individually, taking into account a number of factors, such as professional ­obligations and the nature of the matter.”

More generally, the firm ­dismisses the charge that it favours the corporate side of the business or that finance is used in a ­supporting role.

“It’s an entirely symbiotic ­relationship with corporate,” claims global head of finance Alan Newton when asked about the Freshfields hierarchy. “In many ways it’s moved the other way [from being led by corporate].”

Such a high-profile defection does not, according to Newton, mean that the firm’s commitment to building the practice has ­slackened. “Our practice is ­something we’re continuing to invest in and we’ve already made huge progress,” he insists.

Newton adds that some of the relationships seen as Howard’s own, RBS in particular, will be kept close by the firm. And even ­Linklaters would acknowledge ­privately that it will be hard to see mandates migrate any time soon.

But as one magic circle banking partner suggests, that misses the point. “People sometimes have clients that follow them, but that’s not the point here,” comments the partner. “It’s that what you get with Chris is a bundle of energy, and that always translates into work.”

It also feeds into a desire among some Linklaters partners on both the finance and corporate sides – not least among them corporate chief Jeremy Parr – to see their firm become more entrepreneurial in its pursuit of new business, ­particularly after Freshfields lured BP on a matter from under ­Linklaters’ nose earlier this year.

On the other side of the fence, the impression that Freshfields is serious about lender-side banking work has taken a dent.

“One person moving does not make a difference, but it’s about the message it sends,” says the source with Freshfields links. “Like Slaughter and May, there’s no ­reason they need to build a ­bankside practice, but the pretence that they’re trying to do it is going to go.”

Freshfields remains bullish, but it is the market that will decide.

gavriel.hollander@thelawyer.com