Fried Frank: a series of unfortunate events
3 February 2009
Fried Frank’s global ambitions left in tatters
Fried Frank Harris Shriver & Jacobson’s international ambitions have a habit of being thwarted. In case it had slipped your mind, this is the firm that almost tied the knot with Ashurst back in 2003, only to be denied at the altar by quibbles over remuneration systems and power-sharing.
Since the collapse of that deal, the New York-headquartered firm has ever so slowly extended its international network. But its pretensions to global firm status have taken significant knocks recently.
Over the past few months the firm has seen the departures of three major teams of lawyers – two in Paris and one in Frankfurt. Rumours are also circulating about the success (or rather lack) of the firm’s office in Hong Kong.
Asia managing partner Huen Wong is set to become president of the Hong Kong Law Society later this year, raising questions about his future commitment to the firm, while there are mixed reports over how well the former Simmons & Simmons lawyers who joined in 2006 have bedded in.
“It appears there’ll soon be no one left in the overseas offices of Fried Frank,” comments one former partner.
Fried Frank’s 2008 fiscal year closes at the end of this month. The signs are that its results will be okay, but not spectacular. Coupled with the harsh economic climate, a poor financial year is unlikely to convince the firm’s US partners that it is worth staying committed to costly investment outside its New York base.
“International strategy has been something of an issue at Fried Frank for years,” says one New York recruitment consultant. “My assumption is that some of its corporate work has dried up and they might be pulling in their horns a little bit.”
Corporate and M&A has long been the core of Fried Frank, although over the past few years it has made serious attempts at growing additional areas, such as white-collar crime and securities, bankruptcy and capital markets. The firm also has one of the leading real estate practices in New York.
As far as its overseas practices are concerned, the firm’s recent approach has been to mirror the practice configuration in the US through the hire of teams. But now some of those recent hires have upped sticks.
The most recent was the group of lawyers that included corporate partner Patrick Jais and IP partner Barbara Levy that Fried Frank hired from French boutique Veil Jourde in 2005. The team left for De Pardieu Brocas Maffei last month.
Other international failures include the niche bankruptcy litigation firm Lantourne, with which Fried Frank merged in 2006. In November last year name partner Maurice Lantourne took himself and five associates off to Willkie Farr & Gallagher. They were later joined by Frankfurt-based capital markets partner Michael Schlitt, who joined Fried Frank in 2007 and left last September after only 14 months.
A recurring theme that emerges is that Fried Frank appears unwilling to make the strategic investments necessary to build its international platform. In Germany, following Schlitt’s departure, the US firm has only two M&A partners (described by one commentator as “rather invisible”) and around six associates. The losses in Continental Europe have the appearance of a change of strategy at Fried Frank.
“Maybe they’ve decided to just have overseas outposts,” says a source close to the firm. “But that’s a completely different business model from building a local office and sourcing work locally. You can’t do that if you don’t have critical mass.”
Certainly, having fewer than 10 lawyers in an overseas office is unlikely to convince the firm’s clients that it can handle anything that is thrown at it. But then it is possible Fried Frank is just taking a little pause for breath following a spate of unfortunate adventures in Europe.
“Globalisation doesn’t necessarily have to follow a straight line,” says a US legal market consultant. “It can go in fits and starts.”
Like many of the top US firms, Fried Frank’s New York office is paramount. Plus, the firm is still small enough for its partners to remain largely autonomous, operating their own little fiefdoms. The firm is not a large bureaucracy like some of its 3,000-lawyer rivals.
“Success at Fried Frank has never been measured on whether it’s a huge firm internationally or not,” adds the consultant. “It’s whether it’s competitive in the New York market that counts.”
The inference is that the financial results from Fried Frank’s overseas outposts are not strong and the New York partners are suffering as a result. And that said, partners have a limited tolerance for pain.
The loss of lawyers from a couple of faraway cities is unlikely to worry the partners in Manhattan’s financial district too much. The collapse of another international strategy, should the exodus continue, would be more of a concern.
Fried Frank was contacted for the purposes of this article, but chose not to comment.