New London managing partner installed to target international growth. By Matt Byrne
All eyes may have been on Hogan Lovells last week as the two firms finally became one, but there were other merger-related mutterings making their way through the London market.
And no, we do not mean SJ Berwin and Orrick, which last Tuesday (4 May) ended their talks. The City office of Bryan Cave is the latest US firm to set out its stall publicly for a potentially transformative deal.
To be fair to the St Louis firm, it can hardly be accused of jumping on the merger bandwagon. Four years ago the proposed merger between Bryan Cave and Squire Sanders & Dempsey collapsed after the two firms failed to reach agreement over the structure of the tie-up.
Then last year Bryan Cave did manage to make it to the altar with Atlanta-based, 220-lawyer firm Powell Goldstein.
In London City managing partner Anthony Fiducia has never made a secret of the fact that his firm was hoping to secure a merger in the UK in a bid to cement its position in the European market.
Last year Fiducia said he hoped to have secured a deal within 12 months. Jump forward a year and the timeline is not the only thing that has changed.
Last Monday (3 May) Fiducia stepped down from the London managing partner position to return to full-time fee-earning.
In his place has come Washington DC litigation partner Rodney Page, a Bryan Cave heavyweight, who is relocating to the UK as the firm’s new London head tasked with a specific remit of finding a merger partner or takeover target.
Page has already played several senior management roles at Bryan Cave, including finance and administrative partner (effectively operations partner). Page was also the lead partner on the firm’s ’strategic growth team’, the group tasked with finding merger opportunities three years ago.
One of the fruits of that initiative was the merger with Powell Goldstein, a deal on which Page was the point person. Now his arrival in London is aimed specifically at reinvigorating Bryan Cave’s efforts at promoting international growth, with London and Europe currently topping the agenda.
Why did it need reinvigorating, The Lawyer asked?
“The main reason was the recession and the tough year that was 2009,” says Page. “That caused us to reassess our strategy. We think we came through reasonably well, with around a 10 per cent reduction in headcount, profits down slightly and lots of belt-tightening, but basically we were okay. But the year put a delay on our expansion plans and the strategic growth plan that we’d been working to for several years was put on hold.”
Last year, adds Page, most firms (let’s call them merger candidates) were in survival mode. Now, he says, some partnerships are starting to look around.
“Now more firms are open to the possibility of a merger because they’re concerned about their future, especially those firms in the mid rank,” argues Page.
Page reveals that, during the darkest days of the recession and throughout 2009, there were other merger opportunities Bryan Cave looked at, including ones that would have given it the chance to enter two or three new US markets.
“Two firms approached us after the Powell Goldstein merger, but we didn’t pull the trigger,” he says. “We thought it was more important to focus on the markets we were currently in.”
Similarly in London, Fiducia says the firm had discussions with several firms over the past 12 months, although none got very far. Now the firm might revisit a few.
And frankly, as far as London is concerned, it needs to. The firm currently has around 40 fee-earners in the City, a reduction of around 10 on last year after the downturn collided with Bryan Cave’s City office.
Firmwide the Powell Goldstein merger helped it post a 12 per cent rise in revenue to $563m (£350.6m), but its $625,000 average profit per equity partner will put a dampener on its ambition, at least in terms of securing a deal with one of the City’s leading corporate firms.
And while the City office does boast some particularly high-profile clients, notably Russian oligarch and Rusal owner Oleg Deripaska, its full-service offering is a little thin on the ground.
Indeed, the firm has just lost litigation head Nick Cherryman to Fried Frank, a departure that follows that of former employment group head Sarah Linton, who joined Dewey & LeBoeuf in March (Bryan Cave has since hired senior employment counsel Darren Isaacs from Linklaters to replace Linton.)
So there are holes and some patchiness. Which is presumably why securing a beefing-up deal has moved up the firm’s agenda.
Page says Bryan Cave is likely to be targeting two types of deal. He does not rule out revisiting the kind of merger of equals that the Squire Sanders deal would have been and which just happened with Hogan Lovells.
In London, however, the favourite would be a 60- to 200-lawyer firm in a similar range of average profit and revenue per lawyer and with a significant level of international business, although not necessarily overseas offices.
“Because the market’s changing, our attitude’s changing,” Page confirms.
All you smallish City, Holborn or West End firms looking for a deal should probably give Page a call. You never know.