That is some turnaround. Linklaters’ US headhunters have made a good fist of selling the firm after a period of turbulence two years ago. The magic circle firm has managed to snare four partners from Shearman & Sterling (plus a senior associate who was made partner on entry), two from Latham, one from Jones Day, one from Sidley Austin Brown & Wood and one from Stroock & Stroock & Lavan.
While it is a long haul for a UK firm to hire New York lawyers (something not helped by the institutionalised derision Clifford Chance has to cope with in the US) the Linklaters experience shows that there is latent enthusiasm among US partners for the global model. “We’re not that big in New York, but a lot of US lawyers regard the magic circle as being on a par [with the elite US firms] in prestige terms, and they do see that we have a huge institutional following,” says Linklaters managing partner Tony Angel.
Angel claims never to have considered off-lockstep deals to entice star partners and argues that lockstep is not just a cultural phenomenon, but one that works within the grain of the firm’s client profile. “It’s actually a competitive advantage,” he says. “Lockstep really works when the transactions are cross-border and cross-practice area with institutional clients.”
The transformation of Linklaters’ New York practice has not just been in personnel. Linklaters has been the longest in New York of any UK firm, although it squandered its early lead through inertia and strategic indecision. Previously biased towards projects and securities, the New York practice is now far more aligned with the firm’s global institutional business, the US litigation team’s role on the defence of Goldfields in relation to Harmony’s hostile bid being the most obvious example.
Compared with Allen & Overy (A&O) and Clifford Chance, Linklaters’ finance practice was slow off the mark in creating, transatlantic capability, but the hires of Marty Flics from Latham and Mark Palmer from Stroock have brought a heavyweight bankruptcy capability. Flics has a general creditor advisory practice and had a role on Global Crossing, while Palmer’s distressed debt practice business is skewed towards private equity and hedge funds.
By contrast, A&O’s and Freshfields Bruckhaus Deringer‘s growth seem to have stalled. Freshfields, which like Clifford Chance has an outpost in Washington DC, focuses strongly on premium-billing antitrust work, which has underpinned its strategy of maintaining profitability rather than increasing market share. Freshfields chief executive Hugh Crisp says: “We’re proud of our US offices [in New York and Washington DC] and they make a good cultural and financial contribution.” Freshfields sources say the US practice is comparable to the global profit per equity partner average of £675,000.
A&O, meanwhile, while making a splash with the hire of derivatives specialist Dan Cunningham from Cravath Swaine & Moore three years ago, has found progress to be much slower over the past year.
A&O also has a much lower revenue per lawyer (RPL) figure and revenue per partner (RPP) figure than those of its magic circle rivals (A&O did not return calls for comment). While Clifford Chance and Freshfields manage higher RPL and RPP figures in the US than their firmwide averages, A&O is £65,000 lower and Linklaters £60,000 lower than their firmwide averages. However, Linklaters’ US figures are slightly redeemed by the fact that its figures for 2003-04 will lag its growth. Linklaters’ New York office is set to post a revenue hike of more than 30 per cent to some £20m this financial year. On that showing, it could overtake A&O anytime soon.
US figures for the UK magic circleFirm Revenue Total Ã¢Â€Â¦ of which RPL RPP Global Global (£m) lawyers are partners (£K) (£m) RPL (£K) RPP (£m) Clifford Chance 229 401 92 571 2.4 354 1.52 Freshfields 26.8 72 16 372 1.67 353 1.5 Allen & Overy 26 92 22 282 1.2 347 1.5 Linklaters 15 50 11 300 1.36 360 1.5 Source: The Lawyer