Sounds like you wouldn’t want to play fast and loose with Steve Brogan. The newly-anointed managing partner of Jones Day is one of the toughest litigators in the US and is as far from your classic patrician type as you can get – his father, so the story goes, was a New York policeman and two of his uncles were NY firefighters. As a Washington lawyer, he is the first Jones Day chief to be based outside the firm’s home town of Cleveland, Ohio. His elevation may account for the firm’s shift in international priorities. For as we revealed last Wednesday on Grapevine, part of the Lawyer News Weekly email, Jones Day is in merger talks with Gouldens.
Jones Day, normally thought of by UK lawyers as a slightly blue-collar Skadden Arps (huge, lots of industrial corporates, massive litigation shop) is one of a number of non-New York firms which are suddenly taking the lead internationally. Think Squire Sanders (another Cleveland firm), back in talks with Watson Farley. While Wall Street firms are jealously protecting their margins, the likes of Jones Day – whose average profits per equity partner at £529,000 are lamentable by US standards – are after tie-ups with UK firms.
Perhaps the deal is less surprising than it first appears. You always get the feeling that Gouldens views the concept of partnership entirely pragmatically rather than emotionally. After all, what is Gouldens best-known for? It’s got some good relationships with mid-tier intermediaries, but it’s never that visible on deals, many of which are at the lower end of the mid-market.
No, Gouldens is best known for paying its people shedloads, from the trainees up to the partners. It can afford to do that because it’s always kept a grip on costs and holds the equity very tight, which is hardly a recipe for growth. What’s more, the merit-based profit share-out – like at Jones Day – is entirely opaque. Gouldens partners are almost selling at the top. A guaranteed level of profits for two years is a nice deal when your transactional market is drying up.
So the best case scenario is that Jones Day gets immediate strength in depth in the UK and Gouldens gets international access – something its savvy partners realised it had to sort out without resorting to overseas investment. Worst-case? That two parallel universes of control-freakery just refer bits of business to each other, with all the attendant fall-out. Ladies and gentlemen, place your bets.