UK firm adopts cautious approach to pinpoint the right US laterals. By Julia Berris
Cracking the US litigation market has long been a challenge for the magic circle. Even the most ambitious and capable of UK firms have found competing with US heavyweights on their home turf troubling.
But Freshfields Bruckhaus Deringer does not seem intimidated. Last week (13 July) TheLawyer.com reported that the magic circle firm had hired Bank of America general counsel David Onorato to bulk up its New York litigation practice.
The move comes six months after the firm hired a trio of high-flying litigation partners to kickstart the US disputes practice. Aaron Marcu and Adam Siegel joined from Covington & Burling, while Benito Romano came on board from Willkie Farr & Gallagher in January (The Lawyer.com, 22 January).
The hires may seem infrequent, but for Freshfields, hiring four high-profile partners in the US in six months is big news.
Freshfields is well-known for having operated what its management calls a “resource-constrained” model. With a small and focused team, the US offices have typically accounted for approximately just 4 per cent of global turnover.
Since recruiting the trio at the beginning of the year the firm has focused on recruiting partners and associates who can add expertise relating to financial services investigations. The ultimate goal is to provide global clients with cross-border investigations capabilities.
Developing a complex civil litigations practice in New York could be the dawning of a new era for Freshfields stateside.
“We’ve always been willing to grow our US practice if there’s a true strategic need and if we can find the right quality,” says Freshfields chief executive Ted Burke.
Hiring quality rather than quantity has been the firm’s strategy in the US. It now has a small team of litigation partners there as well as a team of 10 associates, who are a mixture of Freshfields associates and those who joined from Covington after Marcu and Siegel came aboard in January.
Litigation typically accounts for around a third of total revenue at the majority of New York’s elite firms. Critical mass is therefore of crucial importance.
But for Freshfields, proceeding with caution is paramount. The firm has embarked on this project at a time of great turbulence for magic circle practices in the US.
Clifford Chance has suffered a string of defections from its litigation team in recent months. Last year former New York head John Carroll defected to Skadden Arps Slate Meagher & Flom together with partners David Meister and Warren Feldman (TheLawyer. com, 2 December 2008).
In October last year the firm was forced to cut 20 associates from its litigation teams in New York and Washington DC (TheLawyer.com, 14 October 2008).
More recently Clifford Chance suffered the loss of New York-based global litigation head Mark Kirsch, who joined Gibson Dunn & Crutcher along with partners Joel Cohen and Christopher Joralemon during the summer, leaving the firm’s US litigation group somewhat thin on the ground (TheLawyer.com, 10 June).
“It was less about the credit crunch and more about not having the right capabilities,” claims one US legal recruiter. “The people the firm needed to drive the business forward were drawn back to US firms, where they can make more money being part of a successful platform. It will be very hard for the firm to recover from this.”
So what prevents Freshfields suffering the same fate?
Romano sees the firm’s gradual and cautious lateral hiring strategy as the answer to that question and the route to success for Freshfields.
“We haven’t created a litigation team out of two firms merging,” explains Romano. “It’s a gradual process that involves partners getting to know each other well and being part of building a practice. It may take years to achieve, but we’ll build a stronger team that way.”
Romano remains confident.
It may be a long game, but Freshfields seems sure it can make a litigation department work in the US.
Both Burke and Romano are realistic about the challenges of creating a well-rounded and respected litigation team in the country, but both seem equally determined to do just that.
“We hope in time to develop a litigation capability in the US that is both first-class and has sufficient scale to be credible,” adds Burke. “You need to find people with the right quality and the right expertise, and we certainly think our team has both. This is one of the most exciting growth areas for Freshfields at the moment.”
In the midst of the downturn, then, the magic circle firm is investing and making the most of its global platform.
Freshfields looks to be in a good position to take advantage of star lateral hiring opportunities in the US. Not every firm can say the same.