TOP 30 INTERNATIONAL FIRMS
The rise of international firms within the UK market continued unabated in 2005, with the top 30 international firms depriving UK rivals of total revenue worth more than £1bn for the second year running.
The international firms, which admittedly are all headquartered in the US, increased their overall combined turnover by 10 per cent to report a total revenue of more than £1.1bn, up from slightly more than £1bn in 2004.
All of the top 30 US firms had solid years, but in certain cases, such as Debevoise & Plimpton and LeBoeuf Lamb Greene & MacRae, the past 12 months have been little short of astounding.
Debevoise was the biggest success story, reporting a staggering 67.5 per cent increase in UK revenue to reach $56m (£32m). The firm only needed 14 London-based partners to achieve the record jump in revenue, which equates to 10 per cent of the firm’s total revenue of $536m (£306m).
LeBoeuf reported a similarly astounding 43 per cent increase in UK turnover, from $34m (£19.5m) in 2004 to $48.8m (£27.9m) in 2005, and an even more astonishing 67 per cent increase in UK profit per equity partner (PEP), from $681,000 (£389,000) in 2004 to $1.1m (£650,000) in 2005.
LeBoeuf London managing partner Peter Sharp managed to keep the excitement out of his voice when he attributed the increases to “steady growth” across the firm’s key practice areas of insurance, reinsurance and energy. “There was no jumbo deal or specific trigger that sparked the growth for us. It’s been a broad advance across the range of what we do,” he says.
This is a sentiment mirrored by the majority of the international firms and it is sure to send a chill through their UK rivals, which have preferred to believe that their US competitors are making little headway in locally-generated mandates.
The focus has meanwhile shifted from US firms looking for UK tie-ups to UK firms looking to expand into the US firms’ own hunting ground – namely Freshfields Bruckhaus Deringer‘s search for a US bedmate.
The existing US-UK tie-ups showed improved results in 2005. The merger between Kirkpatrick & Lockhart and London’s Nicholson Graham & Jones, which came into effect on 1 January 2005, resulted in the firm entering the rankings for the first time last year. It has since capitalised on the tie-up, increasing UK revenue by 10 per cent to reach $52.1m (£29.8m) and average UK PEP by 36 per cent to $525,000 (£300,000).
But Mayer Brown Rowe & Maw (MBR&M) remains the undisputed success story of the transatlantic mergers, retaining its second place ranking with a UK revenue of $145m (£83m). MBR&M is, however, an exception to the rule, as it retains an independent UK presence.
The profitability of the international firms in London still outstrips their UK rivals’. The top 30 international firms offered an average PEP of £746,200 for the last financial year, compared with just £489,900 in the UK top 30 in 2004-05. However, this is down on the international firms’ 2004 financial year figure for average PEP of £789,900, signalling a slight balancing out in the UK market.
However, US firms are still loudly touting around guaranteed pay packets upwards of £1.5m to star partners in the UK and Europe. Such hefty remuneration packages saw yet another swathe of lateral movements to international firms during 2005, although these did not reach the same level as seen in previous years.
Skadden Arps Slate Meagher & Flom made its intentions clear by bolstering with a string of hires in London. Shearman & Sterling corporate rainmaker Adrian Knight defected to Skadden in November, followed shortly by Allen & Overy (A&O) finance partner Clive Wells.
But Simpson Thacher & Bartlett arguably made the most notable lateral hire of 2005, poaching A&O’s legendary leveraged finance partner Tony Keal, ensuring the solidification of the firm’s already tight relationship with Kohlberg Kravis Roberts & Co (KKR).
Meanwhile, Bingham McCutchen and Gibson Dunn & Crutcher make their debuts into the rankings of the top 30 international firms in London. This is at the expense of Morgan Lewis & Bockius, which reported a UK revenue of £10.3m, and Kilpatrick Stockton, following the dramatic downsizing of its London office late last year.
|1. Baker & McKenzie*|
|UK/global turnover: £92m/£727m|
|UK/global PEP: £445,000/£408,000|
|UK/global revenue per lawyer: £358,000/£217,000|
|* The firm’s financial year runs from July to June|
2005 has seen Baker & McKenzie retain its place at the top of the table.
London revenues is understood to have increased in the second half of 2005, partly off the back of the hire of a four-partner structured finance team from Norton Rose. The hires have ensured that London remains the firm’s largest office, with 687 staff, including 257 lawyers, of which 56 are equity partners.
|2. Mayer Brown Rowe & Maw|
|UK/global turnover: £83m/£538m|
|UK/global PEP: £480,000/£523,000|
|UK/global revenue per lawyer: £355,000/£351,000|
Corporate and litigation remain the two biggest practices at Mayer Brown Rowe & Maw, accounting for 60 per cent of London turnover. Among the firm’s high-profile instructions were advising Persimmon on its recommended offer for UK housebuilder Westbury and acting for the Football Association on its employment tribunal with Faria Alam.
The firm also underwent an aggressive recruitment campaign to take on four new partners.
|3. Lathams & Watkins|
|UK/global PEP: £915,000/£915,000|
|UK/global revenue per lawyer: £724,000/£463,000|
Latham & Watkins claims not to account for revenues on an office-by-office basis. But its London performance is believed to have been broadly in line with its global results after winning mandates on such high-profile deals as the E12.5bn (£8.61bn) financing of energy company Wind, on which it advised the arrangers.
Latham’s remuneration is split between an 85 per cent share that is awarded largely on a lockstep and 15 per cent on a discretionary bonus.
|4. White & Case|
|UK/global turnover: £71.3m/£598m|
|UK/global PEP: £418,000/£709,000|
|UK/global revenue per lawyer: £318,000/£307,000|
White & Case jumped up one spot in the rankings this year following a 28 per cent increase in UK revenue to $124.7m (£71.3m), almost double the 15 per cent increase seen in global revenue. But the firm was unable to compound on this to increase UK PEP. Instead, London partners suffered a £128,000 decrease in their average pay packet to reach $731,000 (£418,000) in 2005 – one of the worst in the rankings.
London senior partner Peter Finlay attributed the disappointing profit to the cost of the lateral hires of six new partners (the firm accounts on a cash basis) and the cost of firm’s new offices, which it relocated to late in 2004. As such, he said profit was expected to “stabilise” in 2006. The hires included a PFI team from Kilpatrick Stockton.
The bank finance team was also strengthened with two partner hires from DLA Piper Rudnick Gray Cary and Cadwalader Wickersham & Taft.
Deal highlights included advising sponsors Qatar Petroleum, ConocoPhillips and Mitsui on the $5.8bn (£3.31bn) Qatargas 3 natural gas project in Qatar.
|5. Shearman & Sterling|
|UK/global turnover: £61.6m/£477m|
|UK/global PEP: £950,000/£789,000|
|UK/global revenue per lawyer: £540,000/£548,000|
The London office of Shearman & Sterling remains the leading light within the firm in terms of profit, with UK PEP some 20 per cent higher than the firm’s global average.
Shearman managing partner Kenneth MacRitchie explains that, while London enjoyed three previous years of rapid growth, 2005 had been “a consolidation year”. However, the firm did recruit structured finance partner Julian Tucker from Allen & Overy.
|6. Weil Gotshal & Manges|
|UK/global turnover: £54m/£583m|
|UK/global PEP: £853,000/£1,046,000|
|UK/global revenue per lawyer: £574,000/£507,000|
Corporate remained the key focus of Weil Gotshal & Manges’ London office, representing 51 per cent of revenue in 2005.
The firm’s ambition to become the global leader in private equity was not translated into revenue or profit growth, though, both of which fell below the targeted 10 per cent rise. This was largely due to the office managing to close less than one in three transactions despite securing 160 mandates in 2005.
|7. Sullivan & Cromwell|
|UK/global turnover: £52.3m/£524m|
|UK/global PEP: £1,583,000/£1,481,000|
|UK/global revenue per lawyer: £918,000/£862,000|
Sullivan & Cromwell’s 16-partner London office benefited from the M&A boom, with its revenue breaking through the £50m barrier.
With an increased workflow, the firm is placing emphasis on London and Continental Europe as key areas, along with China.
Sullivan does not hire laterally in the US, but is known to be looking at its UK capability, with the focus on finance and project finance.
|9. Sidley Austin|
|UK/global turnover: £49.4m/£642m|
|UK/global PEP: £706,000/£706,000|
|UK/global revenue per lawyer: £466,000/£398,000|
2005 was a year of expansion for Sidley Austin. In October the firm launched in Frankfurt. It later expanded with a UK insurance practice through the hire of Nigel Montgomery from DLA Piper Rudnick Gray Cary. And in June the firm was added to Barclays’ panel.
Sidley changed to accounting on an accrual basis in 2005. 2004’s cash figure for UK revenue was £42.3m.
|UK/global turnover: £46.8m/£903m|
|UK/global PEP: £1,046,000/£1,057,000|
|UK/global revenue per lawyer: £526,000/£503,000|
Skadden Arps Slate Meagher & Flom’s capital markets and M&A-focused London office saw the return of big-ticket corporate deals, with Arcelor’s defence of Mittal Steel’s $22.8bn (£13.03bn) hostile bid, and SonaeCom’s E1.1bn (£628.6m) offer for Portugal Telecom.
A hiring spree added Shearman & Sterling private equity star Adrian Knight and Allen & Overy leveraged finance specialist Clive Wells.
|UK/global turnover: £45.6m/£329m|
|UK/global PEP: £846,000/£891,000|
|UK/global revenue per lawyer: £426,000/£388,000|
Dechert’s mandate to advise Travelex on its £1.6bn sale to Apax Partners was the highlight of 2005.
The firm performed well across the board, but financial services saw the most growth, with gross fees hitting £10m. This growth was assisted by the hire of partner Andrew Hougie from Clifford Chance in May 2005. The European network was also advanced by the hire of 32 lawyers from Coudert Brothers.
|11. Jones Day|
|UK/global turnover: £45m/£749m|
|UK/global PEP: £420,000/£462,000|
|UK/global revenue per lawyer: £268,000/£335,000|
Since Gouldens’ merger with Jones Day three years ago, the Jones Day UK operation has shrunk its partnership, a trend reflected in its revenue. However, during 2005 the London office became more visible on pan-European work for US clients, particularly in the restructuring arena, where it acted for investment company WL Ross & Co on its bid for Collins & Aikman and advised on a number of European investments for US private equity house Riverside.
|12. Cleary Gottlieb Steen & Hamilton|
|UK/global turnover: £36.3m/£465m|
|UK/global PEP: £966,000/£1,126,000|
|UK/global revenue per lawyer: £511,000/£518,000|
Cleary Gottlieb Steen & Hamilton’s mandate to advise client Mittal on its unsolicited £17bn takeover bid for Arcelor, with a team led by Paris-based partner Jean-Pierre Vignaud, was the highlight of an exceptional year.
Outside Europe the firm launched its first mainland China office, with Cravath Swaine & Moore securities and capital markets partner Clayton Johnson opening its new Beijing office.
|13. Cadwalader Wickersham & Taft|
|UK/global turnover: £32.8m/£276m|
|UK/global PEP: £1,590,000/£1,455,000|
|UK/global revenue per lawyer: £607,000/£473,000|
Mixed fortunes for Cadwalader Wickersham & Taft in 2005. It brought in high-level finance partners but was still plagued with departures, such as that of its entire projects practice, which officially left early in 2006.
Partners at the firm admit that the London office took its eye off the ball in trying to expand outside its core areas, but claim things are back on track.
|14. Kirkland & Ellis|
|UK/global turnover: £32.5m/£534m|
|UK/global PEP: £1,113,000/£1,240,000|
|UK/global revenue per lawyer: £756,000/£484,000|
Kirkland & Ellis reported steady, if uninspiring, growth in 2005. Despite being eager to expand its London private equity capability, the firm was unable to secure the lateral hires of Linklaters partners Graham White and Raymond McKeeve until early 2006.
However, litigation was bolstered during 2005 with two raids on Shearman & Sterling, while corporate and tax specialist John Baldry also moved across from Weil Gotshal & Manges.
|15. Debevoise & Plimpton|
|UK/global turnover: £32m/£306m|
|UK/global PEP: £862,000/£957,000|
|UK/global revenue per lawyer: £542,000/473,000|
When Debevoise & Plimpton’s London head Jim Scovell said 2005 had been a “terrific year”, he was not kidding.
The London office saw revenue rocket by a phenomenal 67.5 per cent on 2004, from $35m (£19.1m) to $56m (£32m). The 14 partners in the 139-partner firm’s London office chipped in a commensurate 10 per cent of its total revenue of $536m (£306.3m).
The firm enjoyed a strong year across the board, although with particular successes in funds formation, M&A and international arbitration, an area in which it was already among the leading players but which has been further boosted early in 2006 by the hire of Norton Rose partner Peter Rees.
The corporate team saw a string of major matters come through the door, including the $700m (£400m) London Stock Exchange IPO of Novolipetsk Steel, the business headed by Russia’s second-richest man Vladimir Lisin. Private equity in particular was strong.
The firm advised Providence Equity Partners on its involvement in the $15.3bn (£8.74bn) offer for Danish national telecoms carrier TDC, while Debevoise European managing partner Jim Kiernan took the lead advising Clayton Dubilier & Rice, Eurazeo and Merrill Lynch Global Private Equity on their E3.7bn (£2.55bn) acquisition of Rexel.
|UK/global turnover: £29.8m/£270m|
|UK/global PEP: £300,000/£418,000|
|UK/global revenue per lawyer: £253,000/£296,000|
At just £300,000, Kirkpatrick & Lockhart Nicholson Graham’s average PEP was among the lowest of all the US firms’ last year. Yet it also saw one of the highest rises, up 36 per cent from 2004’s relatively dismal (at least in US firm terms) £220,000.
The last year was about bedding in post-merger and there are signs that the worst is over, with a steady flow of laterals such as IP partner John Enstone from Addleshaw Goddard and corporate partner Martin Lane, along with some significant matters for companies such as Wachovia, Viacom and Alcoa. The firm is working on importing some of its signature US practice areas, including insurance, international arbitration and funds. But with London chipping in some $5m (£2.9m) of US-originated work from a standing start in its first full financial year as a merged firm, 2005 has to be filed under ‘satisfactory’.
|17. LeBoeuf Lamb Greene & MacRae|
|UK/global turnover: £27.9m/£251m|
|UK/global PEP: £650,000/£754,000|
|UK/global revenue per lawyer: £399,000/£387,000|
LeBoeuf Lamb Greene & MacRae set London alight in 2005, raising the UK office’s turnover by a staggering 43 per cent – an £8.4m increase on 2004.
The UK office easily outstripped the firmwide growth, which saw a 29 per cent increase in gross revenue (up to £251.4m in 2005 from £194.6m in 2004). London posted a gross revenue of £27.9m in 2005 compared with the £19.5m it recorded for 2004.
London managing partner Peter Sharp attributed the jump in revenue to a long-term growth plan that has seen seven UK lateral hires in the past three years for the New York-based insurance/reinsurance and energy heavyweight.
Highlights for the year included a role on all three insurance industry IPOs during 2005, including Lancashire Holdings’ $1bn (£571.4m) listing on AIM. The firm also advised on Amer Sports Corporations’ E485m (£333.9m) acquisition of Salomon and on CNPC International’s and Oil and Natural Gas Corporation’s joint acquisition of Petro-Canada’s Syrian assets.
|18. Simpson Thacher & Bartlett|
|UK/global turnover: £27m/£415m|
|UK/global PEP: £1,167,000/£1,354,000|
|UK/global revenue per lawyer: £563,000/£537,000|
Simpson Thacher & Bartlett’s London revenue rose 30 per cent in 2005, mainly off the back of private equity instructions from clients such as Blackstone. The firm also secured Kohlberg Kravis Robert as a client following the hire of star partner Tony Keal from Allen & Overy. Simpson Thacher also advised the Apax-led consortium on its winning E10.2bn (£7.02bn) bid for Danish telecoms operator TDC in Europe’s largest leveraged buyout to date.
|19. McDermott Will & Emery|
|UK/global turnover: £25.9m/£457m|
|UK/global PEP: £732,000/£732,000|
|UK/global revenue per lawyer: £405,000/£438,000|
McDermott Will & Emery’s capital markets team had a storming 2005 with an upswing in the market and the hire of a two-partner team from Allen & Overy in January. It advised on several AIM listings, as well as EGF International’s CHF1.6bn IPO (£705m)on the SWX Swiss Exchange. International arbitration and dispute resolution was also bolstered with the hire of partner Juliet Blanch from Norton Rose.
|20. Davis Polk & Wardwell|
|UK/global turnover: £25.6m/£367m|
|UK/global PEP: £949,000/£1,188,000|
|UK/global revenue per lawyer: £776,000/£602,000|
Davis Polk & Wardwell’s London office won a role last year on one of the UK’s most eagerly anticipated deals, advising ntl on its $6bn (£3.43bn) merger with Telewest.
The London office remains avowedly US-capability only, although during 2005 it added a French local law capability when it hired its first non-US lateral, Freshfields Bruckhaus Deringer’s former co-head of M&A in Paris Arnaud Pérès.
|21. Milbank Tweed Hadley & McCloy|
|UK/global turnover: £24m/£284m|
|UK/global PEP: £800,000/£1,154,000|
|UK/global revenue per lawyer: £522,000/£574,000|
Milbank Tweed Hadley & McCloy was back to being sure and steady in 2005 after the rare partner hire of outsourcing star Laurence Jacobs from Allen & Overy in 2004. Managing partner Phillip Fletcher said IP litigation and outsourcing had performed “really well”. But the Frankfurt office remains the firm’s leading light, advising on deals such as TV broadcaster ProSieben’s sale to media mogul Axel Springer.
|22. Reed Smith|
|UK/global turnover: £23.8m/£327m|
|UK/global PEP: £439,000/£439,000|
|UK/global revenue per lawyer: £313,000/£360,000|
Reed Smith’s London and Coventry offices outstripped the firm’s overall performance for the second year running in 2005, with UK revenue up 16 per cent compared with 12 per cent firmwide.
UK managing partner Tim Foster said the capital markets group had been the outstanding performer during the year following its launch in 2003. Life sciences was also bolstered with the hire of two partners from Bird & Bird.
|UK/global turnover: £22.3m/£466m|
|UK/global PEP: £486,000/£523,000|
|UK/global revenue per lawyer: £343,000/£411,000|
Eighteen months on since the merger of Wilmer Cutler Pickering and Hale and Dorr, the firm is still in the bedding-down phase.
The firm’s UK offices, London and Oxford, total roughly 75 lawyers with key strengths in arbitration, corporate technology and aviation. The latter practice counts Lufthansa among its anchor clients, advising the airline on its acquisition of Swiss International Airlines last year.
|24. Hogan & Hartson|
|UK/global turnover: £21.1m/£400m|
|UK/global PEP: £514,000/£514,000|
|UK/global revenue per lawyer: £406,000/£420,000|
Hiring was the story of Hogan & Hartson’s 2005 in London, particularly in corporate, capital markets and private equity. During the year the lawyer count grew by around 25 per cent.
High-profile deals included London partner Dan Maccoby advising Kingdom Hotels International on its purchase of the Savoy Hotel and partners John Basnage and Liz Katkin advising Harmony Gold Mining on its attempted $8.1bn (£4.6bn) takeover of Gold Fields.
|25. Dewey Ballantine|
|UK/global turnover: £20.3m/£224m|
|UK/global PEP: £575,000/£700,000|
|UK/global revenue per lawyer: £451,000/£417,000|
After failing over several years to build up a London corporate practice, Dewey Ballantine decided to go back to its core strength in finance in 2005. However, managing partner Fred Gander still has the challenge of winning more lender-based work.
The office did see some notable successes in the Middle East, such as acting on the first flotation on the Dubai International Financial Exchange.
|26. Gibson Dunn & Crutcher|
|UK/global turnover: £17.5m/£426m|
|UK/global PEP: £934,000/£934,000|
|UK/global revenue per lawyer: £427,000/£478,000|
Gibson Dunn & Crutcher enters The Lawyer’s rankings of top international firms in London for the first time this year, following significant growth within the London office. 2005 saw the firm’s local presence grow from 24 to 41 lawyers, including the hire of litigator Phillip Rocher from Clifford Chance.
Deal highlights included representing Whitbread in its £1bn sale of Marriott Hotels to Marriott International, the US owner of the brand name.
|27. Covington & Burling|
|UK/global turnover: £16.8m/£217m|
|UK/global PEP: £556,000/£556,000|
|UK/global revenue per lawyer: £442,000/£442,000|
Covington & Burling Sources at Covington & Burling claim 2005 was its “best year ever”, and in London its year-on-year revenues rose 10 per cent. London managing partner John Rupp says the corporate team had enjoyed a “steady stream” of deals and that dispute resolution “went nutty”, assisting London revenue to rise from £14.5m in 2004 to £16.8m in 2005.
In an effort to boost revenue further and combat the weak dollar which has caused difficulties in the past, Covington introduced a new default policy at the start of 2006 under which it bills the majority of its London clients in sterling.
Covington’s steady stream of corporate instructions included advising beauty business Coty on its $800m (£457.1m) acquisition of Unilever Cosmetics International, Belgian biotechnology company Galapagos on its public takeover of the AIM-listed drug discovery company BioFocus, and US telecoms company Qualcomm on its £31m acquisition of mobile business Elata.
|28. Bingham McCutchen|
|UK/global turnover: £13.4m/£339m|
|UK/global PEP: £889,000/£698,000|
|UK/global revenue per lawyer: £372,000/£405,000|
Bingham McCutchen makes its first entry into the table this year following a 33.5 per cent increase in UK revenue to $23.5m (£13.4m). The finance group remains the key revenue generator, accounting for 80 per cent of gross fees. The group’s most notable instruction was advising the senior creditors on Gate Gourmet’s restructuring. The litigation group was also bolstered with two partner hires from DLA Piper Rudnick Gray Cary.
|29. Arnold & Porter|
|UK/global turnover: £11.4m/£273m|
|UK/global PEP: £498,000/£498,000|
|UK/global revenue per lawyer: £518,000/£446,000|
Since launching in London last year, Arnold & Porter has enjoyed its best year yet, according to London managing partner Lee Narrow.
The litigation group made headlines with Ian Kirby’s representation of Random House in The Da Vinci Code copyright trial, while the hire of Simmons & Simmons IT specialist Murali Neelakantan boosted the technology practice with a major deal for Indian giant Tata Consultancy Services.
|30. Bryan Cave|
|UK/global turnover: £10.9m/£227m|
|UK/global PEP: £343,000/£343,000|
|UK/global revenue per lawyer: £454,000/£290,000|
It was, according to London managing partner Charles Attlee, a “terrific” year at Bryan Cave on both corporate and litigation.
The firm’s domestic corporate practice enjoyed a strong year, with the move of Youngs Breweries from the main list to AIM being one of the office’s highlights. The US side of the corporate client base, which includes the acquisitive Emerson Electric, also provided a stready flow of transactions.