News review

The Lawyer’s editor Catrin Griffiths looks at the latest developments in the legal world

Dorsey in the doldrums

There wasn’t much festive spirit at US firm Dorsey & Whitney over Christmas. Its London office has suffered an amount of turbulence, particularly when half of its successful tax litigation team resigned for DLA Piper Rudnick Gray Cary. Tax litigation has been big business for Dorsey – it’s even been name-checked in Private Eye for its work, although not necessarily positively.

The timing couldn’t have been worse – Dorsey had just scored a major victory on behalf of Marks & Spencer at the European Court of Justice against the Inland Revenue. But Dorsey, which is headquartered in Minneapolis, has an even bigger headache in London: its associate turnover has hit 40 per cent in the past few months. Like many US firms, Dorsey has had problems integrating its UK office into the US mainstream. It’s brought in a new management team in the last year or so and is rebuilding and promoting internally, but it still has some work to do.

Clifford Chance gears up for Childs’ play

Clifford Chance, the world’s largest law firm, is bracing itself for the election of its new senior partner. It seems odd that a £914m-turnover business still puts its leadership up for general election, but Clifford Chance is not much different from most law firms in that respect.

Current senior partner Peter Cornell announced in December that he will not be standing for re-election once his four-year term is up in April, so there’s plenty of speculation as to who his successor will be. Most of the money is on David Childs, a corporate partner who doubles as chief operating officer. Childs has had an iron grip on the firm’s finances in the past couple of years and has saved nearly £30m in costs, which has helped partner profits rise to an average of £651,000. This year it will be more than £700,000. No wonder the partners like him.

Home and away

UK firms had a busy January, opening offices all over the globe. Ship finance specialist Watson Farley & Williams, which opened in Hamburg in July 2005, took over Hamburg boutique Wegner Bechtel Schmidt. Clyde & Co and Norton Rose consolidated their presences in China with Shanghai openings.

Ashurst replenished its German operation (it lost some people to US firm Latham & Watkins last year) with hires from German firm Haarmann Hemmelrath, plus a couple of recruits from Allen & Overy (A&O) in Italy. European capability, particularly on the private equity and finance side, is of growing importance to Ashurst, which up to relatively recently had most of its activity in London. Overseas offices used to account for 25 per cent of its £201m turnover, but Ashurst wants that upped to 33 per cent. Let’s just hope the US firms stop poaching their people in that case.

Meanwhile, A&O had to look to Canada to recruit capital markets lawyers – there’s a major shortage of them in London, mainly because the investment banks keep luring them away with enormous pay packages.

Bucking the internationalisation trend was Slaughter and May, which has retrenched its international network by offloading most of its Paris operation to local heavyweight Bredin Prat. Slaughters’ strategy is to focus on premium UK work, but to build up strong alliances with similar firms in key capitals – the so-called ‘best friends’ approach. So far it has informal but close links with top firms such as Hengeler Mueller in Germany, Bredin Prat in France, Uría Menéndez in Spain, Allens Arthur Robinson in Australia and Singapore and Bonelli Erede Pappalardo in Italy. With Paris downsized to just a representative office with a couple of partners, Slaughters now only has a substantial overseas presence in Hong Kong.

London continues to be a big focus for US firms. San Francisco giant Heller Ehrman is about to launch in London, following in the wake of fellow West Coast firms such as Gibson Dunn & Crutcher (Los Angeles), Morrison & Foerster (San Francisco), O’Melveny & Myers (Los Angeles) and Orrick Herrington & Sutcliffe (San Francisco), all of which have geared up in the City in the last couple of years with eye-catching hires from UK firms. But the West Coast firms still have some way to go before they match those from the East Coast – the big New York and Chicago names tend to lead the way in London.

Relations shifts

The big associate story of the month was A&O’s long-awaited revamp of its career path. It’s been long in the offing. But at least A&O doesn’t have the same staff problems as trade union firm Thompsons. The firm, which handles claimant employment and personal injury work, mainly for trade union clients across the country, was facing strike action from its own staff – many of whom are members of the GMB – after two pay offers were rejected. This is virtually unheard of in the legal profession.

Full details of all these stories can be found at www.thelawyer.com