Latham & Watkins’ capture of thirteen partners from US rival White & Case has raised eyebrows throughout the City. Not since Denton Wilde Sapte saw 11 partners move to DLA Piper in 2004 has there been such an exodus.
While the loss of five partners from three of White & Case’s Middle East offices must hurt, it is the defection of a group of four from the London bank finance and capital markets team, including group co-head Chris Kandel, that could cause the most severe long-term headache for White & Case.
Kandel’s team, including Sam Hamilton, Brian Conway and Jayanthi Sadanandan, was viewed as central to the firm’s success in London – an office that has grown quickly to become one of the most important in terms of firmwide profitability.
Latham’s City finance team has not been as visible as its counterpart at White & Case, but the firm’s undoubted earning capacity has allowed it to look to new areas.
“I’ve always viewed them as a bold firm in terms of their willingness to expand,” says a London-based partner at another US firm. “The financial crisis has created opportunities to think about doing some things differently and they’re obviously going long in finance.”
Besides Kandel’s longstanding relationships with the likes of Deutsche Bank and Goldman Sachs, Latham can also expect to benefit from Hamilton’s links with Nordic Capital.
“I don’t think there are any people going over who don’t have strength with key clients,” says the London-based partner.
So where does all this leave White & Case’s much-vaunted stable of banking clients? Much of the London practice’s success was built on relationships with Deutsche and Goldman, relationships that are now under threat.
Although the London bank finance team has been reduced to a core of just three partners, and despite one magic circle corporate partner’s claim that “it’s the end for White & Case in London”, the firm is far from ready to give up on the team.
“We’ve built it up largely from scratch before so we can do it again,” insists Magdalene Bayim-Adomako, who has become sole head of the practice following Kandel’s exit. “We can’t look backwards too much, our focus is on the business and on clients. We’ve spoken to them and reassured them we’ll continue to meet their needs.”
That said, Bayim-Adomako, Barbara Choi and Antonia Rawlinson, who is due to return from maternity leave shortly, do not have the same pull with the big banking clients as some of those who left, which leaves ongoing relationships open to question.
“Deutsche likes Latham on the high-yield side,” says a City finance partner. “They’ve seen the writing on the wall at White & Case and aren’t sure they’re a long-term bet.”
It is not a view shared by White & Case, with senior figures repeatedly emphasising the firm’s global reach as a means to hang on to global clients while the London office toughs it out.
“We’re bullish,” says firmwide head of banking Eric Berg. “We view it as a setback. When anyone leaves you try to learn from it and improve, but we know we’ll be fine.”
Berg says he expects at least one partner to relocate from New York while a search for senior finance lawyers gets underway in earnest. He dismisses claims that London’s role will diminish.
“The market will be more competitive now, but this is a competitive business and the way you win is by being better than anyone else. I’m confident we will be,” he says.
But the discontent in the office was apparent as far back as 2008, when global co-head of banking Maurice Allen and his London counterpart Mike Goetz packed themselves off to Freshfields Bruckhaus Deringer.
At the time dissatisfaction with the firm’s management structure was widely cited as the reason for the pair’s departures, with London partners understood to be unhappy with their lack of presence among the firm’s management. According to some it is a problem that has not gone away.
“Nothing has fundamentally changed,” says a City lawyer familiar with the firm. “You have a management that’s not particularly in tune with the finance practice and not particularly concerned whether it stays or goes.”
The reference is to a perception that the London finance practice, despite all its earning power, is undervalued by White & Case’s senior management. The fact that neither last month’s mass exit nor the departure of Allen and Goetz are isolated incidents gives the argument a certain amount of heft.
The signs that something was afoot were present last summer when restructuring partner Dan Hamilton – “undervalued and underpaid”, according to one former colleague – upped sticks for Ashurst. Hamilton followed capital markets partner Tim Jeveons and UBS relationship partner Rachel Hatfield out of the revolving door.
The firm is inevitably making happy noises about recruitment and relocation plans to keep London buoyant, but this is a “sticking plaster approach”, according to the City lawyer.
“They need to look at why these people are unhappy and dissatisfied in the first place,” he adds. “London’s had no strong central management, it’s like a bunch of tribes.”
The mood might be optimistic, but the sudden departures of such a big swathe of partners to a major rival is a body blow to the firm – and one from which it will be difficult to recover quickly.