How a Los Angeles-born firm became one of London’s biggest legal success stories
The most noteworthy thing about Latham & Watkins rise to the peak of this year’s international top 30 is that it has done it without a transatlantic merger or a significant UK bolt-on.
For many of those in The Lawyer’s International Top 30 list, entering the UK legal market has meant finding a local anchor first. US giant Jones Day (then known as Jones Day Reavis & Pogue) tied-up with Gouldens (2 December 2002), Mayer Brown with Rowe & Maw, Reed Smith with Richards Butler, Kirkpatrick & Lockhart with Nicholson Graham & Jones (to form K&L Gates).
For all the above, the promise of a ready made UK outpost (and for the UK side, international reach) proved too good an opportunity to pass up.
Latham wasn’t immune to the temptation, either. It had been in high-level tie-up talks with Ashurst (then known as Ashurst Morris Crisp) before any of the above deals went through.
Ashurst is said to have called off the talks over a mismatch of profitability, a decision later seen as an example of the UK firm chickening out of what could have been a game-changing deal.
Soon after those talks collapsed, Latham’s London office – having kept a relatively low profile in the City since launching in 1990 – went on a lateral hiring bender. That spree continues to this day, most recently with the office taking on Carlyle Group’s in-house counsel Tom Alabaster last week (23 April 2014).
Most recently Latham has been consciously targeting Carlyle in Europe in a bid to match its US position as one of the private equity house’s go-to firms. Its solid reputation in the UK – recruiters have called it one of “the easiest” US firms to recruit for – has secured it the hire of Carlyle’s closest UK advisers, notably former Clifford Chance global private equity chief David Walker last April.
Latham’s strategy of building via laterals has put it on top of The Lawyer’s annual ranking of the 30 largest international firms in the UK by revenue for the first time. Its $210.6m UK revenue puts the office ahead of some of the UK’s largest law firms by revenue.
But Latham’s story is unusual. It was only five years ago that the firm was the poster child for layoffs following 440 job losses, with the expression ‘Lathamed’ (for laid-off) making its way into the Urban Dictionary. The New York Times even referenced the firm in a Sex and the City film review, asking why one of the main character’s would quit her law firm job given the rocky job climate.
This fast and drastic reaction to the downturn has now handed Latham a significant advantage to its peers, argues the founder of Silicon Valley-based recruitment consultant M Legal, Joe Macrae.
“One of the reasons Latham has been able to attract such big hires in London is that they were quick to correct after the recession,” explains Macrae. “They made the deepest cuts, the most quickly. It meant they then had the capability to grow in New York and London and take laterals from the struggling firms.”
Indeed it has. Last year Latham increased its UK-qualified headcount by 15 per cent, from 148 to 171. Its UK revenue per lawyer figure of $1.03m and revenue per partner figure of $3.9m put it squarely at the top end of the London market.
But Latham isn’t the only Californian firm to resurge in London, done without the temporary boost of a merger.
As one of Facebook’s go-to firms, Gibson Dunn recorded the third-highest revenue per lawyer (RPL) figure in the Top 30 list during 2013 at $1.3m, pointing to the success it has enjoyed in winning high-end litigation work in the UK to complement its corporate practice. Likewise, MoFo’s UK RPL (at $820,000) is higher than White & Case , Jones Day and Baker & McKenzie.
Being the technology giants’ lawyers of choice has been one way this group has caught attention overseas. But Macrae points out that this doesn’t mean the market automatically ‘likes’ them.
“The West Coast firms that do well [in the UK] need both the client list and the credibility on the ground,” he cautions. “Those that haven’t done as well will have opened in London with one practice but not developed a vibrant corporate brand until later, when people don’t associate the firm with that image.”
LinkedIn and Facebook legal adviser Orrick Herrington & Sutcliffe, for example, opened in London in 1998 with a practice largely focused on project finance and energy. It has since struggled to crack the UK, suffering a number of heavy-hitting partner departures (5 March 2014) and failed merger attempts (12 November 2012). Its City base slipped out of this year’s top 30 list altogether.
Read more in this year’s Top 30 International Firms in London feature.