Kicking the habit
13 May 2002
When The Lawyer ran a story last month about Kenneth MacRitchie becoming the managing partner of Shearman & Sterling's London office, controversy and consternation ensued. The subject matter was correct; all facts were accurate - MacRitchie was now in charge of the entire City operation. English law was the dominant capability in the office and had been rewarded accordingly. So, what was the problem? It was that tiny 'E' word - English. We committed a cardinal sin when we called MacRitchie an Englishman.
He might practise English law, but MacRitchie is a hearty Scot, replete with the usual patriotic baggage and dislike for incorrect adjectives. The fact that he has swapped the joys of Glasgow for a cosmopolitan City life is immaterial. Mind you, given his career path you could be forgiven (racial stereotype looming into view) for thinking that he came from Irish stock - he has been blessed with one of the luckiest careers in law.
But could it be that MacRitchie has finally exhausted his share of good fortune? Shearman has had a difficult year.
Partner profits are down and the firm has had to make associate cuts. Ten per cent of the firm's associates worldwide were suddenly deemed surplus to requirements. The firm was also forced to face the embarrassment of having its cutbacks revealed by The Lawyer. Despite this, MacRitchie and the London office seem to have managed the process with the minimum of fuss.
"In terms of general morale, the London office was cushioned by the fact that it was actually doing fairly well," says MacRitchie, reminding me that no English lawyer got the boot. He can't resist adding that rival firms have also reduced numbers, albeit in a more controlled manner.
"We had always recognised that law firms ride the tide of the economic cycle," he argues. "As it happens, we found in London that we weren't that badly affected last year."
Given the conditions of the market, as a standalone UK office it put in a strong performance; but for once, being part of a bigger whole proved a problem.
MacRitchie took the scenic route to reach the bright lights of the big city. In his mid-20s, he was offered partnership at the provincial Scottish firm he joined after university, at which point he panicked and went in search of the Lord.
He explains: "When I was offered a partnership, that completely threw me, because in Scotland at that time, once you became a partner in a law firm, that was you. That was life and I wasn't ready for that."
Something snapped and, one allergic reaction to settling down later, MacRitchie had resigned and returned to university to study theology. Try to imagine him in a monk's habit rather than a smart pinstripe. Somehow, it doesn't quite work.
It was his wife who brought him down to earth when she told him: "Enough of this - get yourself a job." It was around the time that Clifford Turner and Coward Chance were merging, so MacRitchie applied to become a banking lawyer. "Clearly, going in at such a late stage, I had to get a really high trajectory on my career," he says.
After his period of intellectual dossing at university, MacRitchie cut a curious figure among his cohorts - maturer in years but relatively inexperienced. But after joining Clifford Chance's banking department, he became part of a push to secure Chase Manhattan (now JP Morgan Chase) as a client. He was seconded there for a year and the bank became one of the firm's largest revenue generators.
MacRitchie rode these coat tails to glory and was made a Clifford Chance partner in less than three years. MacRitchie puts his swift rise down to his appearance. "I sort of looked senior, so people thought I was senior," he says.
But being a partner was not all it was cracked up to be. MacRitchie became increasingly frustrated with the speed at which partners could progress in the lockstep. In addition to the partnership quagmire, back in the early 1990s all City firms were suffering from the recession.
Against this economic backdrop, Clifford Chance was undertaking massive international growth. Its Napoleonic expansion would not be swayed by the dent this continued growth made in partner profits. And although MacRitchie now acknowledges that the firm's decision was a solid one, at the time profitability rather than global dominance was foremost in his mind.
MacRitchie swapped the security of the Clifford Chance partnership for Milbank Tweed Hadley & McCloy, and in doing so became the first magic circle partner to jump ship to a US firm. His project finance specialism fitted perfectly with Milbank's own focus, and the Chase connection did not hurt either. The client who propelled MacRitchie into the Clifford Chance partnership happened to have close historical ties with Milbank. MacRitchie made his approach to the US firm via a mutual contact at Chase and the rest is history.
"We really were living off our nerves there because we really could just have gone - disappeared from the scene," recalls MacRitchie. "We ended up doing a couple of very, very big deals. The biggest deal was acting for Barclays on the British Coal privatisation, which was an extraordinary deal to be doing. I mean, here we were acting for a UK clearing bank on a UK privatisation, and we were just a small English practice in a New York law firm."
Milbank and MacRitchie were now City players. A lot of market doubts were blown away by the British Coal deal. "It was very questionable whether we, setting up there, were going to be able to compete with Clifford Chance, Allen & Overy and Linklaters," says MacRitchie. The UK firms laid on the fear factor with a trowel. They argued that the US firms did not have sufficient strength and depth to handle big deals, particularly if anything were to go wrong; so why not just stick with what you know works?
MacRitchie now admits that this line of argument did faze him. "It got us worried," he reveals. "As it happened, Clifford Chance was acting for the Government on this privatisation, so we were immediately head-to-head with our old colleagues and it was quite a challenge. Freshfields was acting for the company. We were right in there negotiating with the magic circle. These were the times when really we just lived in the office. We knew our whole success and future depended on that deal."
Now that his own pocket is not being picked to fund the expansion, MacRitchie is more sanguine about Clifford Chance's internationalist attitude. So, after Milbank, it had to be a US firm bent on tramping its geographic footprints across the globe.
"It became pretty obvious that Shearman & Sterling were the only suitable act in town," says MacRitchie. He wanted a top-tier US firm with global ambitions and a commitment to building a significant English law capability. Shearman had it all in spades, and MacRitchie joined with a mandate to grow the UK law group. It will be a tough job in this climate, but MacRitchie's determination is evident.
The English law group, like a garden weed, has now outgrown the US law capability in London, although MacRitchie is now on the lookout for budding UK lawyers. That's the UK in its entirety - you get the feeling that all Scots are welcome.
Shearman & Sterling
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