Latham & Watkins: Modest growth
6 November 2006
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Latham & Watkins: Modest growth" />Which firm was recently voted by associates as the fifteenth most prestigious firm in the UK to work for? And first for associate satisfaction and compensation? If you guessed Latham & Watkins, give yourself a gold star.
The result, which appeared in the most recent rankings by careers guide Vault, is not just surprising because Latham is a US firm in London. It is also news because Latham's London office verges on the anonymous, at least for a firm of its size.
Last Monday (30 October), Latham ranked fifth for revenue in The Lawyer Global 100 2006. Yet ask the market what it is that the world's fifth-largest law firm does in its second most important office - London - and most people will still mutter: "Maybe high-yield?"Six months on from his appointment as Latham's new London managing partner, The Lawyer met Andrew Moyle to find out whether the firm was concerned by its relative anonymity.
"I think that's partly the nature of Latham," says Moyle. "We don't grandstand."
There is grandstanding, and then there is being invisible. So let's get more specific. How many £500m-plus deals has the London office appeared on recently?"I think there are two things with that," says Moyle. "Clearly there's a private equity focus [in London] and the public M&A side is something that's going to have to be built over time. It's a market that's very well serviced in London. Having said that, we did the [E16.3bn (£10.9bn)] Bayer-Schering cross- border with Germany [with Christopher Hall representing Bayer], Michael [Immordino] led the Banca Intesa merger [with Sanpaolo IMI for E29.6bn (£19.79bn)], and there was the Avio sale [Latham advised Carlyle on the sale of the aerospace engine maker to Cinven]. We're taking mandates from the magic circle, there's no question about that." Yet Latham had only minor roles on these deals; it is a long way off leading major transactions.
Building LondonMoyle's line is that London's strategy is to build out new areas on a core finance practice. "We now have a strong finance practice, a strong UK corporate practice, a strong US corporate practice, and we're building a litigation practice that's gone from one lawyer two years ago to 17, if you include antitrust," he argues.
Yet Latham London, despite posting a revenue of £81.1m last year (making it the third-largest US firm in London), barely registers on the biggest London-originated deals. Latham would appear to still lack the critical mass to compete at the highest levels on a full-service basis, which would partly explain its low profile.
Moyle might not put it quite like that.
"Once you've built the foundations you do two things: keep building on the foundations and identify niches. This year we've increased our tax capability by bringing in Daniel [Friel] and Sean [Finn] from Lovells, plus Mark Nicolaides in securitisation, Graeme Sloan adding more depth on private equity and so on. Once you've built the core, going to that next stage is an interesting step."
The next stage will involve an assault on the recruitment market, particularly at the junior level. Latham is aiming to make its offices in New York and London, the world's two biggest financial centres, the hubs of its 22-office global practice, at least in terms of critical mass. New York has a head start, with around 330 lawyers to London's 140.
The firm's high rankings in associate satisfaction surveys will no doubt help with this strategy, as will the image it maintains of an inclusive, democratic outfit that values the input of its non-partners.
"There are steps we're taking to get further into the hearts and minds of the market," says Moyle, "such as the UK trainees' programme, which will result in us having between 10 and 15 trainees in the next two years. That to me is an extraordinary sign of the maturity of the London office and Latham as a brand."
Moyle, as down-to-earth an Australian as it is possible to find, knows that as soon as lawyers start talking about 'inclusive cultures' it is often time to pass the sickbag. Still, his argument is that the culture of Latham is driven by collegiality bears examination.
"It's difficult to separate the system from the culture; they end up being the same thing," says Moyle. He argues that Latham's low-key and decentralised approach is at the core of what makes Latham tick. For example, he is particularly irked by descriptions of Latham as an 'LA firm'.
"We're not an LA firm. There's none of this 'heading back to Wall Street' or 'head office being in LA', it's truly diversified on that basis," he says. "We're also not into a star culture here, so I don't want this piece to be about me. At Latham, modesty rules."
The point underlying this declaration boils down to money. There is only one profit pool and all the partners are remunerated and participate in the bonus on the same basis.
Critically, fee-earners are incentivised to share clients they have originated with as many lawyers as possible. And the lawyers they share the client with are incentivised to work for that client.
"This is why the devolution of power to associates, not having a head office and incentives to promote this culture through the remuneration system are important," says Moyle.
Latham's growth figures - 32 per cent more partners and 55 per cent more associates on 2005 - suggest that the culture is attractive. But the profile may be something that just has to wait.
It is a pity that most people outside the firm still do not have a clue what it does in London.