Links London takes a hit

The decision by JPMorgan to ditch Linklaters because of its involvement in the Bear Stearns ­litigation is reminiscent of Clifford Chance’s spat with Bank of America in the 1990s and Freshfields’ row with Citibank at the turn of the decade.


High drama at Silk Street. Magic circle firms don’t often get ejected from bank panels, so I don’t suppose Linklaters’ US litigators are very popular with their finance colleagues at the moment.

The decision by JPMorgan to ditch Linklaters (The Lawyer, 23 June 2008) because of its involvement in the Bear Stearns ­litigation is reminiscent of Clifford Chance’s spat with Bank of America in the 1990s and Freshfields’ row with Citibank at the turn of the decade.

Actually, Linklaters couldn’t have played this any other way.

After all, which client do you offend? JPMorgan or Barclays? A cynic would see Linklaters’ response as pretty astute. The level of finance billings from JPMorgan in London is bound to decline anyway in the next 18 months, while fees from Barclays on the case against Bear Stearns is money in the bank.
David Cheyne’s decision to concentrate on his firm’s reputation in the long term is nevertheless the correct option. His stand is seen internally as entirely principled; his argument that you can’t drop a client has gone down well. In adopting this position Cheyne has salvaged some pride for his partners and made them feel like they have some sense of control.

But in fact a close reading of the situation would suggest that Linklaters’ conversation with JPMorgan was entirely one-way. JPMorgan had made its decision in New York, and whatever Linklaters tried to do would not have been enough. “It wasn’t much of a negotiation,” says one source close to the situation.

The finance department in London may have wanted Cheyne to fight a little bit harder, mind. ­Losing JPMorgan is a horrid setback for one of the most entrepreneurial groups in the City. Over the last seven years Linklaters’ sheer verve has made it one of London’s most impressive ­acquisition finance teams. No other firm has been able to challenge the ­establishment machines of Allen & Overy and ­Clifford Chance; no wonder it’s Linklaters that ­Freshfields’ newly minted finance group wants to emulate. And the two banks that have propelled ­Linklaters to the top? None other than JPMorgan and Barclays, of course. Life is full of little ironies.