The first hint came when Slaughter and May’s US friend Davis Polk raided Freshfields to set up an English-law capital markets practice in London.
The second came when Slaughters’ Aussie friend Allens Arthur Robinson (now Allens) joined up with Linklaters. The Slaughters-Allens relationship has been cooling for a while; unfortunate, then, that a decade ago Slaughters closed in Singapore to move in with the Aussie firm. Interesting politics, there. So the question facing Slaughters is simple: with more of its referral firms turning their backs on independence, what will it take for Slaughters to rethink its solo international strategy?
Senior partner Chris Saul insists it would take something pretty seismic. His firm has had a good recession, but as Asia editor Yun Kriegler explores in her feature on page 24, its penetration of the Asia market is behind its rivals’. On paper, the firm is close to Jun He, Fangda and Haiwen, but the fact is that all three of those PRC firms are unsentimentally looking elsewhere. It’s extraordinary that in the overheated Hong Kong IPO market of the past four years Slaughters has hardly featured on mandates won by its Chinese friends. Jun He has favoured Freshfields, Sidley and Herbert Smith; Haiwen has worked with Simpson Thacher, Sidley Austin, Linklaters and Paul Hastings, and Fangda has plumped for Fried Frank and Skadden.
Even at this most client-centric firm the underlying reason for independence is not about service levels. It’s a strategy primarily determined by partnership ethos. But how much market share can be sacrificed on the altar of culture?
It’s a rhetorical sleight of hand to argue that rethinking the strategy is tantamount to morphing into DLA Piper. That hasn’t happened to Davis Polk, and being global hasn’t stopped Freshfields maintaining high margins. In a world where even Herbert Smith has worked out that a referrals-based international strategy doesn’t pay, there is a profound shift at the top end, but only Slaughters is determined to stay the same. That takes some nerve.