Hire plains drifters: how the top US firms are doing in London
1 April 2014
14 April 2014
12 December 2013
6 October 2014
9 December 2013
US firms are on a hiring drive to gain clout in London and boost their English law capabilities, and the tactic is paying off
Many of the UK offices of US practices in this year’s Top 30 International Firms in London revenue table have been on lateral hiring sprees recently, but few have been as effective as Dechert’s. Similarly, nothing tells the story of its year in the UK quite as eloquently as it London office financials.
Few things, other than a mega merger, are quite as effective at beefing up a firm’s numbers as bringing in a big bunch of laterals. And this year’s Top 30 International Firms list underlines the impact a spate of recent lateral hires have had on the fortunes of many of the US firms that populate the table.
The top 30 firms in the main table below are ranked by UK revenue. That of course is just a snapshot of a firm’s year. Read the accompanying editorial and it is immediately obvious that several of the firms that have done well on the total revenue metric have done so largely because of their investment in local talent and English law.
Indeed, many UK offices of US practices in this year’s table show a return on the investments they have been making throughout the past three to five years. It is also a handy way of tapping into one of the biggest growth markets and international success stories: English law.
Over the following pages, you will see there are some clear winners and losers. Most of them will already know who they are.
Of course, hiring partners is only half the story. It also helps if they deliver after they show up. Mark Brandon of Motive Legal’s recent article (14 March) in these pages highlighted the extent to which this isn’t always the case, with around a third of lateral hires leaving the firm they joined within three years.
But the fact remains that for the US-headquartered firms that make up The Lawyer’s international top 30 (both DLA Piper and Hogan Lovells, which are structured along dual US-UK lines, do not feature in this table but appear in the primary UK 200 list), hiring top talent is usually the quickest way to add clout to your UK offering.
This year, if The Lawyer were handing out gongs for growth, the stand-out winner would be Dechert. Many of the UK offices of US practices in this year’s Top 30 International Firms in London revenue table have been on lateral hiring sprees recently, but few have been as effective as Dechert’s. Similarly, nothing tells the story of its year in the UK quite as eloquently as its London office financials.
Although the firm did not provide a precise UK revenue figure, it did confirm that last year its London office saw a whopping 44 per cent increase in turnover. By The Lawyer’s calculations that would take total revenue from $81.6m (£53.1m) to $118m. Much of that growth is thanks to the steady stream of hires Dechert has made during 2011 and 2012.
Think global, hire local
Many firms in this year’s rankings were busy throughout 2012 ticking those boxes, expanding both their London office capabilities and their English law offerings.
Davis Polk & Wardwell’s English law launch last year - with the hire of Freshfields Bruckhaus Deringer capital markets partner Simon Witty, shortly followed by those of fellow Freshfields alumnus tax partner Jonathan Cooklin and Herbert Smith Freehillscorporate partner Will Pearce - is the winner in terms of shock value, but numerous other US-headquartered firms have also been scoring local talent.
The signs are that the new blood Dechert has brought on board in the UK in the past couple of years has delivered in spades. Two years ago the firm appeared to have an exclusive recruitment channel out of DLA Piper as it snared a raft of lawyers including disputes partners Neil Gerrard, Jonathan Pickworth and international trade specialist Miriam Gonzalez.
Indeed, many of Dechert’s hires have been focused on disputes, particularly those involving financial institutions, thereby tapping straight into another of the legal market’s hottest recruitment trends.
Last year also saw the creation of a London emerging markets unit in the firm’s corporate practice under Camille Abousleiman, one of the several hires Dechert made from Dewey & LeBoeuf. Dechert also strengthened several of its existing practice groups last year, most notably with hires into its international dispute resolution, banking,
finance and restructuring groups. In total, 26 associates and three trade and regulatory advisers joined Dechert in London during 2012.
A word of warning for Dechert, however. As one reader posted on TheLawyer.com at the time of the DLA Piper hires: “What a surprise Dechert London is hiring more lateral partners […] the last time it made an internal promotion to partnership was over a decade ago […] no wonder the associates leave in droves”.
The comment, checked by The Lawyer, is not entirely accurate. While it is true that Dechert’s London office has hardly been a hotbed of internal promotions, with the firm clearly favouring the buy-it-in approach, it did make up three UK associates to partner at the start of this year. But there had been just two promotions from associate in the years since 2006. Never under-estimate the impact of a pithy comment, as it appears the firm’s management have been taking notice of their critics.
In terms of work highlights, last September saw the conclusion of Dechert’s six-year representation of Ukranian businessman Michael Cherney in his litigation against oligarch Oleg Deripaska before the Commercial Court in London, one of the largest cases ever brought to trial in the UK. Around a million pages of disclosure, trial bundles comprising some 500 lever-arch files and more than 100 witness statements from some 75 witnesses kept Dechert’s lawyers busy until the case settled on the steps of the court last year.
Elsewhere, Dechert also cemented its position as one of the leading global advisers on Middle East and North Africa (Mena) sovereign bond issues by representing the joint lead managers on the Kingdom of Morocco’s $1.5bn debut Rule 144A bond issues. Since June 2012 Dechert’s emerging markets team has acted on more than $8.5bn in debt issuances by Mena sovereigns.
Weil Gotshal & Manges was another big riser in revenue terms last year in what was generally a positive period for most US firms. Weil posted a 21.6 per cent rise in London office revenue for the 2012 financial year, with total lawyer headcount also growing significantly, from 89 to 99.
Weil is another US firm that, in the past 12 months, has looked to build out its platform by lateral hires. New partner hires in 2012 included Freshfields high-yield head Gil Strauss and Alex Wood, a restructuring partner who joined from Hogan Lovells last summer.
The firm also made a number of internal promotions to build out its core areas including private equity lawyers such as Simon Lyell and Samantha McGonigle and structured finance specialist Rupert Wall.
Another relatively recent hire provided Weil with one of the plum jobs of recent years - former Jones Day partner Adam Plainer picked up instructions on the UK end of the MF Global bankruptcy.
Transactionally, the firm also scored successes with its advice to the AAR consortium on the $28bn sale of its stake in the TNK-BP joint venture to Rosneft, a deal led by partner Marco Compagnoni.
Weil’s arch-rival in areas such as private equity and restructuring, Kirkland & Ellis, also saw a double-digit revenue increase in London last year, with turnover rising by 10 per cent, from $112m to $122.8m.
With around 70 per cent of Kirkland’s revenues generated in the US, its work for BP gave the firm a boost globally, as did the uptick in the US market generally. But in London restructuring co-head Partha Kar says 2012 was the group’s “busiest ever”, a mantra echoed by banking partner Neel Sachdev, who also says the debt finance side of the practice had its strongest year ever. The buoyant year in both areas highlights the fact that Kirkland tends to benefit from its close relationship with funds on its deals.
On the restructuring side, 2012 kicked off with Kirkland acting for around 300 senior lenders on one of Europe’s largest restructurings, that of Irish telecommunications company Eircom. The firm then acted for Fitness First on the CVA and restructuring; for Goldman Sachs, GoldenTree Asset Management and Avenue Capital Group on the Travelodge restructuring; for the junior lenders on the restructuring of plastics manufacturer Kloeckner Pentaplast; and wrapped up the year helping to secure a deal to bring the long-running debt restructuring of European Directories to a close, with private equity group Triton taking control of the company.
“I don’t think the market was generally that busy in 2012 but we had our fair share of the mandates,” admits Kar. “The distressed market has generally been pretty flat for the past couple of years.”
It is worth noting that despite its deserved reputation as a hard-driving firm, with the attendant connotations of the US-style long hours culture, the vast majority of Kirkland’s lawyers in London are UK-qualified, lending the Gherkin HQ more of a local feel than might be assumed. The exception is the eight-lawyer high-yield team headed by partner Ward McKimm, a hire from Shearman & Sterlingin 2011, which is predominantly US law.
McKimm’s hire encapsulates many a US firm’s approach to strategic lateral hiring. He was brought in to plug the high-yield gap in Kirkland’s London office and now his team sits alongside the firm’s acknowledged strengths in private equity, finance and restructuring.
Put bluntly, Kirkland didn’t have it so it went out and got it.
The Lawyer estimates that Simpson Thacher & Bartlett’s City office revenue grew by around 10 per cent last year, to $61m - a revenue-related reflection of another firm that has hired well.
Last year’s growth was partly powered by the arrival in 2010 of Clifford Chance funds partner Jason Glover, whose growing team has won work for a string of clients including Apax Partners, BC Partners and Scandinavian private equity house EQT, which followed Glover from his former magic circle home.
“And while Glover’s team has picked up some solid mandates,” says Simpson private equity partner Adam Signy, also a former Clifford Chance partner who joined in 2009, he has been no slouch himself.
Signy recently advised Melrose on its $2.3bn purchase of engineering company Elster, a deal that featured the third-largest acquisition-related fundraising since the financial crisis.
While decidedly not a full-service offering in the UK, the borrower side finance practice is notably strong at Simpson’s City office. And while Glover’s funds practice has been cleaning up, high-yield has also been motoring.
Simpson London last year made up its second high-yield partner in the shape of Mark Brod, a German-speaking American. On top of that, Simpson’s strong links to the likes of private equity giants Blackstone and KKR ensures that M&A keeps chugging along.
The hire of Derek Baird, Allen & Overy’s (A&O) private equity co-head who joined late last year has been a boon for the platform. Frankly, doubling up Simpson’s English law M&A team should make it a lot easier to sell the practice to clients than when it was only Signy. Simpson’s other three M&A partners in London are not UK-qualified and as one US firm partner puts it, “clients sense the difference”.
In contrast to Simpson, Reed Smith’s London office is built on legacy UK firm Richards Butler gifting it a ready-made contingent of English-qualified lawyers.
Impressively, what is one of the largest and most mature international firms in the London market still managed to post an 11 per cent rise in revenue last year, again largely powered by a lateral hiring spree that saw eight partners join its UK end during 2012.
Reed Smith also launched two new groups in London, private equity and structured finance, with former SJ Berwin partner and one-time managing partner candidate Perry Yam now leading the former while partner Tamara Box, who joined from Berwin Leighton Paisner, is heading the 15-lawyer latter.
The firm also continued hiring in 2013 for one of its core areas, energy and energy trading, with the hire of McDermott Will & Emery partner Rashpaul Bahia taking the total number of partners Reed Smith has hired in this group in the past three years to 11.
Key mandates for Reed Smith’s London office include acting as legal adviser and secretariat to the two high-profile independent reviews commissioned by the BBC in the wake of the Jimmy Savile scandal. The first review was led by former Sky News head Nick Pollard and considered issues relating to a Newsnight investigation into Savile in October 2011. The second, led by retired Court of Appeal judge Dame Janet Smith, is examining the culture at the BBC in the years Savile worked there. Litigation group head and partner Richard Spafford led the team that also featured litigation partners Carolyn Pepper and Ben Summerfield.
The firm also advised longstanding client Fortune Oil, a London Stock Exchange-listed company, on the $400m disposal of its natural gas business to Hong Kong Stock Exchange-listed China Gas Holdings. Reed Smith’s Hong Kong office led on the M&A aspects of the deal, with the UK capital markets advice handled by a London team including corporate partners Philip Taylor and James Wilson.
While some firms have suffered inner-City blues, Covington & Burlingis growing fast in the UK. Turnover in the US firm’s London office grew 23 per cent last year, from $45m to $55.4m, with partner numbers increasing by five.
London deputy managing partner Chris Walter, who took over from Louise Nash in January, and deputy Gregor Frizzell credited the growth to various lateral hires in 2011, notably a team of four partners from Morrison & Foerster(MoFo), which brought an entire life sciences corporate team to the City.
The London office continued to expand towards the end of that year, making another raid on MoFo with the appointment of Kristian Wiggert as a partner in its European corporate group in December 2011.
During 2012 two hires from that first raid - MoFo’s former London head of corporate (now Covington Europe corporate head) Paul Claydon along with partner Natalie Diep - won roles advising pharmaceutical company Vernalis on its deal with US-based Tris Pharma which saw Covington’s client raise £65.9m.
It is this type of work that drove the firm up the top 30 International list, with other new clients for 2012 including SThree, Haddad Brands, Meda and Drayson Racing Technologie. Other major clients for Covington’s London office include Giorgio Armani and Samsung. However, Walter admits that similar growth isn’t expected for 2013.
“After a period of relatively quick growth we expect the next 12 months to be a period of consolidation,” comments Walter. “With efforts to build on the investments made over the past four years and playing to our strengths, including our strong public policy and government affairs capabilities.”
Not every firm could manage a double-digit revenue increase last year. Yet even in firms that posted smaller rises for their UK operations as a whole, certain practices blazed away.
White & Case’s restructuring practice, like Kirkland’s, was said to be “motoring” while the litigation and arbitration practice in particular had one of its busiest years ever. All but two of the 35 associates in litigation group head John Reynolds’ team billed more than 1,800 hours. Most were above 2,000. Three were above 2,300. Small wonder the team’s Christmas party was, by all accounts, a messfest.
“September was my busiest month ever personally,” says Reynolds. “Several things came together, and we were working on six or seven different matters. But it was pretty constant throughout the year, with hotspots in September and November. We finished the year exhausted, but pleased.”
A mix of cases kept the firm’s litigation and arbitration groups busy, with highlights including a key Libor-related role and Çukurova on its disputed stake with Russia’s Alfa Group in Turkey’s largest mobile phone operator Turkcell.
On the non-contentious side White & Case partner Allan Taylor advised UK oil company RusPetro on its $250m IPO, the first premium listing of 2012 on the London Stock Exchange.
The all-round solid performance at White & Case is reflected in a 4 per cent rise in revenue, from $191m to $199m, a result that just sees it pip arch-rival Latham & Watkins in the table.
The recent expansion in London at Jones Day, which this year celebrated the completion of its first decade since the merger with Gouldens in 2003, continued last year. The total number of lawyers grew from 158 to 167 while the total partner number also grew, from 46 to 52. The Lawyer estimates that this recruitment push has taken Jones Day’s London revenue through the $100m mark for the first time, to $101.8m
Indeed, the City growth is such that Jones Day is busy refitting all five floors of its Blackfriars home to accommodate the recent arrivals and avoid having to move to new premises (it has 12 years remaining on its lease).
The firm’s partner laterals in the past 12 months alone include disputes specialists Christopher Braithwaite and Baiju Vasani, who joined from Simmons & Simmons and Crowell & Moring respectively; M&A partners Dan Coppel and Ferdinand Mason from Dewey and Boekel De Nerée respectively; projects and infrastructure partner Dominic O’Brien from Addleshaw Goddard; former Nabarro employment expert Jules Quinn; and capital markets partner Drew Salvest from Mayer Brown.
The hires reflect Jones Day’s hot areas of investment in its UK operations - litigation, finance, restructuring and corporate.
The first of these has been one of the fastest-growing parts of the practice recently. Indeed, the group led by partner Craig Shuttleworth acted as the guinea pig for the first part of Jones Day’s London office’s refit, partly because of the tremendous expansion that team has seen.
In the past 12 months or so Jones Day’s London litigation team has acted for Texas Keystone on a £1bn dispute over oil exploration rights; for Duff & Phelps, the liquidators of Weavering Capital (UK), in a $450m judgment against four senior employees of Weavering Capital (UK); and defended Total in a follow-on claim for damages in the High Court in connection with the so-called candle wax cartel in Europe.
Shuttleworth is particularly vocal about his ambition of making Jones Day one of the top litigation practices in the UK.
“The firm already has one of the top litigation practices in the US and there’s no reason why we shouldn’t replicate that here,” he insists. “On top of that, the growth we’ve seen here in London is a reflection of the importance of English law. It’s an area we’re determined to grow.”
Shearman & Sterling
Although the London office of Shearman & Sterling posted a modest 3 per cent revenue rise last year, from $109.2m to $112.6m, the City office outstripped the firm as a whole.
Conversations with the firm’s City partners suggest the growth in turnover was expected because of the accompanying healthy boost in lawyer numbers.
However, while total lawyer headcount at Shearman grew by 28 per cent, from 114 to 146, it is worth noting that most of these hires were at associate level, partly because the office had hired a number of partners the previous year.
London head Nick Buckworth says drivers for growth last year included high-yield, projects and M&A, while private equity could be an “area of interest” for new hires in the current year.
“We have a good pipeline of large, long-term transactions in the projects group so volatility in this area is much less [compared to other groups],” comments Buckworth. “Banking and finance, for example, can be much trickier because the market can go from boom to bust quickly, but what we saw in 2012 was an agility in looking for other opportunities - banking and finance working much closer with the high-yield team, for example. If the economy hadn’t been so difficult I’d have expected to have seen more of a substantial increase.”
London got a special mention by newly elected Milbank Tweed Hadley & McCloy chairman Scott Edelman during the firm’s annual partners meeting in Miami this year, his first speech to the US firm since replacing former chair Mel Immergut. Describing the City office as a “highlight” of 2012, the praise was not just a buttering up of London partners. The office, where turnover grew by 7 per cent last year to an estimated $70m, pulled in some hefty names in 2012.
The ball started rolling in February, when Milbank hired Linklaters corporate partner Mark Stamp. Later hires included Freshfields’ veteran competition partner Nicholas Spearing, Linklaters projects partner Clive Ransome and Mayer Brown leveraged finance partner Neil Caddy.
Unsurprisingly, the hires have paid off. Stamp, alongside London finance partner Timothy Peterson, led on part of the $23.3bn takeover of Virgin Media by US group Liberty Global back in February.
Milbank, which is clearly looking to maintain its magic circle recruitment pipeline, recently also poached the head of A&O’s US financial services regulatory practice, Douglas Landy, for its New York office.
Not every firm can do a Dechert. This year’s biggest faller, at least on paper, is WilmerHale, which drops four places in the table to 25th. These figures come with a caveat, however.
While the 2012 London revenue figure is an estimate, The Lawyer believes it significantly overestimated the firm’s 2011 total. That figure of $59.3m gave Wilmer a revenue per lawyer (RPL) figure of $1.66m, the second-highest in last year’s table. (Similarly, The Lawyer has re-evaluated the estimated London revenue of Sullivan & Cromwell, which had the highest RPL figure in 2011 ($1.989m). The Lawyer believes Sullivan’s London office revenue grew slightly last year to just over $100m, but the re-evaluated RPL figure ($1.5m) sees the firm showing an 18 per cent reduction in total revenue.)
Wilmer’s 2012 London office revenue of $45.9m, some 23 per cent lower than last year’s $59.3m, is partly based on the firm’s global RPL data and also takes into account the fact that its UK headcount grew last year (although in total there was one fewer partner last year than in 2011, when there were 12).
The Lawyer’s research suggests that Wilmer’s UK revenue also grew last year, thanks largely to continuing high levels of activity in its stellar arbitration and disputes team headed by partner Gary Born.
Wilmer’s unusual UK platform requires some explanation. The first quirky fact is that Wilmer’s global arbitration practice - widely rated as one of the best in the world - is headquartered in the firm’s Park Lane office under Born.
Then there is the fact that the firm maintains three offices in the UK, two in London and one in Oxford, but the latter is all but a representative office for seeing technology and life science clients. The transactional side of Wilmer is housed at the Alder Castle office and is tiny relative to the 35-lawyer disputes team.
Wilmer’s arbitration lawyers in Washington DC and New York also report to Born’s London group, which is by nature international, operating broadly as one-third English law, one-third civil law jurisdictions and one-third US.
“Typically, that’s how we staff arbitrations,” says Born. “Also, all the lawyers in DC and New York, with one exception, have spent time working in London. [The exception is former Dewey and Sullivan lawyer Jim Carter, who joined last year]. It’s deliberately very international and multi-jurisdictional.”
McDermott Will & Emery
Another firm that is in growth mode, but which shows a revenue drop in this year’s table because of a previous overestimation is McDermott Will & Emery. This year The Lawyer estimates McDermott’s London revenue to be $42.5m, giving it a London RPL of $944,000 as opposed to 2012’s $1.14m.
The firm made numerous lateral hires last year, a number of which fed off the collapse of Dewey. McDermott hired former Dewey private equity duo Mark Davis and Russell Van Praagh in London in April and a capital markets team, led by partners Philipp von Ilberg and Joseph Marx from Dewey’s Frankfurt base, in May.
Non-Dewey hires included senior KPMG tax partner Tom Scott, now head of McDermott’s London tax team. Meanwhile, key mandates for the City office last year included advising the owner of Pom-Bear crisps, Intersnack Group, on its acquisition of Hula Hoops maker KP Snacks.
Looks like London head Hugh Nineham may mean business when he says “there’s a careful and deliberate growth initiative under way” at the firm’s City office.
One firm that did see its UK revenue fall in 2012 is Mayer Brown. The bad news started in May, when the office announced it was planning to cut some 20 lawyers and staff, a redundancy process that ultimately saw the departure of 16 people. This was shortly followed by a redundancy consultation process among support staff.
While the firm preferred not to divulge a London revenue figure The Lawyer has estimated turnover to have dropped by 8 per cent, from $156.8m to $145m, based on an unusual number of partner exits (see below), a slow first half for the transactional team and the fact that firmwide turnover at Mayer Brown slid to a six-year low, from $1.13bn to $1.09bn.
In London, last year’s exits included reinsurance litigator Ian McKenna, who joined burgeoning US rival Locke Lord; structured finance partner Stephen Day, who left for Cadwalader Wickersham & Taft; corporate partner William Charnley, who quit for King & Spalding; leveraged finance partner Neil Caddy, who joined Milbank and finance partner Nicola Marley, who left for Minter Ellison.
This came after the firm lost five partners in a short space of time the previous December, when partners confirmed their intention to quit in favour of Orrick Herrington & Sutcliffe, White & Case and Eversheds.
Despite senior partner Sean Connolly insisting 2012 was one “of two distinct parts”, it is hard to see precisely where the distinction is for Mayer Brown’s London office. No doubt the focus for 2013 will be on halting the flow of exits and bringing London back to health.
Gibson Dunn & Crutcher also posted a drop in UK revenue for 2012, an 11 per cent decrease to $61.3m despite the firm posting a double-digit rise in turnover globally. As The Lawyer reported earlier this year the co-partner in charge of Gibson Dunn’s London office Tom Budd said the fall could be explained by the heavy use of contract lawyers and paralegals on major litigation matters such as the investigation into Libor, in which a team led by City disputes head Philip Rocher represented UBS.
Rocher joined Gibson Dunn in 2005 from Clifford Chance to launch its UK litigation practice from scratch. Now there are six partners and around 20 associates in the team.
“In London the aim is to be in the top tier for litigation,” says Rocher. “We’re there in terms of quality but need to keep building the size and diversity of the practice.”
Litigation is at least half the London office if not more (there are only about 46 lawyers in London and litigation generally chips in 55 per cent to 60 per cent of revenue).
Last year’s stand-out case saw a London team led by Rocher act for UBS on Libor-related matters.
“Although this was a truly global project involving lawyers from all our offices, we wouldn’t have got it if we hadn’t had a top-quality London team,” Rocher says.
Cleary Gottlieb Steen & Hamilton is another US firm that in recent years has tapped into the booming UK litigation market. Jonathan Kelly launched Cleary’s London litigation and arbitration team when he joined from Simmons & Simmons in 2010. There are now 20 disputes fee-earners and four partners in the team including former Stephenson Harwood CEO Sunil Gadhia, who bulked up the English law side of the practice when he joined last year. US law litigation partners Chris Moore and David Sabel make up Cleary’s UK contentious quartet. Jonathan Blackman, the US partner in Cleary’s London office when
Kelly joined, has since returned to New York.
Twenty years or so ago Cleary’s London office was effectively a US capital markets boutique, but as Kelly points out, “the past 10 years or so has seen a very significant diversification of the practice”.
The eurozone sovereign issues last year, recently highlighted by the woes of Cyprus, dominated the workload in Cleary’s London office, with the firm acting for the Greek government on its $173bn bailout package.
Capital markets work continues to be a central plank of Cleary’s work in the UK and globally, with the focus being primarily on the debt side most recently. The firm did, however, advise Russia’s largest bank Sberbank on its $5.4bn IPO and Russian telecoms group MegaFon on its London float.
Indeed, Russia-related work is one of Cleary’s sweet spots, with litigation and arbitration also featuring prominently. Kelly highlights a shift from Russian oligarch-related litigation to Russian corporate-related disputes, featuring the likes of Gazprom, VTB and Rusal.
“There’s a developing tension between Russian judicial intervention in certain disputes and the
jurisdiction of arbitrators and courts, including the English courts,” adds Kelly.
Those US firms with solid Moscow practices coupled with burgeoning strengths in English law will be all too ready to capitalise.
Cue Debevoise & Plimpton, which has a longstanding Russian nexus in London and continued to build its litigation practice in the UK throughout 2012, most notably with the lateral hire of HSF’s Kevin Lloyd (in addition, the New York firm added nine associates to its London disputes practice during 2012).
It is one of the oddities of the market that in London, Debevoise, one of New York’s premier blue-blood practices, is primarily an English law practice, while in terms of sector focus and core practice areas it is built deliberately along New York lines. Last year revenues in its London office, where the key practices are insurance-related financial institutions, private equity (both funds and transactions), M&A and disputes, remained flat at $81.3m
That said, the firm still managed to snare roles on a number of standout matters including representing Suzuki as the claimant in consolidated ICC London arbitration proceedings against Volkswagen over a multibillion-euro cross-shareholding. London partner Sophie Lamb led the team that also included partners Lord Goldsmith QC, Karolos Seeger and John Missing along with more than 20 associates and counsel in London, Hong Kong and New York.
Of course, bulking on a bit of extra revenue is not everything. Several of the firms in this year’s table had stand-out years even if the needle on the total revenue counter did not shift that spectacularly.
Skadden Arps Slate Meagher & Flom, another US firm with client links with Russia, featured in the headlines. Not only did the firm act for the outright winner in one of the year’s highest-profile cases, Roman Abramovich in his titanic battle against the now deceased Boris Berezovsky, the lead lawyer in that case Karyl Nairn (one of The Lawyer’s Hot 100 this year) also had her efforts recognised when she was made a QC earlier this year.
“In the past, many of our biggest successes have been in commercial arbitration matters and not visible to the marketplace,” says David Kavanagh, co-head of Skadden’s London disputes practice with Nairn. “Our recent litigation wins have, however, helped our team get wider recognition. And we’re delighted by the overwhelming response to Karyl’s promotion to silk. It demonstrates the enthusiasm from clients and arbitrators for top-class disputes experts who can both manage cases and provide winning advocacy skills.”
For Skadden, Nairn’s appointment is seen as an overdue recognition of the US firm’s London litigation and disputes practice generally, for some years one of the busiest parts of the practice globally.
The US economy may be in broadly better shape than that on this side of the Pond but the results on these pages focuses only on those revenues generated or earned in the UK. And in that context, in a flat at best economic landscape, the results seem to show that the best way to achieve growth is to buy it in. Which is precisely what the top firms are doing.
American winners in London
Dechert is not the only firm in the table that has enjoyed a veritable boom time in the UK over the past couple of years. Quinn Emanuel Urquart & Sullivan’s London office acted opposite Dechert on the Deripaska/Cherney litigation, with the firm’s legal team led by the co-managing partner Sue Prevezer QC
The firm is a new entry to the top 30 table this year, posting $45.3m (£29.6m) with an estimated profit of $31m. This is an impressive performance considering the US litigation powerhouse only opened the doors of its London office in April 2008.
While still relatively small in the City, with just eight partners last year, the firm’s raid on Herbert Smith Freehills last month secured it the services of senior litigation partner Ted Greeno and underlined its ambition.
Months earlier the firm had made waves when it hired Stephen Jagusch and Anthony Sinclair from Allen & Overy (A&O) as partners in its London office with Jagusch, who joined in January this year, reprising his A&O role as global chair of Quinn Emanuel’s international arbitration practice.
Elsewhere, Arnold & Porter re-enters the table with estimated total revenue of $42.7m, powered by the Washington DC-headquartered firm’s focuses on regulatory matters, patent litigation for pharmaceutical companies (where London partner Ian Dodds-Smith is particularly well known) and disputes more generally, including international arbitration. Firmwide revenues were boosted by the addition of around 100 lawyers at the start of 2012 from San Francisco’s Howard Rice Nemerovski Canady Falk & Rabkin. In the UK the firm’s role advising the management and standards committee of News Corporation on criminal matters relating to the News of the World phone-hacking case highlights its focus on white-collar crime.
Ropes & Gray is another first-timer in The Lawyer’s international top 30, entering with an estimated total revenue of $40m. Indeed, the Boston-headquartered firm’s aggressive recruitment campaign, spearheaded by high-profile partners Maurice Allen and Mike Goetz since it launched in the UK in 2009, has secured it a berth in the top 30 a year quicker than Quinn Emanuel. How’s that for bragging rights?
This year that campaign paid dividends when Ropes & Gray’s London office picked up a key role on the $23.3bn takeover of Virgin Media by US group Liberty Global, with partner Jane Rogers acting for existing client Liberty on financing matters. Rogers headed a team that also featured Allen and Goetz along with banking partner Matthew Cox, a 2010 hire from Freshfields Bruckhaus Deringer, corporate partner Kiran Sharma, snared from DLA Piper in 2011 and tax partner John Baldry, a Kirkland & Ellis hire the same year.
Allen says: “Timing is everything, Ropes’ opening coincided with a sea change in the London legal landscape and the recruitment market couldn’t be better. There is now a real acceptance of the value that US law firms bring to clients. “
Revenue per lawyer: a different picture
One of the truest indications of a firm’s place in the market’s pecking order, its peer group and the quality of work it is handling is generally provided by its revenue per lawyer (RPL) figure. Reorder this year’s top 30 table by RPL and a whole new world emerges.
For starters, Baker & McKenzie no longer heads the table. The $598,000 (£390,000) each that was, on average, generated by the global firm’s 333 UK lawyers last year is dwarfed by Quinn Emanuel’s $1.88m, Sullivan & Cromwell’s $1.5m and Gibson Dunn & Crutcher’s $1.3m. But the firms’ models are quite different, a fact underlined by RPL.
Quinn Emanuel makes a virtue of keeping permanent qualified lawyer headcount low (just 24 last year in the UK) while Sullivan had just 67 lawyers (19 of whom were partners) beavering away in its London office in 2012. Yet they managed to generate an estimated $100.5m between them.
Major matters last year at the elite New York firm included advising IT provider CGI on its acquisition of Logica, a deal led by partners Tim Emmerson and Ben Perry, both of whom who had been recommended to CGI by the company’s financial adviser, Goldman Sachs. In picking up this deal, Emmerson and Perry also won CGI Group as a client for Sullivan.
At the other end of the scale Squire Sanders posted an RPL of just $360,000. That number speaks volumes.
US firms wanting to grow in London are turning to the male-dominated lateral hiring market, with women making up an average of just 16 per cent of partners across our top 30 international firms.
The UK offices of Cleary Gottlieb Steen & Hamilton, Edwards Wildman Palmerand Gibson Dunn & Crutcher (which faced a sex discrimination claim from a former employee in December) recorded the lowest proportion of female partners in 2012, with women making up 0, 3.3 and 6.25 per cent of total partners respectively.
Sources interviewed by The Lawyer say US firms wanting to grow in the City are looking to the laterals market, a traditionally male-dominated sector, and so are struggling to achieve a diverse pool of candidates for the top jobs.
“Out of our 30 partners [one female] in London, 19 have joined as lateral hires in the past four years and unfortunately only about 2 per cent of partners on the lateral hiring market are women,” comments Edwards Wildman London managing partner Nick Bolter. “It doesn’t help that the automatic reaction when people get approached by a US firm is they’re going to sell their soul and do thousands of billable hours.”
That said, Cleary - which had no female partners out of a pool of 21 until this January when it promoted corporate lawyer Polina Lyadnova - is known in the industry for its cautious approach to growth, rarely making lateral hires or launching offices. Likewise, Gibson Dunn, which recorded just one female partner out of a pool of 16 last year, rarely makes an appearance on the lateral hiring front, relying heavily on contract lawyers and paralegals for major litigation matters such as the investigation into Libor.
This leaves US firms in a catch-22 situation - the male hierarchy can be slow to make way for female associates at US powerhouses, with those at the top likely to have spent all their professional lives with their firms, and working the least family-friendly hours. Meanwhile, US firms with a smaller presence in London, as Bolter points out, are looking to grow via the laterals market.
The lack of diversity at these firms is a big problem, not only for those at the firms, but also for business.
“We have female clients asking how many female partners we have,” explains Bolter, embarrassed about the office’s low number of women at the top. “In retaining our best people, male or female, it’s important we have a wide range of role models whom associates can look up to.”
But it is not only these three firms that have dismal partnership figures. Other US firms with either no or just one female partner in London last year included Simpson Thacher & Bartlett, with none out of 13; Davis Polk & Wardwell, which had none out of seven; and Morrison & Foerster (which dropped out of the top 30 this year), with one female partner out of 14.
And the numbers don’t get much better higher up the scale. Debevoise & Plimpton, applauded for its diversity in the US, only has two female partners out of 19 in the UK, Weil Gotshal & Manges has four out of 25 and Dechert had only four female partners out of a UK total of 36 in 2012.
But let’s end on a high note. Nearly half of Bingham McCutchen’s new partners this year were women, with female lawyers making up six of the 13 promotions at the firm. In London, seven out of a total of 20 Bingham partners are female.
With London managing partner James Roome saying that organic growth in London is the focus at the firm, perhaps herein lies the solution to the gender diversity question in future.