1 August 2011 | By Matt Byrne
17 October 2011
18 February 2013
22 April 2013
4 June 2008
19 May 2008
Quinn Emanuel has taken the litigation market by storm since its City launch - but attaining the next level is going to be the real test for the US giant’s London outpost
Not every firm’s third birthday party takes place in an historic Grade 1-listed royal palace with a Rubens ceiling. But then, not every firm is Quinn Emanuel Urquhart & Sullivan.
To be fair to other firms with less meteoric rises to prominence, it was Quinn Emanuel’s London office that was quaffing the champers at Banqueting House in Whitehall, not the whole firm (that has been around for a seriously mature 25 years).
Still, the glitziness of the venue and a guest list stuffed with stars from the legal and finance worlds - including Jonathan Sumption QCand derivatives legend Dan Cunningham, a Quinn Emanuel partner since March 2009 - underlined the US firm’s success in the City.
In case you were unaware, Quinn Emanuel is one of the most profitable firms in the US, posting an average profit per equity partner (PEP) of $3.6m (£2.2m) in 2010. Last year Quinn Emanuel’s still relatively new London office did not do too shabbily either.
Its four partners (London now has seven) generated £11m in revenue, posting £7.8m profit. For maths fans that is a profit margin of 70 per cent and a PEP of around £1.95m. In 2009 Quinn Emanuel London posted a revenue of £8.5m with £5.5m profit, figures that reveal a 29.5 per cent rise in total income for last year.
“I’m expecting a substantial uptick for 2011,” says Richard East, one of Quinn Emanuel’s two London co-managing partners, the other being Sue Prevezer QC, and the key driver behind its UK success.
Judging by the recruitment campaign in the City that has seen its partner numbers more than double in the past 12 months, from three to seven, East’s projection seems fair.
Having been nominated numerous times for various awards in the past 36 months, Quinn Emanuel finally picked up a biggie this summer when it was crowned The Lawyer’s International Law Firm of the Year.
The success of the firm’s London office, its first fully fledged international outpost, was key to it winning the prize and beating the likes of Latham & Watkins, Sullivan & Cromwell and Debevoise & Plimpton in the process.
Quinn Emanuel launched in London in April 2008 with a simple business model: unlike the vast majority of its rivals, it specialises in bringing litigation against major financial institutions and capitalises on conflict-based referrals.
Welcome to London
Quinn Emanuel raised its profile with victories in a series of high-profile cases involving financial institutions such as Re Sigma Financial Corp and UBS AG and UBS Securities v HSH Nordbank, the latter being one of the first credit crunch cases.
In the past three years cases such as these, plus a steady flow of recruits, have helped the London office gather momentum.
Quinn Emanuel is currently embroiled in the titanic struggle between Russian oligarch Oleg Deripaska (Quinn Emanuel’s client) and Michael Cherney (represented by Dechert) over the 20 per cent interest in aluminium producer Rusal that Cherney claims he is owed.
London office co-managing partner Sue Prevezer QC and Gerbi are leading the firm’s team on the case, which is set for a headline-generating court battle next April.
But not everyone is convinced Quinn Emanuel has set London alight.
“They’ve hired a lot of people, but how much have they really done and how successful have they really been?” asks one City partner. “They lost European Directories at the Court of Appeal [CoA] as well as other cases back-to-back.”
Quinn Emanuel’s reputation in the US is built largely on its 91 per cent trial and arbitration success rate coupled with an aggressive litigating style that appeals to its client base.
Some critics of its UK operations have said that a similar overly aggressive style could be offputting.
“They’re where Herbies was 10 years ago,” claims one rival partner. “That is, they’re likely to say, ’You’d better use us because you wouldn’t want us onthe other side of the table’.”
More worrying than any hardball tactics for East et al is its UK success rate. What is his response to the City partner’s claim that the firm has
lost a number of cases, including European Directories, where it acted for the subordinated lenders challenging the release provisions in the intercreditor agreement?
“I can’t dispute that we lost at the CoA, but on many levels it was a helpful case,” argues East. “It sent a clear signal about our role in the area of restructuring. We took on a case that everyone else said was a ridiculous position, with Linklaters, Allen & Overy [A&O] and Kirkland [& Ellis] on the other side. But our barristers told us it was a good case, so we said, ’Sorry, but those guys must be reading the wrong clause’.”
The European Directories case was, adds East, “huge” for Quinn Emanuel in terms of marketing.
“We’re still getting a flow of cases off the back of it,” he reveals. It is a theme echoed by Maurice Allen, London managing partner at Ropes & Gray, the firm that handled the restructuring aspects of the case.
“Yes they lost, but there’s no doubt it gave them some leverage,” says Allen.
Other restructurings, such as Cattles and Wind Hellas, were “more of the same”, according to East.
“I don’t think anyone can dispute they were extremely hard cases, so it sends a message that we take tough cases,” he continues. “And sometimes we lose.
“On the flip side, sometimes when we win we have to settle so we can’t publicise those cases. When you’re fighting for junior creditors you often lose more than you win.”
The tough get going
East’s willingness to take on tough cases is part and parcel of the lawyer’s appetite for taking on a challenge. And nothing illustrates that better than the gusto with which he has helped build Quinn Emanuel’s London office.
“How have they built the brand so quickly?” asks one source close to the firm. “They’ve got a clear plan - litigation, and within that banking and bankruptcy - and they’re prepared to litigate against the banks. That’s the business model.
So it’s a focused model that cuts out interdepartmental squabbles about which area they should be investing in.
“On top of that they’ve got Richard. When he started he was never off the phone, cold-calling people if necessary. It was the firm’s biggest-ever business development exercise, with thousands of meetings in the first year targeting contacts at the bar, firms and clients - in particular financial institutions and hedge funds.”
That level of energy alone is partly responsible for catapulting the three-year upstart into the top level of London litigation. But the firm’s stellar finances are also down to the unusually tough line it takes on costs.
For starters, it is an understatement to say Quinn Emanuel’s approach to building a new office was stripped down. On day one Quinn Emanuel’s London office consisted of East, a desk and a phone. East even negotiated the lease on the office.
“They’re so hardcore on costs,” says one source. “The lawyers have to pay for their practising certificates themselves.”
That hardcore line is not just limited to stumping up for occasional costs. Quinn Emanuel - driven by the culture stemming from its US parent - takes an equally tough line on cashflow. For example, if partners do not pull their fingers out getting bills sent or paid they can be fined anything from $200 to $500 a day.
The remuneration system is equally bespoke. According to insiders it is not a merit-based or lockstep system - it is a John Quinn system.
“He sets remuneration,” says one partner about the firm’s founder. “He looks at the number of hours, the quality of the lawyer and the general contribution to the firm and then comes up with a number.”
For any partner who has spent any time working at a US firm in the UK, this might set alarm bells ringing that Quinn Emanuel’s London outpost suffers from the common disease of remote management. East, however, insists that this is not the case.
“Only a few decisions, such as lateral hires, require US input,” he insists. “Apart from that it’s down to us.”
“The US does allow London partners a degree of autonomy,” confirms one barrister who has worked with Quinn Emanuel. ”[London] is setting its own agenda. Other firms often control out of the US. The office is being inspired by the US, but it’s not a dictator.”
Allen at Rope & Gray, a lawyer not unacquainted with remote US management, adds that he does not get the impression that Quinn Emanuel’s London office suffers from the typical long-arm US management style.
“US firms can easily exert control simply by setting targets,” says Allen. “In this case I just think John Quinn wants to be involved.”
Quinn certainly makes his presence felt, with regular trips to the City. But East insists that this is not the top man checking up on him.
“I like it - it’s a focus for us,” says East.
As for remuneration, East says the firm does pay guarantees in London but does not pay huge uplifts when partners join. Laterals will get “a decent number” in their first year, but any big numbers are down to individual performances.
“I came off my guarantee voluntarily after the first year because it was acting as a cap rather than a floor,” reveals East.
Ultimately the success of Quinn Emanuel’s London office will be judged on the cases it wins and the talent it attracts.
Certainly, the hire of Davies, the former head of Olswang’s litigation group, was a coup.
“Martin is an excellent recruit for that office,” says Tom Weisselberg, a junior tenant at Blackstone Chambers. “He’s a team player and is incredibly effective at identifying good associates and managing them well, giving them the confidence to run cases on their own. That’s one of his real skills. He’s also super bright, but wears his brightness incredibly modestly.”
That said, the hire of the media-centric Davies is unlikely to plug the gap that several in the market believe still exists in Quinn Emanuel’s London office - that of a top-tier pure commercial litigation partner.
But a bigger challenge is likely to be the successful broadening of the practice without cutting off its flow of referrals. Quinn Emanuel’s ambition for London is simple - it aims to be the leading commercial litigation practice in town.
To achieve that it will need to start replicating some of its core US practice areas, notably IP, an area it launched last year in Germany with the hire of patent litigation partner Marcus Grosch from A&O in Mannheim, as well as building out new-to-London add-ons such as international arbitration.
“We’ve got to expand the offering and build a hedge,” admits East. “Patent? Definitely. Arbitration? Definitely. White-collar crime? Maybe. The market won’t always be like this for us.”
For now, by doing the simple things well, Quinn Emanuel is ahead of the game.
Richard East, co-managing partner
”Richard [East] is a really interesting character,” says an insider who has known East for many years. “He came to the London School of Economics [LSE] later than most in his year and came via a comprehensive, so not by the traditional route. Then he was one of only two firsts in his year. He’s super-bright.”
After the LSE and a stint at Oxford working on a postgraduate qualification, East joined Baker & McKenzie, where he was current London managingpartner Gary Senior’s trainee. He left to join former Clifford Chance partner Andrew Wilkinson at Cadwalader Wickersham & Taft.
“You watch Richard in action - he’s a tough but fair operator,” adds the source. “He had stints at Cadwalader and Kirkland [& Ellis] prior to setting up Quinn [London]. You’ve got to be tough to survive in those places.”
East was partner number one for Quinn Emanuel in London, but it very nearly didn’t happen.
“Lots of firms sniffed around him, including Weil Gotshal & Manges, which made him an offer but he did a U-turn when Quinn came in,” recalls
the source. “[Weil London managing partner] Mike Francies still really likes him though.”
The proof is in the pudding. Weil, along with Kirkland and several other firms, regularly refer work to Quinn Emanuel.
Sue Prevezer QC, co-managing partner
Former Essex Court Chambers barrister Sue Prevezer QC was called to the bar in 1983 and took silk in 2000. She has been a deputy High Court judge since 2006.
Prevezer joined US firm Bingham McCutchen in September 2007 to try her hand at non-contentious financial restructuring. Less than a year later the lure of building a contentious practice at Quinn Emanuel proved too strong and she joined the firm in May 2008.
Some UK litigators have questioned why a barrister of Prevezer’s quality does not handle more of her own advocacy. This, says fellow managing partner Richard East, is a misconception.
“Sue’s done a fair amount of her own advocacy over the past three years, but as we say to clients, we don’t have a one-solution-fits-all approach to matters,” he says. “Sue was the advocate who won the Sigma case in the Supreme Court - a pretty big case. There are cases where she’s just the right advocate - she is, for example, our lead counsel on a large matter against Barclays for Unicredit [with Fountain Court Chambers’ David Railton QC on the other side]. In the Deripaska case, however, the client management issues are huge, and hence she decided to play a partner/solicitor role rather than doing the advocacy or being part of the trial team.”
In other cases Prevezer has been a junior QC to another silk.
“In the HSH Nordbank case she juniored to [Jonathan] Sumption [QC],” adds East. “Given our size we need to be flexible as we have multiple ongoing cases and Sue can’t be the advocate on all of them.”
That said, Quinn Emanuel’s US clients, which are used to seeing their lawyers follow cases from start to finish, may be more likely to see Prevezer in court.
“On cases where we have US clients it’s more likely that Sue will be lead trial lawyer, as this is what the client will expect,” explains East.