The UK sway
16 July 2001
22 October 2013
10 April 2014
21 October 2013
14 October 2013
2 April 2014
If someone was to ask you which of the US firms in London listened the most to their UK partners, Weil Gotshal & Manges and Cadwalader Wickersham & Taft might not be top of the list. After all, both of the New York giants have had their fair share of partner losses from their UK practices - the finance practice in the case of Weil Gotshal and everything but insolvency and litigation in the case of Cadwalader.
But apparently, the mere fact that partners have left does not prove that London has no say in strategy, because the two firms have come out top of The Lawyer's US Firm Management Survey.
With the exception of London offices that are the result of transatlantic mergers, of the 30 firms surveyed, only White & Case and Mayer Brown & Platt equal them for having UK-qualified London partners on the global executive.
Weil Gotshal's London head Mike Francies sits on his firm's 13-member global management committee; Cadwalader's managing partner Andrew Wilkinson sits on a seven-member management board; White & Case's project finance partner Peter Finlay is one of eight on his firm's board; and Ian Coles at Mayer Brown sits on a management committee of 15.
Perhaps even more ironically, English-qualified managing partner Barry Francis at Pittsburgh firm Buchanan Ingersoll is also on the board. He is poised to leave the firm after it decided to abandon its UK project finance and PFI practice, of which Francis is the head (The Lawyer, 25 June). A place on the board seems no guarantee of security.
Wilkinson is the newcomer, catapulted onto the management when partner losses gripped London a year ago. Francies is a year into a second three-year term, and at White & Case a firmwide restructuring gave Finlay his place on the board last Spring.
So is close contact with head office a good thing, or does involvement in firmwide strategy come with the price of losing autonomy in London?
Robert Thomson, managing partner of Jones Day Reavis & Pogue in London, is not involved in his firm's advisory board but does not see it as a problem. The firm has a managing partner working with a 30-member advisory board, none of whom are from London.
"We have an awful lot of autonomy," says Thomson. "Let's say we want to bring in new people or go into new areas - we make a case and my experience is that the firm is extremely responsive. We've always had fantastic backing for anything we want to do. We've got our budget to manage and we come up with ideas; no one is telling us what ideas to come up with - it's up to us to develop them, and we do."
There is an argument that constant contact with head office can mean constant involvement in the day-to-day running of London.
Francies, not surprisingly, takes a different view. With London now being the firm's second-biggest office after New York, he thinks it is imperative that someone is on the board. "From a European point of view, to have a place - and therefore a voice - on the management board is very important," he says. "At Weil Gotshal it's pretty important to have someone on the management board - no real decisions are taken without going through there."
Francies took over the position on the board from Maurice Allen, the former joint head of the office who left to join White & Case last year. His place on the board is a result of a nomination rather than an election, and means he must attend meetings every two weeks to discuss everything from strategy and compensation to budgets, business plans, new partners and new premises.
As far as he is concerned, it had never occurred to him that a place in global strategy could be a bad thing. Certainly, judging by the few transatlantic mergers that have gone ahead, gaining such a place is an imperative.
In each of those mergers, the London offices, however small, have secured their places on the board. Tony Wollenberg of Steptoe & Johnson Rakison boasts a place on the 12-partner executive committee, three London-based Dechert partners are on the policy committee of 13, and Reed Smith Warner Cranston's senior partner Ian Fagelson is on the firm's 13-strong executive.
Fagelson said it was a no-brainer when the two firms linked up. "It's an important point," he says, "but it had virtually no discussion, because if you integrate two existing firms, obviously the combined corporate organs are going to have appropriate representation from both sides. That's not necessarily the case if you have one firm opening another office."
In total, there are eight US firms in London with English-qualified partners on the global executive. Another four US-qualified partners who are based in London boast places - Edward Greene at Cleary Gottlieb Steen & Hamilton, Bruce Buck at Skadden Arps Slate Meagher & Flom, Dyke Davies at Bryan Cave and Tom Kellerman at Brobeck Hale and Dorr.
Kellerman is an exception because Brobeck Hale and Dorr is a joint venture in Europe between two US firms - Boston's Hale and Dorr and San Francisco's Brobeck Phleger & Harrison. Kellerman is on an advisory committee comprising four European partners and three partners from each of the parent firms.
Of the 30 largest US firms in London, exactly half have UK-qualified lawyers at the helm. In all, 10 of the 30 managing partners have no say at all in the firm's management or strategy, and the remaining eight play some role, often through a secondary committee.
Those eight are Arnold & Porter, where London head Fern O'Brian attends policy committee meetings in a non-voting capacity, Dorsey & Whitney, Latham & Watkins, LeBoeuf Lamb Greene & MacRae, McDermott Will & Emery, Morgan Lewis & Bockius, Dewey Ballantine and Sidley Austin Brown & Wood, where partners sit on secondary committees.
Take Chicago's McDermotts, for example. There is an executive committee of five people who meet once a week and make the day-to-day decisions. Then there is a management committee of 24 elected members and department heads, with both London managing partner John Reynolds and senior partner William Charnley on the committee. The executive committee formulates strategy and then makes recommendations to the management committee.
So what is wrong with that, and more to the point, what exactly should firms be doing? Alan Hodgart, European director of management consultancy at Hildebrandt International, says it is pretty much essential to have Londoners on the board. "I think it's important for two reasons," he says. "One is that there's a cultural divide and a lack of understanding of the market, so if an American firm is really serious about growing in London, they really do need someone based here on the board.
"Secondly, if the firm's ultimate strategy to grow is through merger, there's a real concern that one side wants to dominate the other. If you have someone from the UK on the board, it's very symbolic of the fact that you want to share power."
He says that the most effective management is to have two boards, one dealing with the day-to-day management and one dealing with strategic direction. "There are different ways of seeing the world, and they should all be represented on the board," he says.
By contrast, Hays ZMB director Yvonne Smyth says the influence of London within the firm depends very much on the firm and the individual. "I think it's to do with the practice areas in London and how much they overlap with New York - is there ongoing exposure of partners in London to partners in the US?" she says. "That means is the US even aware that London exists in fee revenue terms and are the people in leadership positions in London known to the decision-makers in New York? I don't think you need to be on the board necessarily; I think it's more subtle."
Two cases in point are New York's Milbank Tweed Hadley & McCloy and Los Angeles firm Lathams. In both cases the London offices of the firms have no input into the firmwide board, but both Milbank's managing partner Phil Fletcher and Lathams' head Joseph Blum have been in London for a long time and have the ear of management in the US.
So, though it might not be the be-all and end-all, having a place on the global strategy board is not to be sniffed at.
Finlay at White & Case says: "I don't think a place on the board means that there is an over-reaching influence on the affairs of an office. I think it's useful to have geographical diversity so that people who are in the European practice are closer to the development of the firm."
Hodgart says that the US firms will increasingly have to involve London partners more. "You really do have to have a board which is more broadly representative of the geography of the firm," he says. "I think that in the English firms, probably because they've had to deal with the European thing, it's a bit more accepted. The Americans are a bit more paranoid about being governed by the English. Most of the American firms still have a long way to go."