The rise and fall of Buchanan Ingersoll's London office has been by anybody's standards a rapid one. Announcing its arrival in November 1999 with the poaching of a respected projects and PFI team from Beachcroft Wansbroughs, the Philadelphia-based firm had within two years built up a practice with more than 10 partners and expertise across a wide range of disciplines. Apart from the Beachcrofts partners, the firm's vision attracted lateral hires from firms such as Eversheds, Denton Wilde Sapte, Tarlo Lyons and Henry Hepworth (now H2O). It even took on partners from Sonnenschein, another US firm that found London a tougher market to crack than expected.
But already the move has turned sour. Many of those brought on board have left, including the lawyers from Beachcrofts, who have moved to Pinsent Curtis Biddle and Addleshaw Booth & Co. Buchanan's management has now decided to concentrate on corporate and litigation and is scaling back the office from nine partners to just three, blaming the move on the need to improve profitability (The Lawyer, 4 February).
This cautionary tale has understandably increased concerns among UK lawyers over the stability and staying power of US firms in the City market. These worries have also been stoked by the widespread reporting of the tremendous domestic pressures that US firms, notably those with a heavy technology bias, are facing.
Tough decisions in the US, notably by the likes of Brobeck Phleger & Harrison, which has just implemented its second set of redundancies, have had to be made. Brobeck Hale and Dorr, Brobeck's UK joint venture with Boston's Hale & Dorr, has also been forced to look at ways of cutting its staff levels.
But do events at Buchanan and Brobeck, and talk of recruitment freezes at the tail end of last year, really herald a cooling of US firms' love affair with London?
The answer surely depends on the firm. Just like their UK counterparts, US firms vary wildly in their management, culture and growth strategies and they should not all be tarred with the same brush.
Those that have the biggest brands are clearly the safest bets and have been most consistent in their success and growth. The loss of a high-profile player – such as Maurice Allen and his team leaving Weil Gotshal & Manges for White & Case – may be damaging, but does not cause them long-lasting harm.
|“Those that have the biggest brands are the safest bets. The loss of a high-profile player – such as Maurice Allen and his team leaving for White & Case – does not cause long-lasting harm”|
Others that are more opportunistic in their approach have failed to provide a closely integrated, cross-referring environment and they are the ones who are most at risk in losing partners or teams.
It is worth pointing out that the success of a London office does not depend on having critical mass – the belief that there is safety in numbers is misplaced. Far more important is to choose a firm that has a focused strategy. A well-managed firm combined with a decent brand name will weather the change of economic climates better than a firm with a brand name and no clear strategy. And the reality is that, by this yardstick, the track record of the vast majority of US firms is by and large good. Particularly in the past three years, US firms have proven a powerful attraction to many high-profile UK partners in top City firms – although with the notable exception of those in the magic circle.
One of the principal reasons for this is that many US firms have learned from their early mistakes, the most common of which was to 'micro-manage' from the US. More and more management responsibility has been handed over to the London offices, which have authority to recruit as they see fit, although the US management has to put its seal of approval to the choice. And in many of these offices the managing partner is now a UK lawyer and UK partners outnumber their US counterparts.
As their practices have developed, many have come to rely less on US referral work and have become standalone profit centres.
In the early stages of the development of US firms' City offices, the first UK partners to jump were those looking for the excitement of building a practice from a small base combined with the financial gain of working with top brands in the US. More naturally cautious lawyers followed as client bases consolidated and the risk of moving diminished. Over time this has meant that many of the London offices of US firms have adopted a more UK culture. This gradual Anglicisation has coincided with an upturn in financial performances.
Although some have dual chargeable hours targets and bonuses to accommodate what the US firms believe to be the UK's 'apologetic' billings system, partners at many offices can hold their heads high among their Stateside colleagues when it comes to their contribution.
With fewer partners in London to distil the equity, some have even outperformed their US offices. The last financial year saw many US firms enjoy better per average equity drawings in London than in New York – one firm saw a $4m (£2.82m) profit share per equity partner in the City.
The willingness of US headquarters to reduce their management input and allow their London offices to take responsibility for their continued growth has also undoubtedly helped to improve the retention rate of partners. No longer are their lateral hires frustrated by what they often perceive as a fundamental lack of understanding on the US side of either the London market or their specialism.
This is not to say that there are not ongoing tensions about the development of the practice – there is still the regular complaint that many US firms, which still seem to regard London as the hub of Europe, are not sufficiently active on the Continent. This is a particular concern among the more successful London offices, which see the absence of a European presence as an impediment to developing their practice and, often justifiably, to decent lateral hire recruitment.
But putting Europe to one side, there is a growing understanding among US management of what it takes to operate successfully in the City. This is enough to justify confidence that US firms will continue to provide an attractive career option for high-calibre UK lawyers.
The vast majority are in London for the long-term – the business logic remains too compelling for them to think otherwise, even taking into account the depth of the current downturn. To pull out now or retrench, with the attendant publicity, would make the costs of re-entry extremely high. The City's legal community will remember a US firm that shows a lack of nerve now.
And, for every Sonnenschein and Buchanan, there are yet more US firms that are looking to enter the London market. At least two substantial firms are talking to disaffected teams with a view to launching in London for the first time.
For UK lawyers thinking of joining a US firm, the important thing is to do your homework and be able to differentiate between the various practices – just as you would if you were deciding between UK firms. What matters is the quality and prospects of the practice, not its geographical origin.
Dominique Graham is a specialist in partner moves at recruitment consultancy Graham Gill