What NY firms want from the Valley
3 August 2009 | By Julia Berris
Cooley is the latest West Coast firm to fall prey to the New York invasion.
Rivalry between firms on the US East and West coasts has been a feature of the US legal community for years.
Since Los Angeles-headquartered Latham & Watkins conquered the New York legal market in the 1990s, establishing a pre-eminent high-yield team, other West Coast giants have made waves in the Big Apple.
Unlike Latham, a number of West Coast firms have focused on public company M&A work to build up their names on both the West Coast and in New York.
Although this strategy has worked well for firms such as Cooley Godward Kronish and O’Melveny & Myers, New York giants have started to raid these firms to bulk up their West Coast M&A practices, hitting back at the West Coast players that have moved in on their territory.
“Public M&A is what many West Coast firms are well-known for,” says one West Coast legal recruiter. “But the likes of Skadden [Arps Slate Meagher & Flom] have moved in on this space and really creamed them.”
The most recent plundering came last month when Dewey & LeBoeuf hired an M&A duo from Cooley in the shape of M&A head Richard Climan and partner Keith Flaum. The pair, who have joined Dewey’s Palo Alto office, have been joined by Cooley technology partner Eric Reifschneider.
Climan and Flaum are heavy-hitters well-known for their ties to international technology and pharmaceuticals companies.
In March this year Climan advised medical research company Gilead on its $1.4bn (£860m) hostile bid for CV Therapeutics, beating off competition from Japanese company Astellas Pharma.
“This is most definitely a big loss for Cooley,” says one US recruiter. “They’ve been a core part of building an M&A practice that really forms the basis of Cooley’s overall strategy.”
Cooley’s strategy over the years has been to make ties with start-up companies, mainly in the technology market, which it then advises on financing deals and their subsequent IPOs.
“The idea is that you then have significant ties with the company to continue advising it in other areas of the firm,” says a West Coast recruiter. “The likes of Climan are the guys that bring in the big deals that are critical to this process.”
Dewey clearly sees the value of bringing in an established public company M&A team, and there is no doubt in the US legal community that Climan and Flaum are a big loss for Cooley.
That said, Cooley CEO Joe Conroy says that his firm’s M&A practice, which is made up of more than 60 lawyers, remains strong.
“The practice has an impressive deal list, including big-ticket M&A experience advising Fortune 500 companies,” he says. “We actually see this as an opportunity to expand our M&A practice as it continues to be a growing need for many of our clients.”
Cooley is not the only West Coast firm to suffer from the predatory nature of New York’s elite.
In October last year an O’Melveny M&A team made up of partners Steve Camahort, Michael Kennedy and Michael Dorf defected to Shearman & Sterling’s San Francisco office. The defections were seen as a real blow to O’Melveny and left the firm’s San Francisco-based M&A team thin on the ground.
While at O’Melveny the trio advised on big-ticket M&A deals, including Sirna Therapeutics’ $1.1bn sale to pharmaceuticals company Merck and Vector Capital’s $634m bid for technology security company SafeNet.
“These teams are real assets to any US firm, so it’s easy to understand why New York firms have moved in hard on this space,” says a West Coast partner. “It’s not clear what the West Coast firms are doing to combat this.”
Despite this, Conroy at Cooley remains defensive. “We have deep roots in the Valley and pose a significant competitive challenge to firms that seek to play here without our history, credentials, capabilities and connections.
“Of course there’ll be New York firms that place huge and risky financial bets on acquiring talent in the market, and those firms will join the ranks of our competition here.”
It looks as if the newcomers to Silicon Valley could have a fight on their hands.