Why Kirkland’s PE swoop is the start of an aggressive new era
14 June 2010 | By Matt Byrne
14 July 2014
16 December 2013
14 April 2014
15 July 2014
20 February 2014
Chicago firm emulates Weil Gotshal with UK investment.
The big splash hires of Ashurst corporate partners Gavin Gordon and David Arnold by Kirkland & Ellis (TheLawyer.com, 1 June) has all the hallmarks of a new chapter for the Chicago-headquartered firm’s City office.
The firm’s last big-hitting private equity appointments were those of Raymond McKeeve and Graham White, who joined from Linklaters in 2006. Two years later McKeeve left to pursue an ultimately short-lived career with property tycoon Robert Tchenguiz, only to pop up last year as head of Berwin Leighton Paisner’s private equity group. White remains a partner in Kirkland’s London office.
“This looks like a defensive move,” says one rival partner. ”Kirkland wants to protect its existing US client base. It’s a good move for Kirkland, and it certainly looks like a change of gear.”
That view is not shared by the head of Kirkland’s London office Jim Learner. He argues that his firm is not changing its strategy, but is simply doing what it has been doing in Europe for years in relation to private equity. Kirkland has seen what Weil Gotshal & Manges has achieved and wants a piece of it.
“We already represent a number of both US and European houses and this is just a way of further extending our capabilities,” insists Learner. “This move is both defensive and offensive.”
Gordon and Arnold’s key clients include Apax Partners, Cinven, Blackstone, Candover, LGV Capital and Hutton Collins, all of which will be doubly in Kirkland’s sights once the duo turn up for work. Their start date is still to be confirmed, but is expected to be some time in the autumn. (We explore Ashurst’s side of the story on page 13.)
And while restrictive covenants and other obligations should put a block on Kirkland looking to tap up any of Ashurst’s associates who might feel like following Gordon and Arnold, in the long term there is not a lot the firm can do to prevent some of its junior lawyers moving over to its rival.
It may not happen, of course, but Kirkland has a fat chequebook and is not shy about using it.
Learner refuses to discuss compensation, although he cannot resist saying: “Obviously we’re a profitable firm.”
‘More so than Ashurst,’ Learner might have added. Last year the UK firm posted an average profit per equity partner (PEP) of £673,000, around $970,000 at the current exchange rate (the signs are that Ashurst’s PEP for 2009-10 will be flat at best).
In contrast, Kirkland’s PEP in 2009 stood at $2.5m.
So there is no doubt Kirkland has the ability to pay for talent. It also believes it has a significantly better platform for the kinds
of deals its two newest partners will be hoping to win later this year.
“Our platform should be of significant advantage to Gavin and David,” says Learner. “We have a strong borrower-side finance practice, strong high-yield and a large global footprint. We’re used to working on multijurisdictional deals.”
That platform will be critical to the chances of Gordon and Arnold delivering. And make no mistake, they will be under considerable pressure to do so.
“When you join a new office, if everyone knows you’re being paid more than them then chances are most people who aren’t being paid as much might not respond too positively,” suggests one rival.
But if the pair are hoping for some reassurance, then for now at least they need to look only as far as new London boss Learner.
“We do these things because we’re looking to make long-term investments, not just 12 or 24 months,” Learner says. “We want entrepreneurial people who fit with our culture and who’ll contribute for 10, 15 or 20 years. It’s not about what you deliver on day one.”
Willkie grows bankruptcy with Links, Quinn captures
Willkie Farr & Gallagher took a significant step towards building its nascent creditor-side bankruptcy practice last week when it hired two partners in New York from Linklaters and Quinn Emanuel Urquhart & Sullivan.
Linklaters litigator Mary Warren and Quinn Emanuel partner Joseph Minias have joined Willkie’s business reorganisation and restructuring department as partners.
Their appointments follow Willkie’s coup last month of hiring former Clifford Chance partner Margot Schonholtz from Kaye Scholer, whose practice has been estimated conservatively as being worth around $20m (£13.7m) a year.
Willkie has long had a well-respected debtor-side bankruptcy group in the US, but bankruptcy co-chair Matt Feldman accepts that it has lacked a big-name, go-to creditor reputation.
“It was a hole we realised would make sense to fill,” says Feldman. “Margot was the first person we reached out to.”
Schonholtz, who joined last month along with fellow Kaye Scholer partner Ana Alfonso, adds that the arrival of Warren and Minias, “two energetic, young but experienced lawyers”, would round out Willkie’s bankruptcy practice and help with the build-out of the financial institutions/private funds group.
Last week’s hires are the latest in a string of major investments made by an unusually expansive Willkie. In addition to Schonholtz the firm took on a team of project finance specialists in Paris from Freshfields Bruckhaus Deringer, three of whom joined as partners.
Willkie’s London office currently remains tiny, with just one partner in Jon Lyman and five associates. The firm does have a formal alliance with Scottish private equity boutique Dickson Minto, however.
“We continue to evaluate London,” says Feldman. “It’s very small and we’re happy with that. We’re a conservative place, which we think is a real positive with the way the world’s changing for law firms.”