Will Ashursts' Continental push come too late to make its mark?
10 June 2002
Ashurst Morris Crisp is making a serious, if belated, push for the Continent. A foray into the Spanish market last November gave the firm a presence in a fifth key European jurisdiction.
However, Ashursts has had a foothold in Europe for several years, but only the longstanding Paris office has ever been a serious player. Two new German laterals last month and a raid on Belgian firm Liedekerke Wolters Waelbroeck Kirkpatrick & Cerfontaine in March finally gave it the personnel for a credible northern European network.
When the merger between Ashursts and Latham & Watkins broke down in spring 2000, Ashursts resolved to push full steam ahead with European expansion. The firm's senior partner Geoffrey Green maintains that in spring 2002, the firm's overriding priority is still to conquer the Continent. "For the firm as a whole, European expansion is the number one aim. Any question of US capacity is only to assist with that expansion," he says.
Leaving that issue aside, Ashursts' rationale for attacking the Continent is clear - it feels it has no choice. The firm's German managing partner Nick Angel says bluntly: "The most remunerative deals are cross-border and to do those deals you need to be in every jurisdiction."
Germany was the first priority - when Angel arrived in Frankfurt two years ago, the firm had just 23 lawyers. The German practice this week hired Rainer Eichholz, the former managing director of global debt at Dresdner Kleinwort Wasserstein, the investment banking arm of Dresdner Bank AG. His appointment follows the arrival two weeks ago of highly-rated M&A partner Jörg Kirchner. Kirchner was poached from Baker & McKenzie, and it is understood he has brought with him key clients including pharma giant Aventis.
The two new hires bring the numbers up to 60 lawyers, including 12 partners, two of whom were made up from assistant level this year. Angel is particularly happy with the firm's ability to attract quality at more junior levels. "A triumph of the past year has been the recruitment of assistants," he says. "We ran a huge campaign to attract new junior lawyers." The recruitment has given the firm an unusually high leverage ratio for Germany.
Because Ashursts arrived so late in the game in Germany and could not find a culturally acceptable merger partner, the firm has been forced to look beyond the obvious when seeking partner laterals. A partner at Herbert Smith's best friend Gleiss Lutz spelt out the difficulty, saying: "The problem for the firm is to attract top German lawyers because Ashursts is not particularly well known. Without them, no firm can get good work."
Allen & Overy (A&O) has successfully followed a strategy of organic growth and small-scale lateral hires, which is similar to Ashursts expansion method. It opened its Hamburg office primarily to capture a rated group of White & Case lawyers. The firm also took on highly rated in-house Deutsche Bank lawyer Neil Weiand. The magic circle firm has already proved the strategy can work if played right.
Ashursts has been forced to be creative and the recruitment of Eichholz, as an investment banker, is a prime example of this. Green claims: "He has huge numbers of contacts and it's more common for there to be movement between the professions in Germany."
Ashursts also opened in Munich not for strategic reasons, but primarily to capture Karl Wach and Richard Engl, two disaffected lawyers from Linklaters & Alliance. However, the second base paid off later allowing Ashursts access to a new pool of talent from which it drew Munich lawyer Kirchner.
For Ashursts the challenge now is to turn the bodies into work. According to Angel, the plan for the next 12 months will be about consolidation and growth of the business. The firm has three finance partners, seven corporate, one litigation and one tax. Angel says around 50 per cent of the firm's work is sourced in Germany, while the rest comes from London. Around 70 per cent of the total is corporate.
Although the firm has a rated private equity base, the corporate department does not register in the 2001 Thomson Financial figures for legal advisers on deals with German targets. UK rivals Norton Rose and Lovells, which have better established German practices, feature, as does Latham, which started to develop Germany even later than Ashursts. Anecdotal evidence suggests that Ashursts does not yet have a profile outside private equity. Although the people are in place, Ashursts' German office must boost its domestic and cross-border transactional work to prove its worth.
In Belgium, the capture of two partners from Liedekerke has more than doubled the size of the firm's competition and trade practice. This is a crucial boost to all Ashursts' European offices because a credible competition practice is essential for major cross-border deals.
Prior to the laterals, the head of Ashursts' Belgian competition practice, Julian Ellison, was alone in Brussels apart from Mark Clough QC, who split his time between there and London.
The new partner hires, Alexandre Vandencasteele and Denis Waelbroeck, also took a team of eight assistants. Although the office needs at least one more partner, the new hires could give Ashursts the same standing as Lovells and Norton Rose, which has itself suffered major defections to Howrey Simon Arnold & White. But although the Liedekerke partners are rated, their capture made less of a splash in the Brussels legal community than Latham's four-partner raid on Wilmer Cutler & Pickering.
According to Ellison, his Brussels competition and trade team was self-sufficient before the new hires. It sourced only between 10 per cent and 15 per cent from London and sent more referrals than that back.
Ashursts also has a small Belgian domestic practice that gives referrals to the competition team. The Liedekerke lawyers, and in particular Waelbroek, have an excellent reputation for state aid and cartel work, but they are not M&A specialists. However, the upside of a broad spread of work is that the office will be less of a drain on London, a problem for the Brussels offices of many US and UK firms, including magic circle practices.
Ashursts still needs to plug a few gaps, but the firm has the basis for credible offices in the key northern European centres. Its culture would never allow it to adopt an aggressive Clifford Chance-type strategy, even if it could at this late stage. Green says: "We're not persuaded by a model that says you have to be everywhere. There are firms on that treadmill that can't get off it."
What Ashursts must prove quickly, however, is that Germany, Brussels and the other outposts can match Paris for quality work and, ultimately, revenue. That's some challenge.