The roles were reversed within the magic circle in New York last week. While Allen & Overy (A&O) and Clifford Chance made their presences felt with new lateral hires, Linklaters suffered its first group defection.
Linklaters’ loss of three lawyers in its New York office, including US head of corporate Mark Palmer just two years after he joined the outpost from Stroock & Stroock & Lavan, may signal the end of the firm’s winning recruitment streak.
Unlike Clifford Chance, which has been shedding partners at an extraordinary rate since its merger with Rogers & Wells in 2000, or A&O and Freshfields Bruckhaus Deringer, which have made little headway in the city in terms of headcount, Linklaters has been recruiting up a storm in the past three years.
Linklaters has successfully implemented an aggressive growth strategy, increasing from 50 lawyers at the start of May 2004 to 108 lawyers last month – that is, until last week’s defections.
As a US recruiter warned: “The losses may be a one-off, but it may also unsettle the rest of the team.”
Linklaters was already showing signs of waning momentum even before the defections, having only made one lateral partner hire in New York in 14 months and losing finance partner Kevin Hall to Reed Smith earlier this year.
But rather than being a sign of dissatisfaction, it is likely that last week’s losses were politically motivated. Word from the well connected in New York is that Palmer was cajoled into the move by a savvy client interested in developing closer ties with former New York Mayor Rudolph Giuliani, who is believed to have his eye on the presidency.
That is because Palmer and his team of two Linklaters associates joined Bracewell & Giuliani, the Houston-based firm, formerly known as Bracewell & Patterson, which made a splashy Manhattan launch last year by bringing aboard Giuliani as a name partner.
Political leanings aside, Linklaters’ losses are in direct contrast to Clifford Chance, which has been reconfiguring its US operations. The firm has downscaled its post-merger operations to 311 lawyers, 90 fewer than two years ago. But it is now looking to rebuild its offering and has made a series of hires, most recently that of finance and restructuring partner John Howitt from Paul Hastings Janofsky & Walker last month.
A&O has also broken its lateral partner hire drought, recruiting structured finance partners Howard Goldwasser and Lawton Camp from the New York office of Orrick Herrington & Sutcliffe last week, its first partner hire since January 2004. A&O has seen little growth within New York across the board in the past two years, adding just 22 lawyers.
But A&O US head of litigation Michael Feldberg claims that the tide has turned. Gross revenue is expected to increase by 15-20 per cent when the firm’s 2005-06 financial results are announced, while “several more [laterals are] in the pipeline” he claims.
However, A&O’s and Clifford Chance’s recent hires have made little impression on the local market. As one US competitor said: “I don’t know who those people are.”
Freshfields has similarly struggled, with its US headcount actually dropping by one lawyer over the same period. As a result, the firm has resorted to drastic measures – namely its targeted US tie-up – in order to boost its transatlantic presence.
However, co-senior partner Guy Morton’s announcement last year of his bold plan to achieve a US merger before the end of his five-year term has met with little interest from US firms. As one New York lawyer put it: “Do I really think they’ll merge? I don’t think so.”
By comparison, a New York recruiter attributes much of Linklaters’ success to the credibility that New York managing partner Paul Wickes has brought to the office. Since joining in 2003 from Shearman & Sterling, Wickes has grown the office from 35 lawyers to its present size of 105 lawyers – post-defections. He is now aiming to double that and claims to have several laterals in the pipeline, putting the firm well on its way to achieving this.
“Notwithstanding this departure, Linklaters are doing much better than ever before,” the recruiter said. “They’re profitable and are recruiting top people – something that we’re still not seeing from the other magic circle firms.”