It’s taken a Scot to kick Davis Polk & Wardwell into shape. Tom Reid’s tenure as managing partner is already taking the white-shoe firm into different territory. As features editor Matt Byrne details in his analysis, Davis Polk had lost its lustre. The Wall Street leviathan had drifted into insularity, with worrying results; investment bank consolidation meant that once-solid relationships with Morgan Stanley and JP Morgan were now colonised by hungrier rivals such as Kirkland & Ellis and Simpson Thacher. Davis Polk still maintained a supremely confident capital markets practice, but was lagging on corporate transactions and had nowhere near the deep M&A bench that Sullivan & Cromwell or Simpson Thacher enjoyed.
In the short time since he has been managing partner Reid has put the firm through an Angelic reinvigoration. Chief among his innovations has been the defensive decision to build an English-law practice in London to shore up its New York-London-Hong Kong capital markets business. Here’s where it gets really interesting for the Brits, since Davis Polk’s strategic redirection has major implications for Slaughter and May.
The firms had always been institutionally close; Slaughters, Hengeler Mueller and Davis Polk had had a longstanding alliance for capital markets work since the late 1990s. Note the pluperfect tense: Davis Polk’s decision to hire English partners over here represents the biggest shift in elite transatlantic referrals for a decade. Sullivan & Cromwell and Simpson Thacher had already taken themselves out of the boutique game with their serious UK hires, but Davis Polk’s U-turn has forced Slaughter and May to exercise its City charms on other Wall Street firms with similarly conservative positioning.
And in this context, the Tom Reid story is also the Brad Karp story. For the major beneficiary of Davis Polk’s rethink has been Karp’s Paul Weiss Rifkind Wharton & Garrison. Like Reid, Karp is (relatively) new at the job, having taken over in 2008 following Alfred Youngwood’s decade-long leadership. Paul Weiss – probably best known outside the US for litigation – has become very, very close to Slaughter and May. I suspect Slaughters sees more cultural fit with Paul Weiss than buttoned-up Cravath. With the dwindling number of top-flight independent firms with which to forge relationships, Slaughters is going to be holding its new American buddies extremely tight.