The heirs of Allen: where the dream team has landed

How about this for an incredible assertion: that a US firm with only a marginal track record in bank lending can build a London finance practice to rival Allen & Overy (A&O) and Clifford Chance.

If you’d have heard Maurice Allen talk in the late 1990s, you might even have believed it was possible. When Allen left Clifford Chance in 1995 for Weil Gotshal, he explicitly set out to capture finance work from the big two. Everyone knows the rest: although Allen’s team made great gains in a short space of time, its house was built on sand. Within just a few years, a full-scale political row between Allen and his New York masters led to the virtual collapse of the London finance practice as partners scampered off in different directions.

Ancient history? Perhaps, but it’s often instructive to study where the Betamaxes of this world went wrong.

After all, since the Weil Gotshal experiment, not one US firm has been bold enough to take on the big boys wholesale.

Since Weil Gotshal, US firms have simply fewer opportunities to make their mark. The most successful – Cadwalader Wickersham & Taft, Shearman & Sterling and Sidley Austin Brown & Wood – now tend to target specific areas of practice, and without making the great claims that Weil Gotshal’s London lawyers once did.

“It was quite a positive time,” says a former Weil lawyer. “All Maurice ever articulated to me was that it was going to be a banking, senior lender practice. I don’t think we thought very hard about it. The economy was doing well and leveraged finance and private equity work was just starting. Every-body had great hopes for the high-yield market and it was the first time that jumbo loans were being done.”

Still, Weil Gotshal managed to snare two mandates that no US firm in London could hope to win now. Apart from telecoms financings, it advised Chase on the senior debt financing of the BOC-Air Products merger and – much more controversially – Barclays Capital on the notorious Kappa buyout. Weil Gotshal’s displacement of Clifford Chance as usual adviser caused huge waves and was due mainly to Allen’s strong relationship with BarCap’s Jonathan Rowland.

But the general perception is that Weil Gotshal did not cover itself in glory on the Kappa deal, mainly because of its fewer resources on execution. At any rate, Clifford Chance managed to leap back on the deal as special counsel, much to Weil Gotshal’s chagrin. (There was some bad feeling between Clifford Chance and Weil Gotshal after Allen’s departure from the magic circle firm, and that’s an understatement.)

The issue of resources – which would come to undermine even Weil Gotshal’s relatively well-stocked offering at the time – is one that still bedevils US firms in banking. In capital markets and structured finance, you can build segmented practices in areas that don’t necessarily require massive City muscle, but with senior lenders, building up a practice is now nigh-on impossible, mainly because of A&O and Clifford Chance’s lock on key relationships.

Another former Weil Gotshal lawyer says: “What we didn’t see was that although US institutions wanted to use US law firms in London, the institutional relationships of magic circle firms with their clients were as established as US firms with theirs. It didn’t matter to Citibank, if you were pitching to them, that they used the US side of the firm.”

And it’s even harder now to build up critical mass than it was five years ago, when the recruitment market was much more flexible. Nowadays, any US firm wanting to prise out a finance partner from a major UK player has to take the long view.

And indeed, despite, or perhaps because of, all the sound and fury around Weil Gotshal in those days, Allen had a gift for persuading promising young associates to jump ship to a start-up. Start-ups were all the rage back in the late 1990s, and many of those young Weil Gotshal lawyers have used their entrepreneurial experiences to eclipse their former mentor.

Take James Chesterman and Sean Pierce, who had worked with Allen at Clifford Chance and were part of the group of aspiring assistants who were inexplicably passed over for partner in 1995. Since Weil Gotshal, the two have made their names from out of Allen’s shadow.
Chesterman has been leading the finance group at Latham & Watkins, one of the most successful US practices in London, while Pierce added a much-needed bank flavour to Freshfields’ borrower-heavy finance offering.

Helen Burton, now one of the City’s rising stars in acquisition finance with deals such as Seat Pagine Gialle on her CV, has been fundamental to the onward march of Ashurst Morris Crisp’s finance practice, as has fellow partner and Weil Gotshal refugee Erica Handling, the acknowledged queen of the collateralised debt obligations market. Ashursts also snapped up fellow former Weil Gotshal partner Siân Withey, who is currently leading the firm’s capital markets push in Milan. Another key player in capital markets, Rachel Hatfield, was one of the few Weil Gotshal partners who ended up joining Allen at White & Case.

After the bearpit that was Weil Gotshal, these lawyers have made canny choices. They virtually all went to firms with some sort of finance track record, and crucially, some support from the management. The heated confrontations which Weil Gotshal’s London finance practice had with the bosses in New York have not been replicated elsewhere.

Still, it all had a happy ending. Weil Gotshal may regret its foray into UK finance work, but it’s now astoundingly successful here in its core US areas of corporate and restructuring. Its ex-partners have done rather better than they thought. And Maurice Allen is still a legend to some.