The Weil thing

One US firm has consistently stood out in the London market: from its splashy introduction in 1996 to its current status as a private equity powerhouse, Weil Gotshal & Manges has been one of the few to break through the City’s glass ceiling

In the decade or so that Weil Gotshal & Manges has been open for business in London, the office has attracted a series of big personalities. This has come at some cost of personnel, but it shows that the cult of the individual can help a US firm build up a brand within London, so long as New York is happy that that individual serves the transatlantic business.

The road to embed itself in the City has been bumpy, but it is a fascinating case history of how to build a £54m-turnover business in one of the world’s most competitive legal markets. And it has pivoted on the management relationship between New York and London.

The corporate key

“Not every firm wants to be successful in its own right in London,” says Weil London managing partner Mike Francies. “For Weil, London’s an important financial centre and being successful here is important.”

Corporate has been the key to this. Last September The Lawyer 100 Annual Report showed that corporate was the strongest practice group, representing 51 per cent of the office’s turnover, or £27.5m. However, transactional business can bring its own vulnerability: London experienced a 10 per cent drop in revenue in 2006 due mainly to closing fewer than one in three corporate transactions, despite having secured 160 mandates in 2005.

Private equity was the driver behind the original launch. Weil London was set up in 1996 in response to key US private equity client Hicks Muse Tate & Furst (now HM Capital) setting up in Europe. The New York office had for a number of years been Hicks Muse’s favoured firm.

“They were worried,” a former Weil partner confides. “They had to launch a London office to rescue the relationship. What they don’t want is for London to become too successful and rival New York – that’s not the purpose of the office.”

That comment encapsulates the tensions around the office, which were there right from the start. Opportunism has been the hallmark of Weil’s transatlantic business-building, and yet the huge opportunism displayed by Weil in hiring Maurice Allen out of Clifford Chance and letting him build a finance, rather than a corporate, practice was nearly its undoing.

The turmoil around the end of the Allen regime has been well documented by The Lawyer. Weil insiders dismiss the Allen years as ancient history (although they grudgingly admit that Allen’s rainmaking skills propelled the UK office to enormous visibility, which is half the battle for US firms in London).

But the departure of Allen and much of his team was a perfect example of how a New York-London relationship can go badly wrong. New York partners, led by Steve Dannhauser and Tom Roberts, were simply not happy with London’s independence, and made their feelings clear. “Maurice wasn’t happy with the intense management coming from the States,” recalls a former partner.

Allen’s resignation was followed by a spate of high-profile exits, putting Weil’s newfound stature in doubt. Helen Burton, who dealt with much of Hicks Muse’s European work, defected for Ashurst in 2001, and Allen’s successor as banking head James Chesterman left for Latham & Watkins.

With its UK debt capability almost completely annihilated, Weil struggled to keep hold of its most important client, Hicks Muse. Considering that the point of launching in London was to serve Hicks Muse when it expanded into Europe in the late 1990s, losing partners responsible for the client would be a disaster.

And yet the departures gave Dannhauser and partner Tom Roberts the chance to rebuild the London office in New York’s image. The focus was now firmly back on corporate.

“It changed a lot for us in London,” admits Francies. “Mobilising the global client base and expertise in private equity was essential to building strength in the office and across the firm.”

The debt practice was then left with US banking head Ron Daitz, who had relocated to London at the end of 2000 (he has since moved back to the US).

At the time of Burton’s departure, Daitz told The Lawyer of his concern for every client in the office, but affirmed his faith in associate Richard Ginsburg, who is now the relationship partner for the former Hicks Muse European arm Lion Capital.

“Richard happens to know them very well, so I’d assume they’d be comfortable with him, as they have been in the past. Resources have always been a problem in this office,” Daitz told The Lawyer in 2001.

Ginsburg, a US lawyer who arrived in London in 2000, has been a vital link between the debt-focused practice of the Allen years and the corporate business at Weil now. His borrower finance practice has underpinned key transatlantic relationships for the likes of General Electric – and also the remnants of HM Capital in the shape of Lion Capital, for which he has become relationship partner.

Lion Capital, which spun out of HM Capital in early 2005, was a vital win. After relying so heavily on its US relationship to make its London office profitable when the company began its assault on European markets, Ginsburg had to secure the business.

“Lion Capital is an excellent longstanding client that has a global presence,” says Ginsburg. “This relationship is crucial to the firm office, but also to the whole firm.”

Ginsburg may have shored up Weil’s Lion Capital relationship, but he has had to fight off competition in the shape of SJ Berwin private equity partner Steve Davis, who has advised on a number of mandates, such as the £813m acquisition of Dutch retail chain HEMA from Kohlberg Kravis Roberts in June this year. But such was Ginsburg’s impact that he made partner at the end of 2001 in the wake of the finance departures and with clear buy-in from New York. That intake saw another internal corporate promotion in Will Rosen, who left the firm earlier this year.

In truth, the relationship between New York and London is clearly demonstrated in the lateral hiring strategy. New York has been comfortable with big-name laterals, but less so on internals. Mark Soundy arrived from Travers Smith in 2004, while Francies was in talks down to the wire with Clifford Chance stars Matthew Layton and James Baird back in 2003.

In 2005, as US funds were piling into Europe, New York decreed that more senior talent in London was imperative. It therefore sanctioned a major headhunting initiative and finally landed Lovells private equity star Marco Compagnoni and senior associate Jonathan Wood in February last year, with Wood coming straight into the partnership. Compagnoni’s relationships with Advent, Barclay Brothers, HgCapital, Terra Firma and 3i have helped hike the proportion of corporate relationships originating in the UK to 75 per cent.

The arrival of Compagnoni and Wood has taken Weil to another level in the City, particularly after Compagnoni’s role for Terra Firma on the Alliance Boots bid – one of the first times a US firm has had a role on a bid for a FTSE100 company. Meanwhile, Wood has scored UK work from key US client Providence Equity Partners.

“It’s always a goal to increase the amount of work generated from London, but we think the mix is right,” says Compagnoni. “We refer work across the network and this has developed very well.”

But New York continues to keep a close eye on London, particularly after the UK practice only managed a 4 per cent increase in revenue in 2006. In March Weil flew in Boston managing partner James Westra and co-chairman of the corporate practice group Barry Wolf to help attack the UK private equity market.

Westra and Wolf, both members of the management committee, were brought in to build on the London office’s strength in private equity. Make no mistake, this strategy is not being formulated on a local level: the New York HQ is firmly in charge and overseeing the process.

This has been reflected in the tight grip on the partnership. Even though Francies, Germany managing partner Gerhard Schmidt and France office head Claude Serra all occupy spots on the 17-member global management board, gaining approval for promotions seems to be very difficult to achieve in Europe.

The Allen years saw plenty of homegrown partners, but after his departure things changed. “Maurice is a very persuasive person,” says a former partner. “When he left a lot of people were passed by for the partnership.” Promotions did indeed slow, with just five made up since 2004.

Last June The Lawyer reported that senior associates Kevin Santry and Gudrun Steele left after being promised partnership, only to be told that the budget could not accommodate their promotions. Other associates who left include Ivan Duggan, who joined outsourcing company EDS in June 2006, and Alex Hand, who defected to Eversheds three weeks earlier. David Willbe left to join former partner Wayne Rapozo and Graham Defries at Dechert in May last year.

“The people at the top in the States will always want to keep London at a certain size and level of success,” claims a former partner of the firm. “They don’t want an office that will rival New York, so they keep numbers down and control growth.”

However, Francies and his colleagues insist that the firm incorporates a truly global and ‘one-firm’ approach to management and clients. “It’s the same with any international firm: clients are global and therefore you provide the service in the jurisdictions they need you in,” says Francies. “We look after the client in the London office and they’re taken care of by partners in other areas as well.”

From 2000’s chaos to a major private equity brand in 2007, Weil has been a transatlantic object lesson in how to create opportunities out of turmoil. With the deals slowdown already hitting transactional practices, New York may have to think carefully about how to nurture its