It was never a question of if. It was a question of when. Tony Keal’s resignation from Allen & Overy (A&O) last Wednesday had been on the cards for more than 18 months.
Anyone with even a fleeting knowledge of A&O partnership politics knows that Keal has had a series of run-ins with the management. Those discussions were heated – to call Keal combative is an understatement – but they were not personal. They were philosophical, and they went straight to the heart of the firm’s strategy.
The celebrated email, which he mistakenly sent out to all lawyers within A&O (see The Lawyer, 27 June), highlighted the tensions. Should A&O recognise differing financial performances between departments and reward fee-earners accordingly? Should A&O invest in the global business at the expense of higher profitability? Keal’s devastatingly honest counterblast to management also exposed something A&O assistants had suspected: that partnership was becoming increasingly out of reach.
Keal will be more at home at Simpson Thacher, which has a conservative global model – it is New York-focused with only three offices outside the US – and is highly profitable.
It suits some within A&O to dismiss Keal as brilliant but wayward. Yes, he could certainly be difficult, but let’s not forget that this is the man who virtually invented acquisition finance as a discipline in the City. Others argue that his aggressive negotiating style is outdated. Well, the banks don’t like him much, but sponsors adore the way he can kick the lenders into submission. Hence KKR’s unwavering loyalty to him on UK debt financing. It was no surprise that once Keal decided to leave, he would go to KKR gatekeeper Simpson Thacher – and he’s likely to take all the UK work with him.
This is an era when banking lawyers are following Keal and reinventing themselves as sponsor lawyers; look at Alan Inglis at Clifford Chance, who has suddenly popped up drafting Permira’s monster term sheet. In this context, Simpson Thacher is building a formidable UK team.
Back at A&O, Keal protégée Jackie Evans is isolated in Canary Wharf, and the firm’s acquisition finance offering is now dominated by the ex-Norton Rose laterals – with Tim Polglase the elder statesman and Robin Harvey the rising star. The other homegrown partners (the outstanding exception being Stephen Gillespie) have nowhere near the same sort of name recognition outside the firm. A&O may miss Keal more than it thinks.