After the breakdown of its talks with SJ Berwin, Proskauer Rose decided to go it alone in London. Can it keep its momentum?
Proskauer Rose has suddenly become a centre of gravity in the London cosmos, demonstrating exceptional pulling power over some of the legal industry’s brightest stars.
At the core of this astronomical event is the US firm’s former chairman Allen Fagin, deployed by his successor Joe Leccese in February to spearhead the London office’s exponential growth. This appointment was inevitable given his 35-year knowledge of the firm, his two terms as head of the lateral partner hiring committee and his strategic involvement in the launch of the London base back in 2007.
And so since February Fagin has spent an average of two weeks per month in the City office working alongside London managing partner Mary Kuusisto. He already seems to have worked his magic, with an impressive string of results.
“For the past four years we’ve been interested in establishing a serious presence in London and the question was how to accomplish that in a reasonable timeframe,” he says.
Proskauer opened its London office four years ago with five lawyers. By February this had risen to around 10.
“Once our new recruits all start we’ll have about 30 lawyers,” adds Fagin. “We’ve brought seven partners to the firm in six months, and we have others in various stages of the pipeline.”
Proskauer kick-started its hiring spree after its protracted merger talks with SJ Berwin fell apart last November, diminishing the US firm’s hopes of growing in London by combining the firms.
While industry sources suggest that Proskauer has also considered Travers Smith and Macfarlanes for potential tie-ups in the past few years, Fagin says no other UK firm seemed quite the right fit for it once the SJ Berwin talks broke down.
“When it was clear the merger wouldn’t work we had to find another way to grow in London,” he says. “We see London as part of an overall Proskauer thrust to have a significant presence in the major markets of the world. London is a critical market for us and a crossroads for Europe, the Middle East and Africa – and, in many respects, Asia as well.”
A US-based legal recruiter echoes Fagin’s sentiments, saying that Proskauer’s expansion plan for London has been evident for some time.
“Their growth in London is following a clearly defined strategy – they have articulated clear areas and are expanding them,” the recruiter comments. “They understand that to stay competitive they need to shore up London or they’ll lose market share. And they’re targeting individuals.”
The most conspicuous area of growth so far has been Proskauer’s funds practice. This recently attracted three new partners and six associates to join partner Bob Barry, who arrived from Travers Smith in February 2010.
The funds partner raid started in July with the hire of rising star Nigel van Zyl and fellow partner Oliver Rochman from SJ Berwin. Van Zyl reportedly turned down offers from Clifford Chance and other US firms in favour of Proskauer.
“We’re thrilled beyond words that Nigel has joined us and we have no doubt that he’ll more than live up to the advance billing,” Fagin gushes. “He’s an outstanding talent and will be an outstanding colleague.
“Our funds practice really does operate as a team both in the US and globally, and I think Nigel will fit right in. I think the attraction for him was the fact that he was joining a strong team.”
The hire of Kirkland & Ellis funds partner Kate Simpson – who has also previously worked at SJ Berwin – was announced just a day after the van Zyl and Rochman appointments.
“Kate has an outstanding reputation and her roots are in two outstanding firms in the funds arena,” Fagin says. “Her pedigree is superb and she has also had a good relationship with Nigel because they worked together at SJ Berwin.”
Van Zyl and Rochman are also set to be joined by a team of six associates who announced they would move across from SJ Berwin earlier this month.
But it remains unclear as to how many of van Zyl’s clients are prepared to make the leap to Proskauer with him. A source close to the firm questions whether it will have enough work to keep its new funds team busy.
“It can be quite difficult to back-fill behind aggressive lawyer hiring, which the likes of Greenberg Traurig have also discovered,” the source comments. “US firms can often over-estimate the number of clients who will come across. It can be quite difficult to move institutionalised clients.”
Despite the question mark over clients, Fagin is confident that the high-profile hires will propel the practice into the highest echelons of funds players in the City.
“With four full-time partners and at least 10 associates, we’ll have a fully competitive offering,” he asserts. “The group will be comparable in size to – if not larger than – those of Clifford Chance, Weil Gotshal [& Manges], Kirkland & Ellis, Travers Smith and Macfarlanes. So in terms of reaching a critical mass for the funds group, by the time everyone arrives we’ll be there.”
Proskauer’s funds haul follows a raid on Jones Day’s corporate partners in April, including the US firm’s London chief Russell Carmedy and its head of European private equity Michael Nouril.
Other key partner hires have included corporate regulatory partner Peter McGowan, who joined from Berwin Leighton Paisner in July.
Fagin admits that some hires have been opportunistic while others have been more targeted, but the concentration on certain practice areas is no accident.
“Our strategy was to focus intensively, and probably exclusively, on areas of the practice where we believe we can effectively compete in this marketplace with anyone else,” he says. “It’s the opposite of having a full-service office and trying to be all things to all people, which we think is a strategy for failure.
“The markets we’re focusing on need to be practices where we already have a well-established brand in the US, where we can leverage off that to create a similarly well-established practice in the UK and where there is a clear, pre-existing client demand in the UK. It’s not rocket science. It’s about being prudent and playing to our strengths.”
Fagin believes these strengths fall into five areas: alternative investment finance; transactional and private equity; capital markets, with an emphasis on US capital markets; finance, with a focus on junior capital finance (otherwise known as mezzanine finance); and mid-market M&A, covering deals mainly within the $100,000 to $1bn range.
“These are the areas we’ve been concentrating on, and then there’s another concentric circle of practice areas necessary to operate this including tax, our regulatory capability, acquisition finance and employment,” Fagin adds.
Commentators outside the firm agree that its strengths lie in funds and junior finance, but seem sceptical about its strength in M&A, as well as its choice of Carmedy and Nouril to boost that practice area.
“Globally Proskauer is a leader in funds, but in M&A they are just not a player at all,” says one legal commentator. “They might be hiring people in M&A but it’s not going to worry the likes of Skadden [Arps Slate Meagher & Flom], and Carmedy and Nouril are not exactly going to set the world alight.”
But Fagin stresses that Proskauer’s City office will never hire for hiring’s sake, and that he is targeting individuals he regards as the best lawyers for each key practice area.
“We have been, and in some respects still are, a relatively new offering in the London marketplace,” he says. “How quickly we grow in each of these areas is going to depend on our success in identifying top-quality people, but we’re not looking to hire to fill spots – we’re looking to hire outstanding lawyers and colleagues.”
Although Fagin will not give specifics on how each recruit has arrived at the firm, he admits he is pleased with the market’s response to Proskauer’s recruitment drive.
“There are some people we’ve approached, some who’ve approached us and some who’ve been brought to our attention,” he says. “What’s interesting is the number of serious partners who’ve approached us, and that’s accelerated as it’s become clear that we’re here and we’re serious. There’s a sense in the market of what we’re trying to accomplish.”
But questions have also rippled across the London market as to whether it is more than a coincidence that three former SJ Berwin funds partners gravitated towards the firm after last year’s merger talks.
Although he will not divulge any details about the merger negotiations or any agreed ’hands-off’ period between the firms, Fagin says Proskauer and SJ Berwin have enjoyed a close relationship for almost 20 years, born out of the dying embers of Boston firm Testa Hurwitz & Thibeault, historically SJ Berwin’s US ’friend’.
“A large number of our partners came from Testa Hurwitz, which was a top-quality firm,” Fagin says. “And there are, or have been, a number of mutual client relationships whereby we’ve been doing the US work and Berwins have been doing the UK work.
“The funds area is also reasonably small and there’s a significant amount of interchange. People see each other at important conferences and there’s a great deal of professional interchange in addition to having mutual clients and, on occasion, being on the opposite side of transactions.”
With funds growth all but ticked off and the corporate team strengthened, Fagin says hires in other practice areas are already in the pipeline.
“We don’t have a pecking order of priorities, and we’re very much guided by opportunities that come along and how they present themselves,” he says. “We have active searches going on and conversations in each of these areas.”
City recruiters predict hires in Proskauer’s tax, junior finance, transactional and private equity practices in the next few months, a prediction that fits with Leccese’s comments when contacted by The Lawyer.
The new chairman, who took over from Fagin in January, confirms that London growth is a big part of Proskauer’s master plan, which also includes expansion in other core jurisdictions including Hong Kong and Sao Paulo.
“London is critical to our strategy, as is Hong Kong,” Leccese says. “We’re continuing to look for capital markets lawyers in the London marketplace and we plan to expand our mezzanine finance capacity as well.”
But Proskauer’s London recruitment push is not without its critics. A source close to the firm is sceptical about its stop-start approach to growth since launching the City base.
“Their recruitment has tended to consist of a ’go’ button and a ’stop’ button, and they’ve been a bit lurching in strategy,” he argues. “They’ve now pushed the ’go’ button and are really going for it, but it’s quite aggressive growth.”
The intense push for new talent also raises questions about the integration challenges thrown up by a large clump of lawyers arriving all at once, particularly when most of Proskauer’s leadership is still coming from the US.
Fagin acknowledges the importance of integration and foresees a time when his current recruitment drive will give way to a stronger focus on bedding-in the new teams.
One of his first homogenisation techniques will be the deployment of partners and associates from the US to spend extended periods in London.
“As the London office grows I expect us to be posting US partners to the office, either on a permanent or a long-term temporary basis,” Fagin reveals. “One of the key issues is how fully the office is integrated, and I’m talking about professional and practice integration as well as social and personal integration. Forging bonds as a partnership has enormous value.”
Although it is too early to say who might be coming over, or to pin down Fagin or Leccese on numbers, Fagin adds: “I don’t know if it will happen by the end of the year, but it will be soon. There’ve been several people with whom preliminary discussions have been had, and it’s likely we’re looking at transactional lawyers. I don’t know how many – Joe will make that decision – but it’s likely we’ll have some associates at partner level as well.”
Proskauer’s renewed focus on London does raise the question of why it did not wake up to the importance of its City office earlier.
Sources close to the firm describe a lack of interaction between the New York headquarters and the London office during London’s formative days, meaning there is now a sense of making up lost ground.
“Having Allen spending so much time in London is probably a good thing because he can keep it on their radar screens over in the States,” says one insider. “Maybe the downturn has made US firms realise that growth in the next 10 years will come from far more international markets, and London can be a better hub in terms of these emerging economies than the States, which can be more inward-looking.”
In other words, growth in London is a good thing for Proskauer strategically. Quite why it didn’t realise this earlier is a mystery.