When Clifford Chance’s communications, media and telecommunications (CMT) group head Joachim Fleury transferred to London from Amsterdam in 2001, there was much fanfare about a global assault on the technology market.
Fleury was one of the firm’s biggest rainmakers. He made his name on the back of the telecoms M&A boom and was seen in some quarters as having the potential to become the firm’s first non-Brit managing partner.
When Fleury flew into London, the team comprised 10 partners and 40 associates. Just three years later, it has three partners and 14 associates.
Any management ambitions that Fleury held will be on hold until he gets the practice on track again. Nobody should doubt that he’s strong enough to do it, but with David Childs swinging the axe at non-performers, he’ll have to do it fast.
So where did it all go wrong? When data protection specialist Christopher Millard left for Linklaters in May 2002, eyebrows were raised at a rare intra-magic circle move, but few predicted doom and gloom. What has followed is something of an exodus – of partners, associates and clients.
Clifford Chance partner Nick Elverston became the latest partner to leave the firm’s troubled CMT team when he announced his departure for Herbert Smith earlier this month. Elverston was made up at Clifford Chance on the back of the internet boom. While his practice has evolved since those heady days, it is telling that he can only see his career evolving at another firm. He is the latest partner to leave in what has been a year of turmoil.
“A lot has happened in a year. We had Tim [Schwarz] leave and Nick leave and we’ve reorganised, but that’s just a different way of looking at the market,” admits Fleury.
Media and IP partner Daniel Sandelson was Fleury’s number two and head of the UK group. He resigned leadership of the group earlier in the year; insiders say he had grown tired of the conflicting personalities. He promptly headed off on sabbatical. Fleury is welcoming him back with open arms, claiming that “he’s reinvigorated after being released from management responsibility”. There certainly should be less conflict, as the group is almost unrecognisable from the one he left just three months ago.
Following Sandelson’s resignation, Fleury and telecoms regulatory partner Liz Hiester failed to form a team and Hiester left for the competition group. Clifford Chance’s PR team tried to spin the reorganisation as a realignment to reflect changes in the marketplace, but the truth seems to be that the CMT group was a bunch of talented individuals that just didn’t get along. In addition to Hiester’s move, IT partner Raj Parkash was shifted out of the profit centre.
This reorganisation also claimed the jobs of six associates. Again the PR people got terribly upset, claiming that there were no “formal” redundancies. Other sources claim that six heads had to go, while another source in senior management said that three left of their own volition while three were asked to leave. An associate in the group confirms: “We had a number of senior figures and only so many could be offered career progression.”
The group is now woefully understaffed. Another junior associate left to join Schwarz at Linklaters and Sandelson has an associate on secondment with the London 2012 Olympic bid. Fleury insists that he is recruiting, but Clifford Chance is not looking so appealing right now. With former Allen & Overy (A&O) IT legend Laurence Jacobs setting up a new team at Milbank Tweed Hadley & McCloy, Fleury faces stiff competition if he wants to recruit the cream of the market.
Staffing issues have not been the group’s only concern. Three years ago, when the group was at its peak, it could rely on clients such as Deutsche Telekom, Global Crossing, MCI and Energis. The latter three no longer exist in their former state, while the Deutsche Telekom relationship has been hit by the departures in Germany of relationship partner Peter Nägele and litigation partner Bernd-Wilhelm Schmitz (now at Latham & Watkins), who handled all of Deutsche Telekom’s litigation.
It has been a tough market for all firms involved in the technology and telecoms sector. Following the dotcom crash, many companies have taken a great deal of commercial work in-house. The technology, media and telecoms (TMT) departments of most law firms have responded by jumping on the outsourcing bandwagon. In David Griffiths, Clifford Chance has a partner with a superb reputation in this arena, but it is a difficult market for the magic circle to compete in.
Laurence Jacobs’ success at A&O proves it can be done, but it’s not easy. IT suppliers are generally unwilling to pay top whack magic circle rates. One in-house lawyer describes their prices as “absolutely unaffordable”. Many suppliers have piled into the public sector and law firms have followed, dragging rates down further. DLA has been particularly successful in this arena, generating much work out of Leeds, while firms such as Field Fisher Waterhouse and Masons offer a cheaper, City-based alternative.
Linklaters’ willingness to invest in Millard and Schwarz shows a belief in the sector and a belief in Clifford Chance talent, but can Clifford Chance’s remaining CMT partners recreate their glory days?
Fleury insists that the group is busy with clients such as Tele2 (and others which couldn’t be named) setting up mobile virtual network operator (MVNO)-type operations. He also says that the private equity market is generating M&A activity and that the London group was working on international telecoms projects.
Fleury is a fantastic corporate lawyer with an unrivalled knowledge of the European telecoms market. Few would doubt that he can rebuild his own practice, and a slimmer department must mean fewer management hassles. But if he still holds the ambition of a global, full-service CMT group, it is likely to be a pipe dream.