McDermott loses its way in City as US management keeps shtoom

Last week (17 September) The Lawyer reported on the departure of McDermott Will & Emery corporate rainmaker William Charnley, who defected to rival firm Mayer Brown. His move is the latest in a long line of high-profile departures from the US firm’s London office, leading people to speculate that discontent is rife and morale is low.

Since 2005 a number of key partners have left McDermott, including capital markets partners Andrew Croxford and Andrew Caunt, who joined White & Case’s London office in June this year, and former head of employment Fraser Younson, who joined Berwin Leighton Paisner (BLP) in November 2006, followed closely by employment partner Rebecca Harding-Hill.

With a previous reputation for maintaining a broad range of practice areas and a successful entrepreneurial attitude in the London office, why has it suffered such losses after the spate of high-profile and well-respected hires in 2001?

“It was a great office to work in and we were given far more autonomy in London compared with many other US firms in the capital,” one former partner reminisces. “The problems started when the global strategy began to change and the focus was realigned to structured finance.”

At first this autonomy was appealing to new recruits, who were keen to be instrumental in developing a practice group.

Hires such as Steven Hull, who joined from Nabarro to set up the first pensions practice at a US firm in a London office, and the energy group, headed by Doron Ezickson, reflected the entrepreneurial attitude the firm is so keen to emphasise.

So with an emphasis on individual achievement, has the firm suffered the consequences of a lack of team spirit and integration?

“Entrepreneurship is important to us,” admits London managing partner David Dalgarno. “It’s about balance. We want people who want to build teams with their own achievements, but also work towards a common firm goal.”

The common goal changed when the firm’s current chairman, Chicago-based partner Harvey Freishstat, was appointed in 2004.

“There was a noticeable difference in the direction of the firm,” says a former partner.

Earlier this year The Lawyer (30 July) reported on McDermott’s hire of Ashurst securities and structured finance partner Kate Lamburn, who was brought in with the specific remit of growing a collateralised debt obligation practice.

“The problem is the lack of communication in the London office,” says another former partner. “While we were left to our own devices initially, as time went by management became less willing to communicate strategic decisions and include the rest of the firm in the process.”

The partner adds that the renewed strategy was not communicated formally to the office, but filtered through the firm, providing no clarity of purpose.

“Everybody’s different and the level of communication that people desire or need varies,” says Dalgarno. “Our office is efficient and we have a very strong team. I wouldn’t highlight lack of communication as a serious problem.”

While the London office still incorporates a range of practice areas, including IP, corporate and employment, developing a stronger structured finance team has been a goal for the firm.

“We’re not just focusing on structured finance,” insists Dalgarno. “We’ve been working for years to develop the firm in the range of areas our clients want us to serve. Structured finance is certainly one of these areas.”

Despite Dalgarno’s confidence in the office and the wider strategy, others point to the lack of a structured global vision and an inability to communicate any specific direction.

London’s wobbles are mirrored throughout Europe. The firm’s Munich office suffered a four-partner exodus from its tax department in September last year, despite joining the firm from KPMG just a year earlier. McDermott split with Italian firm Carnelutti Studio Legale Associato in Rome and Milan in 2005 and the firm has failed with numerous attempts to open in Paris.

Dalgarno says: “We’ve spoken to a number of different people about launching in Paris. The reality is it’s an unstable market and it’s difficult to establish a strong presence there. We think our European presence is strong and our referrals have built up over the years.”

But others beg to differ. A former partner says: “People are unhappy because no one understands what McDermott wants to do. How can you contribute if you haven’t been told how the firm intends to grow?”