Ashurst has never been shy of growing via laterals.
Throughout the 1990s and during the past decade that has been a cornerstone of its growth. Now the firm’s senior partner Charlie Geffen has been forced to address a sense of unhappiness over its ’scattergun’ lateral hiring policy, an issue exacerbated by the recent glut of partner exits.
For a significant number of current and former Ashurst partners that hiring policy doesn’t get much more scattergun than its swoop on a group of McKee Nelson structured finance lawyers in the US last year. This was an extraordinary departure for Ashurst. It launched an on-the-ground presence in New York and Washington DC at the height of the downturn and at a time when the firm was chucking partners out by the bucketload.
Last year the strategic U-turn – the brainchild of finance partner Erica Handling – could be pushed through at board level by a bullish Geffen with the sales pitch that the market wasn’t good but would bounce back eventually.
There was always going to be a need for structured products, whether traditional or new, went the argument. But while the official line today from managing partner Simon Bromwich is that the office is doing fine, numerous sources close to Ashurst have described it as “disastrous”. Frankly, in the current environment, no one should be overly surprised if, as one former partner puts it, Ashurst’s US gamble is “losing money hand over fist”. Structured finance deals are hardly rocking the market.
What should be more worrying is that the stateside launch is also said to be losing Ashurst much of the referral work it used to pick up from a raft of its US friends. Ashurst used to sell itself on not having an office in the US. With the McKee deal it suddenly became a different proposition.
“No one believes them when they tell them it’s only a structured finance play and they’re not competing with them in other areas,” says a former partner.
Arguably much of this pain would go away if Ashurt’s PEP returned to the glories of days past. Signs are, however, that this year’s figures will be at best no better than last year’s £673,000.
Long term, the McKee move may just come back to haunt Ashurst.