US firms in London are ramping up their trainee schemes as the lateral recruitment market in the City begins to run dry.

Shearman & Sterling has boosted its trainee intake by 80 per cent, from 10 in 2006 to 18 in 2007, while rival US firm Cleary Gottlieb Steen & Hamilton plans to increase its annual intake of trainees in London by two-thirds during the next three years.

Shearman London managing partner Kenneth MacRitchie has pledged to shun star lateral hires in favour of an organic growth strategy fuelled by internal promotions.

MacRitchie said: “US firms in London need to build up via lateral hires. But it’s not a sustainable model going forward.

“The point is we’re now approaching the next stage of the office’s development. We’ve matured to enable us to strengthen internally.”

Cleary, which has 12 trainees this year, will take on 14 next year, 18 in 2009 and 20 in 2010.

Cleary corporate partner Tihir Sarkar said: “We feel that by focusing on trainees we can develop a loyal team in London that’s grown up through the ranks.”

Shearman launched its formal trainee scheme in 2002, considerably later than firms such as Sidley Austin, which first started recruiting trainees in the late 1990s, but much earlier than others such as Latham & Watkins and Kirkland & Ellis, which launched formal schemes during the last two years.

Morrison & Foerster and O’Melveny & Myers welcomed their first newly qualified associate this autumn.

Shearman’s move follows some retention issues in London. In the past two years nine former Shearman counsel have left to make partner elsewhere.

Shearman built up its London office via a number of star lateral hires in the late 1990s and early 2000s, but is now looking to build organically as it has found it increasingly difficult to recruit the most talented UK lawyers.

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