20 Years of The Lawyer: 1989

UK firms take first international steps

City firms had one thing on their minds in 1989, and it was international –expansion.

Germany was by far the most difficult of legal markets to penetrate, because the state was divided into local jurisdictions and lawyers could only practise in their specific area. But a relaxation of those rules meant that out-of-town firms could finally launch in Frankfurt, for example. It kicked off a spate of German mergers that year; Hengeler Kurt Wirtz of Düsseldorf merged with Mueller Weizel Weisnerof Frankfurt to become Hengeler Mueller, the biggest firm in Germany with 30 partners.

In September that year Freshfieldsconfirmed it was opening in Frankfurt. The following month, Denton Hall linked up with Scherzberg & Undritz of Hamburg, Feddersen Lauleof Frankfurt, Heuking Kuhnof Düsseldorf and Schwarz Schniewind Kelwing Khadjaviof Munich, which were all merging. (Dentons was on an international roll in 1989; it also opened in Tokyo and Singapore and signed an alliance with Thai firm Anek & Associates.)

And at the end of the year Clifford Chancemade a highly significant step into Germany with an alliance and joint Frankfurt office with Stuttgart-based Gleiss Lutz.

Alliances were the first option for the larger firms with designs on Europe. Allen & Overy linked up with top Paris firm Gide Loyrette Nouel in February that year. “It’s one-stop shopping,” competition partner Michael Reynolds told The Lawyer at the time. “We’ve got to be more in line with the times and try to bring in continental law firms.

The old approach was to set up in competition with the locals.”

Even old-school Macfarlanes was infected with the international bug. It created a link with Los Angeles firm O’Melveny & Myers. Senior partner Vanni Treves described it as “a special relationship with bite”.

Further afield, Ashurst opened in Tokyo with Chicago firm Sidley & Austin.

However, some UK lawyers found hunting for an alliance partner tricky. Peter Kunzlik of Hammonds told The Lawyer in 1989: “We visited one Spanish firm which looked like a firm. But when I asked a partner about the others, he said he did tax work but did not know what the rest did.”

Guess how much they earn
An article in the September issue of The Economist estimating City lawyers’ earnings was the talk of the town.

The Lawyer commented: “Partners’ earnings, rankings by estimated fee-earnings, listings by value of clients’ deals or turnover, are all now appearing. Inevitably this information will start to play a significant role in forming clients’ and potential clients’ views of the legal marketplace.”

But 38-partner East Anglian firm Birkett Westhorp & Long blazed the trail when it released a turnover figure of £6m in June. Senior partner Christopher Cocksedge said: “Lawyers are terribly secretive about this. But I think it is a marketing tool.”

Freshfields management gets tough
In a report headlined “City surprised by Freshfields power shake-up”, The Lawyer revealed that John Grieves was to get executive decision-making powers, after McKinsey recommendations.

“My aim is that in five years’ time Freshfields should be indisputably one of the world’s leading law firms,” Grieves said. “Europe is Freshfields’ first priority. Soon we will open a Frankfurt office. And I am proud that the head of our Paris office is a Frenchman.”

It would not be the last time Freshfields turned to McKinsey for advice. In 2003 it hired the consultancy to examine its finance practice.

Why don’t they make them like that any more?
In an interview with Clifford Chance senior partner Max Williams, it was revealed that while he was at school at Pangbourne Naval Academy in 1943, an illicit cigarette he was smoking burned down the library and half the school.
Williams was candid about trying to fend off rumours that the firm was wanting to plant flags in every suitable jurisdiction.

“I’m having great difficulty convincing people that we’re not opening in Edinburgh,” he lamented. “I now don’t tell people I’m going fishing in Scotland, in case they think I’m going to drop off and look for some office space.”

Your information is wrong, honest
In the half-year deals tables of the year it emerged that Slaughter and May, Freshfields and Linklaters handled 52 per cent of public offers worth more than £100m. Clifford Chance could only manage 5 per cent.

Clifford Chance claimed it had internal evidence that the proportion was greater than 5 per cent, but was “unable to make it available”.

An observation from another age
The Lawyer, 10 October 1989: “The ethos of machismo is starting to infect the City firms. All-night sessions, meetings at 7am, longer working hours, bigger salaries, burnouts and nocturnal sandwich trolleys are all becoming features of life in the City firms.”

And in other news…
Barely a year and a half after its merger, Crossman Block & Withers split. And Hill Dickinson and Hill Taylor Dickinson also split into North West and London practices respectively. The pair re-merged in 2006.

The Lord Chancellor Lord Mackay

After two hard years of fractious consultation and considerable controversy, the Lord Chancellor Lord Mackay unveiled the Courts & Legal Services Bill in December 1989.

Mackay’s reforms, which included multinational partnerships, were the regulatory catalyst to the huge changes in the legal profession in the past two decades. However, his proposals on extending rights of audience to solicitors in the higher courts were reviled by large sections of the bar. Bar Council chair Desmond Fennell warned of “a new Hundred Years’ War.”

But Mackay held his nerve – despite the widespread rumour that some 20 High Court judges were poised to resign over the issue. He said: “The bill is a significant step in the evolution of a healthy and competitive profession for the needs of the coming decades.”

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