David Judah and Rex Nwakodo have joined the partners’ exodus from the London office of Steptoe, joining Wallace & Partners as head of corporate and head of technology respectively.
Steptoe, which merged with UK telecoms boutique Rakisons in November 2000, is left with just two full equity partners – Brendan Patterson and Michael Thompson – from the initial 12 that were at Rakisons when the final merger talks began. Four junior equity partners have also left.
Steptoe UK managing partner Maury Shenk, who came in from the US to replace Tony Wollenberg, is the only other equity partner in London.
“I think that building a big London outpost of a US firm was quite misconceived,” commented Judah.
Shenk said: “Mergers can be difficult processes, and ours has been more difficult than most.”
A key driver for the merger was to create a transatlantic telecoms practice. Steptoe, though, had built its reputation on the strength of its telecoms regulatory practice, while Rakisons’ strengths were more transactional.
“The perceived synergies between the two firms didn’t really work,” said Judah.
Shenk admitted: “The merger was targeted at the technology practice and there was probably not a worse time to do a technology-focused merger. The synergies were not as good as first thought.”
Another former partner said he resented the Washington DC office imposing its management on London. Rakisons’ charge-out rates were higher than those in the US and the adoption of US accounting systems ate into the firm’s profitability.
Shenk stated: “The firm has to function as a single entity.” He said the firm’s insurer had been demanding with the procedures that had to be put in place, and while legacy Rakisons partners may not have been comfortable with “big-firm systems”, he did not feel that they impinged on their practices.
The former partner added: “Neither side felt they got a good deal out of the merger. I think that it will shrink further and become a small outpost of the US.”
Shenk was happy to admit that this is exactly what the London office had become.
It seems as if the firm’s future lies well away from the technology market. Shenk claimed that acting for Motorola in a dispute had jumpstarted the firm’s arbitration practice. He also said that Patterson’s commercial property practice was a growth area.
On their move to Wallace & Partners, which brings the number of partners at the firm to eight, Judah concluded: “It’s ironic – I’m leaving to join a smaller, more entrepreneurial firm, but it’ll probably be bigger than Steptoe [in the UK] by the end of the year.”
|The Rakisons exodus|
|The Rakisons exodus
Equity partner exits prior to merger
Equity partner exits since merger
Junior equity partner exits
Remaining equity partners