US firms smash pay scale for UK private equity talent

Top stars offered up to forty per cent on top of UK earnings as US firms enter into City bidding war

Private equity lawyers are commanding the largest sums in UK legal history as US firms up the ante by poaching star partners in the face of escalating investment activity.

According to The Lawyer’s research, private equity specialists at a US practice can expect to earn on average £1m annually.

The seven-figure sum outstrips average profit per equity partner and plateau pay at the top 10 UK firms for 2003-04 by a staggering 41.6 per cent and 24.1 per cent respectively.

The wave of star private equity departees – which began with Linklaters’ David Aknin’s move to Weil Gotshal & Manges in November 2003 and has most recently included Ashurst’s Thomas Forschbach heading for Latham & Watkins – has been gathering pace, forcing the swell in pay.

It is understood that, had Matthew Layton and James Baird made the move from Clifford Chance to Weil earlier this year, the two would have been guaranteed around $2m (£1.2m) until the end of the year.

O’Melveny & Myers is known to be offering astronomical figures for private equity lawyers. Matthew Hudson, formerly an SJ Berwin partner, who joined the US firm’s London office earlier this year, is being paid £1m a year for three years. It is understood that partner John Daghlian is earning a similar amount.

Over the last five years, while total deal value has fluctuated, buy-in and buy-out volume has grown in the UK and Europe by 6.6 per cent and 11.9 per cent respectively. In 2003, these types of deals made up 68 per cent of the total UK M&A market, holding steady at that figure for the first six months of 2004.

What price to join a US firm?
Partner name Former firm New firm Compensation
David Aknin Linklaters Weil Gotshal $1.5m (£915,000)
Thomas Forschbach Ashurst Latham & Watkins $2m-$2.4m (£1.2m-£1.5m)
Peter Nussbaum Freshfields Milbank Tweed £1m
Matthew Hudson SJ Berwin* O’Melveny & Myers £1m
John Daghlian SJ Berwin O’Melveny & Myers £750,000-£1m
Andrew Carpenter DLA O’Melveny & Myers £750,000
Matthew Layton** Clifford Chance Weil Gotshal $2m (£1.2m)
James Baird** Clifford Chance Weil Gotshal $2m (£1.2m)
*Left SJ Berwin in 1998
**Stayed with Clifford Chance

Source:The Lawyer
Note: $ conversions at 2003 average of $1.64