Top tier New York firm Cahill Gordon & Reindel is planning to open an office in London.
The decision to launch in the City marks a major shift in policy for the firm. Cahills opened a Paris office in 1935 but has since refused to join the growing tide of international expansion.
Cahills is the fourth most profitable firm in New York with reported average profits per partner of $1.6 (£1m). It has maintained this partly by keeping its partnership small at about 60 partners and concentrating on profitable leveraged finance work.
It is understood Cahills has been under pressure from its financial institution clients to set up in London. The firm has resisted until now because the investment necessary would dilute its enormous profits.
A source at the London office of another top US firm says: “They have been pressured by Bankers Trust. About a year ago they said no when Bankers Trust asked them, but they have been watching other firms doing their work over here.”
It is not known whether the firm will practise only US law in London. One source says he would be surprised if the firm hired UK lawyers, but another suggests it may not have been ruled out.
Speculating on Cahills' reasons for coming to London, another source says: “You have globalisation of econ-omies, nascent high yield markets in the UK and Europe and growing sophistication among mutual funds.
“Then you have the globalisation of investment banks and the regular rotation of people through London, which means people feel comfortable working with people they work with in the US.”
With Cahills coming to London, Wachtell Lipton Rosen & Katz, the most profitable firm in the US, will be the only top New York firm without a London presence. But a US London managing partner remarks: “They'll never come.”
Roger Meltzer, one of Cahills' administrative partners, refuses to comment on the firm's plans for London.