Washington plans derailed by Obamamania
Allen & Overy’s (A&O) long-held ambition to launch in Washington DC was thwarted at the final hurdle last November, The Lawyer can reveal.
The magic circle firm’s plan to ramp up its US coverage coincided with a three-month secondment to New York by senior partner David Morley.
Now, as Morley settles back into life in the City, The Lawyer can uncover a little of what he achieved in the Big Apple, and which parts of his plan failed to materialise.
As reported last autumn (10 September 2008), Morley’s US sojourn was intended to demonstrate the US market’s importance to A&O.
The firm’s managing partner Wim Dejonghe summed up the reasoning behind the move when he said: “David spending more time [in the US] is a commitment from the partnership to the US market.”
But what exactly did Morley achieve during his three-month stint?
He had been invited by A&O US head Kevin O’Shea to experience at first hand the challenges the UK-headquartered firm faces in New York. A&O, like its magic circle rivals, is well aware that the US market is critical.
Over a coffee last week in New York, O’Shea told The Lawyer: “Having a senior figure on the ground shows the firm really means business.”
And few things show a firm means business as well as opening an office.
Setting up a DC shop with a credible antitrust, IP litigation and regulatory practice has been a focus of A&O’s for many years. The recent move to tighter bank regulation in the US, coupled with the billions of Obama-related dollars currently flowing through the capital, have only made the magic circle firm even more hungry and determined.
“The firm’s discussed this for a very long time,” confirms one New York-based A&O partner. “It could become more challenging given the current environment, but it’s definitely something management is very excited about.”
During Morley’s US stay, A&O got extremely close to finally launching its second US office. The deal, which centred on a group of six partners from an unnamed US firm, was already well underway when Morley landed in New York on 1 October.
“The team was fully equipped to hit the ground running, with antitrust and cartel capabilities and a formidable partner at the helm,” says one A&O insider. “So formidable that he was hopeful of a spot in Obama’s administration.”
Although that plum job did not end up happening, the mere possibility of it was instrumental in delaying the process and was ultimately a contributing factor in stopping the team signing on the dotted line with A&O. Eventually the deal disintegrated, with some team members opting to stay with their current firm.
A&O’s DC dreams are now temporarily on hold, but this potential expansion was only one aspect of Morley’s trip to the US. Enhancing client relationships and securing new clients was just as crucial.
“Introducing him to banking clients and potential clients was fantastic,” says one New York-based partner. “It helps to get your foot through the door and gives you a great in if you have firm leadership with you.”
Client meetings are helpful, but while workflows dwindle for all international firms, A&O may have more pressing issues at hand.
So far A&O is the magic circle firm that has made the fewest layoffs among its peers. Consequently, it appears to be in better shape than some of its rivals.
But with staff levels currently under review and US associate appraisals underway, the mood in the New York office is hardly jubilant. So Morley’s presence in the US also served to reinforce an impression of internal stability, while externally the economy spiralled and rival firms experienced unprecedented staff culls.
“You also have to realise that hard decisions are being made all the time,” says one US partner. “Morley stayed here for three months. No one can now complain that the decisions the firm makes from London aren’t based on knowledge of the US market and how the office works. He knows what’s going on.”
For his part, O’Shea remains optimistic about the future and clear about where A&O needs to grow to take advantage of the evolving legal and financial markets. The two key strategic goals right now are ramping up in regulatory services and completing the US end of a global IP litigation group.
And the conclusion of Morley’s stay? Although every day seems to bring more grim news from the world’s top law firms, ;A&O ;is determined ;to make its US practice stay the course – something Morley’s Big Apple outing underlines.
White & Case city partners miffed at needy New York HQ
White & Case London partners are celebrating healthy 2008 figures, with the City office’s profit per equity partner (PEP) of £1.1m thought to be significantly above the firmwide average.
London revenue last year was also up, by approximately 4 per cent, taking the total to around $246.2m (£170.45m).
Although the twin increases are something to be proud of, not all is rosy at the New York-headquartered firm’s UK base.
As revealed by The Lawyer last week (2 February), some London and international partners are feeling more than a little disgruntled about the hefty New York subsidies imposed by the firm’s headquarters for the provision of infrastructure services such as marketing. The payments for these services, which London partners claim not to need, are eating into the City office’s profitability.
Contributions from London last year totalled around $19.5m (£13.5m), which is thought to have included several million pounds for infrastructure services.
“The reality is that London doesn’t require the level of services it’s paying for,” says one UK partner. “In fact, London provides a lot of services to various European offices, but is still expected to pay New York.”
London and other international office revenues were revealed to the partnership in January. While London’s revenue is up, New York is said to be suffering due to the sharp economic downturn.
London is believed to be twice as profitable as any other European office and has maintained steady revenue growth throughout an economically challenging year.
“In the past [the payments] have been a source of frustration,” admits a former New York-based White & Case partner. “But knowing how much New York is suffering now, it’s not surprising that London and other international offices are angry about this.”
A spokesman for White & Case said: “We’re a diverse global business, in which international capital movements are the norm, as they are for any cross-border firm.”