Mergers: the ultimate test of loyalty

Catrin Griffiths

Dangerous things, mergers. I’m not talking about Penningtons’ takeover of zombie firm Manches, although that deal is tricky enough in itself – as we expose in considerable detail this week. 

I’m referring to the shenanigans at Ashurst, SJ Berwin and Herbert Smith Freehills, whose global mergers have seen partners skitter off in all directions. 

At all three City firms it’s been fraught. Management teams push for a deal in which they are totally invested, only to be faced with truculence from line partners who suddenly turn counter-suggestive. Denied a habitual say in the running of the firm, they can now exercise their voices. Charlie Geffen’s shock ousting as Ashurst chief falls into this category; to the outside world this can seem like ingratitude, but to an insider this sort of event affords a rare moment of political satisfaction.

If Geffen does stay at Ashurst following the vote against him, it would be an extraordinarily selfless act. Put it this way, Ashurst insiders are not predicting he’ll stick around long. In the meantime, the firm is having to deal with the unwanted resignation of corporate head Stephen Lloyd, as reported on last week. An undoubted star, Lloyd’s departure wasn’t entirely unexpected, given the uncertain political sands at the firm right now. It’s an open secret that he had a generous offer on the table from Simpson Thacher three years ago but he changed his mind when Ashurst – or rather, Geffen – appealed to his loyalty. In some cases, partners can be reinvigorated into being cheerleaders for their firm but that’s rare. Pretty much the only relevant example is Clifford Chance private equity partner Matthew Layton, who tried to resign for Weil Gotshal a decade ago. Clifford Chance tenderly applied the usual emotional blackmail and Layton stayed. He’s now one of the favourites in the race to become the firm’s global managing partner.

But loyalty to a firm that is broadly the one you joined and became a partner in is not the same as loyalty to a firm that is undergoing the uncertainties of transformation. 

Ashurst is now an entirely different beast from what it was three years ago. Like SJ Berwin and Herbert Smith, Ashurst partners have found that that go-getting Asia strategy hasn’t come easy.