London continues to attract a cosmopolitan mix of firms, from Gibraltarian to Iranian, Panamanian to Finnish. But the most noticeable foreign law firms in London are, unsurprisingly, the American ones.
Some US firms have had offices in London since the early 1960s. Coudert Brothers, for instance, opened its doors in London in 1962. But it is only recently that US firms in the UK have begun taking on the British at their own game, boosting their complement of UK-qualified lawyers and offering services in direct competition. Andrew Bor, of US firm Perkins Coie, says: “The line between City and US firms has blurred. We are now competing for the same clients.”
Weil Gotshal & Manges is a case in point. The US firm had a half-hearted fling with the UK's Nabarro Nathanson but the two firms found few areas of synergy and the relationship fell into abeyance. The US firm has now decided to build up its own team.
The firm's London office officially opened for business on 1 March 1996 with 25 fee earners. The practice's business development partner Maurice Allen says: “We aim to be a full-service financial practice, offering a full range of capital markets products.”
Allen, who enjoyed a high-profile career at Clifford Chance before making the switch in 1994, joined Weil Gotshal because he believes it is a US firm that “is prepared to do more than just dip its toe in the water”.
The firm's credo is that it is no longer possible to divide the world up into geographical areas because so many transactions now involve both a UK and a US element.
Allen explains: “While English firms are busy building up a US capability, it is hard for them to build a credible US securities practice because they can't get lawyers.
“We thought it would be easier to do it the other way around – as an American firm recruiting English lawyers. Indeed, we have found it easier to recruit the right people than we might have imagined.”
Weil Gotshal is aiming for steady growth in the number of fee earners over the next three to four years, with an eventual complement of 50 or 60.
“Our focus is not to build market share, but to provide a full service to select clients,” says Allen. “We are not here for everyone but to provide key services to those clients. That is the only way to run a profitable business. We will expand beyond finance but not in every direction.”
Weil Gotshal has not explored joining forces with another UK firm after Nabarro Nathanson because, says Allen, “only a full merger would make sense, and we do not feel that UK firms are profitable enough. Often, the firms would be too big for a happy integration. Experience has shown that it rarely works out.
“Besides, what is important to the client is the service that you offer them, not the way the service provider is structured.”
Richard Cole, of Mayer Brown & Platt, says his firm is not “competing head-on for purely domestic UK work.
Our market is the international market.”
The practice has 19 lawyers in London and 10 are English-qualified. Historically, it has concentrated on finance and corporate work, but it has recently recruited two lawyers in derivatives and structured capital markets.
Cole, too, is doubtful that there will be a transatlantic merger in the near future. “Potential parties simply haven't found the advantages to be attractive enough,” he explains. “The cultural differences are too wide and you have to bear in mind that law firms are people businesses.”
Perkins Coie, which has over 350 lawyers in the US and specialises in project and aircraft financing in London, started over here last year with four fee earners. One associate has left, one is joining, and the firm intends to recruit another two people in the near future. The new associate is English-qualified but, joining as an associate, cannot call himself a solicitor.
The firm's Andrew Bor explains: “We have grown fairly rapidly in the past six to nine months. Our short-term objective is to become a multinational partnership.”
He adds: “In international finance, deals tend to be done in either English or New York law. There are a number of firms in London with the capability of doing both, so to be competitive you have to be able to offer both.”
While his own firm has considered a merger, Bor is sceptical about whether there will be any transatlantic mergers in the near future.
The size of the largest US and UK firms makes a merger difficult to achieve. There is often too much overlap between top firms for them to merge, and if they do, because of their size, they have to work that much harder to preserve goodwill.
Rather than an outright merger, Bor believes: “We may well see whole practice groups or departments leaving a City firm and joining the London office of a US firm.” He also thinks a number of US firms in London will be “revisiting the issue of whether it is worth staying here”.
Bor adds: “A sea-change has been that US lawyers coming to London can now expect to make a career here rather than simply do a tour of duty as they did before.”
He has also noticed that firms in the London market are much more flexible and quicker to react to opportunities than they used to be. They will increase or decrease their staff according to demand.
Robert Rakison, of Morgan Lewis & Bockius, says his firm is also expanding and recruiting more partners. Morgan Lewis is the fourth largest law firm in the US. Its corporate and tax practice in London has 15 lawyers but would like to increase that figure to nearer 50.
“The difference between ourselves and firms such as Sidley & Austin or Weil Gotshal is that they are trying to build up their hiring from the top echelons of UK firms,” says Rakison.
“We have been in the UK much longer and are taking a more cautious approach. We have got to get the right mix. The last thing we want to be is a UK law firm under a US franchise. Those firms will be under a lot of pressure to produce fees, whereas we have already proven our wings.”
To what extent these beefed-up London offices pose a threat to the indigenous UK firms remains to be seen. There is an obvious difference in size, but that is not to say that the US firms cannot make a difference at the margin.
Weil Gotshal's Allen says: “The English firms recognise that there is some threat. They may have to change some of the things they do, go the extra mile for their clients. They will certainly have to learn to live with us.”