Oh, the trills of delight at Allen & Overy (A&O). And oh, the snorts of disbelief at Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters & Alliance – swiftly alchemised into studied indifference – when we revealed A&O's hire of Cravath Swaine & Moore partner Dan Cunningham last week.
But haven't we been here before? The situation is weirdly reminiscent of the way A&O went about building up its German practice. Lagging behind other magic circle firms, A&O was impatient about the idea of a long courtship. So it had the splendid idea of raiding Bruckhaus Westrick Heller Löber, one of the very firms it was covertly wooing, thereby ballsing up any chance of merger. Nice one.
In fact, it is doubtful whether A&O has the stomach to merge – that would involve an element of risk to which it is culturally averse. Its limited experience in this arena includes Brosio & Casati (the Italians managed to secure such excellent terms for its senior partners that it is unclear whether A&O's negotiating stance was born of naivety or desperation) and the Dutch/Belgian raids, which were more in the category of mass lateral hires.
The A&O line is that the partnership culture is more important than mere market share – not that that rules out a US merger in the long term. All very laudable, but the Cunningham affair begs another interesting question on collegiate values. Exactly how did A&O persuade a Cravath partner to join? Cunningham knows A&O well, but personal contact and a shared international vision is not enough to sustain a gigantic pay cut. Like messrs Brosio and Casati, he is coming in at the top of the lockstep, and will have to rub along on a mere £1m. But you can bet that A&O was able to offer plenty of imaginative elements in that package. (Hardship allowance, anyone?)
A&O would not be the only UK firm to play with its profit share. Linklaters, Clifford Chance and A&O have strings of salaried partners. Linklaters has a capped lockstep within Europe and Clifford Chance has had to bring in superpoints for the US and Italy. This tinkering will enable Linklaters, for example, to top £1m this coming year for plateau partners.
Despite declarations to the contrary, lockstep in the global UK firms is fraying round the edges. As for Freshfields, it may come to regret its purism. What price equity now?