Tim Clark: Slaughter and May

Tim Clark has slashed Slaughters’ foreign offices to focus on its best friends strategy. But the relationships are only as strong as the deals that bind them.

Slaughter and May” />Tim Clark is possibly the only senior partner who has set out to slash his firm’s international reach. When he first took over on 1 May 2001 Slaughter and May had five international offices in Brussels, Paris, New York, Hong Kong and Singapore.

Six years later the firm still maintains a tiny representative office in Brussels, but the extent of Slaughters’ global offering is now based on pure English law with a nine-partner base in Hong Kong and a Paris office, which has shrivelled to just one partner. When Clark retires this time next year he will have presided over a sustained period of physical retrenchment – but also record profits.

Slaughters partners would argue that the two are linked. But there is another factor: the firm’s international strategy is entirely dependent on its relationship with its key best friends. It is a model that the firm is now hoping to replicate in Asia following its first-ever meeting of referral firms in Bangkok (see box).

Other firms would regard this as risky, not to say foolhardy. So how close are the best friends relationships?

Best friends
“The only power a senior partner at Slaughters has is the power of suggestion,” says Clark. If that is the case, then he and practice partner David Frank have been remarkably successful in coaxing partners and their international contacts into rethinking their strategies.

Clark and his close colleague Frank spend a large part of their lives travelling and meeting best friends. The pair attend quarterly management meetings with their European allies Bonelli Erede Papparlardo in Italy, Bredin Prat in France, Hengeler Mueller in Germany and Uría Menéndez in Spain.

Visiting firms outside this core group is also a substantial part of their jobs, albeit accomplished with a unique Slaughters flavour. In a recent trip to visit De Brauw and Nauta in Amsterdam, Clark flew Frank in his own plane. (It is not clear whether Frank totally enjoyed the experience.)

Wall Street crash
Clark’s first spot of downsizing came early in his second term as senior partner, with the closure of the New York office. The outpost had been going since the 1980s and primarily handled English law financing work with a strong streak of South American debt business. Its fortunes started to ebb in the late 1980s when that business became a US market, but Slaughters kept it open throughout the 1990s. Perhaps it was just too politically difficult to close it. After all, Slaughters had already closed in Frankfurt in 1995 when it became clear that the German market was also not yielding direct-fee business.

The closure in the US marked a watershed. It came in 2004, at a time when Slaughters had moved away from being associated publicly with Davis Polk & Wardwell, which was always more of a Hengeler relationship historically.

It also coincided with Hengeler spreading its US net. As far back as May 2002 The Lawyer was reporting that Hengeler was making marketing visits to Cravath Swaine & Moore, Milbank Tweed Hadley & McCloy, Simpson Thacher & Bartlett and Wachtell Lipton Rosen & Katz, among others – despite the fact that it had a semi-formal alliance with Davis Polk for capital markets deals.

“Our focus in the last five years has been to make [our US relationships] deeper,” says Clark. “New York was about direct relationships between London and leading New York law firms. The guy in New York was the person responsible for the relationship with New York firms – we just had someone in the timezone who could answer questions.”

Yet Clark is keenly aware of the symbolic weight of offices abroad. “New York we would have closed earlier,” he confesses. “Then 9/11 came, and it wasn’t the time to be closing offices in New York.”

Nowadays Clark champions a dual approach to North American business. Slaughters markets itself to US firms in two ways: as a UK referral partner and as one of a European grouping of firms. The next joint marketing trip to New York is in June, with the best friends streamlining and coordinating their contacts. “We look at the common denominator,” says Frank.

Clark and Frank have certainly set about strengthening their relationships with key Wall Street firms such as Cravath, Davis Polk and Wachtell. Notably, though, not quite so much with Sullivan & Cromwell. “Sullivan & Cromwell don’t endear themselves to us,” remarks another Slaughters partner dryly.

The joint pitching to the big Wall Street firms is only part of what Clark has focused on during his two terms as senior partner. Knitting together the European offering has been the main focus. “We started out with an objective to get closer [to the best friends],” says Frank. “Just having somebody’s telephone number on your Rolodex doesn’t cut it. We stumbled across that [concept] early in the piece.”

French leave
By the end of Clark’s first term as senior partner Slaughters was confident enough in its best friends relationships to find ways of offloading two of its larger overseas operations.

In July 2004 it closed two offices: New York and Singapore. The Singapore operation transferred to Australian best friend Allens Arthur Robinson; such was the ease of the move that Clark took the concept and applied it a year later to the Paris office, calling in French ally Bredin Prat to help out.

The Paris office had always been anomalous, because for historical reasons it practised French law – something that always comically undermined Slaughters’ claim to be a UK independent practising purely English law.

But unlike the Singapore move, the Paris closure meant the departure of six partners in total. Four – Alex Blackburn, Eric Grangeon, Brigitte Leclerc and Yves-Charles Zimmerman – went to Bredin Prat; Pierre-Pascal Bruneau went to Debevoise & Plimpton; while Antoine-Audoin Maggiar went to Berwin Leighton Paisner. The departure of six partners was, in Slaughters’ terms, astonishingly dramatic.

The real thing
The links between the best friends essentially ape the internal structures of the integrated global firms. “One-stop shops have an appearance of integration, but less in reality,” argues Clark. “We have the reality and not the appearance of it.”

The secondment programme is well established: Slaughters houses 15 lawyers from relationship firms across the globe, including Europe, Australia, Brazil and Russia. Those 15 also include secondees from Hengeler, Uría and Bonelli, despite the fact that the three have beefed up their own physical presences in the City with shared offices.

The five best friends have also instituted an autumn school, where handpicked associates discuss M&A trends and network. The most recent partner promotion round saw two autumn school alumni make the cut: Robert Byk and Tim Pharaoh.

Cultural hub
Clark’s gameplan was to launch regular pan-European management meetings, something that his Continental counterparts have bought into.

“We meet regularly at various levels,” says Luis de Carlos, managing partner at Uría. “At a managing partner level we meet three or four times a year. We basically review the firms’ performances, look at market developments and relationships with the best friends.”

The next meeting is in Milan in June and it will have an agenda that spans practical as well as strategic issues. Often a topic is pushed down into the operational level of practice group meetings.

But what is there still to do? More of the same, according to Clark. “Make sure we increase the number of partners involved and know the people in other firms,” he says. “So in effect they’re an extension of our firm – not profit sharing but, yes, culturally.”

There are nevertheless weaknesses in this approach. As long as each firm stays at the top of its game, all is well. Slaughters has become central to the group, but is unable to execute – and indeed, is culturally uninterested in – overt or centralised management of group strategy.

Parts of the best friends’ activities are devolved: the Central and Eastern Europe network is run by Hengeler, for example. Should a South America network begin, Uría would lead it. Slaughters’ sphere of influence in Asia means that it took a lead role in the development of its fledgling network there.

But the top Chinese firms with which Slaughters works – Jun He in particular, but also King & Wood and Haiwan Law Firm – are also being courted by every top US firm with Asia ambitions. Slaughters is, however, edging closer to Jun He. This was underlined by its being the only invitee from China in the Asia network launch last April.

Clark tacitly acknowledged the queasy fact that other law firms were courting the top China firms when he told The Lawyer: “The market’s developing very rapidly. These [China best friends] are of major size and high quality. We think working with them to produce China law capability is unbeatable, really. We would hope that, if they have work outside China, they’d come to us, but we have to persuade them.”

One partner in a Slaughters best friend firm sounds another note of caution. At the moment the UK firm is at the top of its game, but its lack of presence amid the professional deal-doers in the private equity market could have implications for its Continental allies.

“If we want to do a private equity deal then we want to work with firms that do private equity – Weil Gotshal or someone,” says the European partner. “And [Slaughters] doesn’t have a banking practice. For that they need us more than we need them.”

In other words, so long as Slaughters is still getting the deals in, it will be popular with its allies. If it starts slipping, though, things will get slightly less cosy.

And in the meantime the Continental firms are still keeping their doors open to transatlantic M&A powerhouses.

Clark agrees that transactional capability is the bedrock of the relationships. “To us the magic circle’s always meant who, for the major transactions in London, are the firms people will always go to,” he says. “Clearly Linklaters, Freshfields [Bruckhaus Deringer] and Clifford Chance are different from us. In terms of global, largest, whatever, we’re clearly not in that group. But as long as we’re doing our fair share of deals, that’s success for us. We want to do deals for our clients and for the people doing deals in Europe.”

Slaughters’ ability to manage cross-border transactions is predicated on its ability to offer M&A advice through its best friends network. For his two terms of office, the best friends network has been Clark’s baby. And yet the firm’s destiny lies in the delicate balance of relationships between the best friends. For his successor as senior partner, European diplomacy will be crucial.
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•Slaughters’ office closuresFrankfurt: Closed 1995 New York: Closed 2004 Singapore: Closed 2004 Paris: Closed French law capability 2005

Last month Slaughter and May hosted a two-day session in Bangkok for its best friends in Asia.

The firms invited included Jun He Law Offices from China; Shin & Kim and Kim & Chang from South Korea; Anderson Mori & Tomotsune, Nagashima Ohno & Tsunematsu and Mori Hamada & Matsumoto from Japan; and the firm’s existing Australian best friend Allens Arthur Robinson. Other jurisdictions represented included Taiwan and Indonesia.

Many of the Asian firms had worked together before, albeit on a bilateral basis; Slaughters is acting as the facilitator.