2014 found US firms in London gaining even more ground. Legal Business’ 13th annual Global London survey charts the key players and winning moves as leading firms make their breakthrough.
A line of taxis wait patiently along Old Broad Street as White & Case’s partners exit the office one after the other apologising for the delay. In January 2015, the firm ran up a £12,000 waiting charge from Addison Lee because partners failed to come out on time as they were overrun with work, mainly M&A deals. There’s no doubt it has been a dynamic start to the year for many global firms in London. And following a strong 2014, many firms expect this level of activity to continue.
Global London total headcount 2004-14
‘All the stars really came into alignment last year for the first time in a few years where all of our key practice areas were very strong,’ says Simon Jay, a corporate partner at Cleary Gottlieb Steen & Hamilton. ‘M&A had been patchy up until the third quarter of 2013 whereas 2014 was strong throughout the year.’
Proportion of international and UK-qualified lawyers
Certainly, many forces appear to be aligning right now for US-based advisers. The continuing strength of the US economy relative to Europe, the vogue for European borrowers to tap US investors, increasingly deploying US-law financing products like high-yield bonds, has given US law firms an additional boost in the last two years.
This has been matched on the contentious side by continued inroads in disputes work and the increasing dominance of US regulators in high-stakes corporate investigations.
Likewise, the relative loss of influence of banks – key clients of City law firms that for years had snubbed US advisers in London – in favour of a wide array of buyout houses and specialist funds has been a major boon for US law firms, given the tendency for such clients to stick with their favoured advisers when abroad. As such, private equity, leverage finance and funds have proved highly fertile ground for American firms.
Partner hires
With years of experience and local knowledge of the City market now built up – 2014 seems to mark the point where US-bred advisers have become fully fledged competitors in London.
Further evidence of a quickening pace at US firms over the last 12 months were two high-stakes moves – Cooley’s dramatic London launch in January with a 55-lawyer team drawn from Edwards Wildman Palmer and Morrison & Foerster (MoFo) and Akin Gump Strauss Hauer & Feld’s acquisition of Bingham McCutchen’s London office (see ‘The third wave’).
The Firms that made the most hires to partner in 2014/15 |
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|---|---|---|---|
| Firm | Partner | Previous firm | Date |
Akin Gump Strauss Hauser & Feld |
Angeli Arora | Bingham McCutchen | October 2014 |
| Barry Russell | Bingham McCutchen | October 2014 | |
| Christopher Leonard | Bingham McCutchen | October 2014 | |
| Davina Garrod | Bingham McCutchen | October 2014 | |
| Emma Simmonds | Bingham McCutchen | October 2014 | |
| Helen Marshall | Bingham McCutchen | October 2014 | |
| James Roome | Bingham McCutchen | October 2014 | |
| James Terry | Bingham McCutchen | October 2014 | |
| John Clark | Bingham McCutchen | October 2014 | |
| Liz Osborne | Bingham McCutchen | October 2014 | |
| Mark Dawkins | Bingham McCutchen | October 2014 | |
| Mark Mansell* | Bingham McCutchen | October 2014 | |
| Neil Devaney | Bingham McCutchen | October 2014 | |
| Richard Hornshaw | Bingham McCutchen | October 2014 | |
| Sarah Smith | Bingham McCutchen | October 2014 | |
| Stephen Peppiatt | Bingham McCutchen | October 2014 | |
| Stuart Sinclair | Bingham McCutchen | October 2014 | |
| Thiha Tun | Bingham McCutchen | October 2014 | |
| Thomas Holton | Bingham McCutchen | October 2014 | |
| Tom Bannister | Bingham McCutchen | October 2014 | |
| Vance Chapman | Bingham McCutchen | October 2014 | |
Reed Smith |
Benjamin Davis | Travers Smith | March 2014 |
| Winston Penhall | KPMG | April 2014 | |
| Nicholas Brocklesby | King & Wood Mallesons | May 2014 | |
| Angus Finnegan | Osborne Clarke | July 2014 | |
| Prajakt Samant | McDermott Will & Emery | July 2014 | |
| Matthew Heaton | Pinsent Masons | August 2014 | |
| Francisca Sepúlveda | Allen & Overy | September 2014 | |
| Andrew Meads | Hill Dickinson | October 2014 | |
| Simon Gough | DLA Piper | October 2014 | |
| Robert Porter | Sovereign Land | November 2014 | |
| Luke Mines | Linklaters | February 2015 | |
Jones Day |
Michael Weir | Berwin Leighton Paisner | June 2014 |
| Benedict O’Halloran | General Electric | September 2014 | |
| Justin Conway | DLA Piper | September 2014 | |
| Neil Hamilton | Paul Hastings | September 2014 | |
| Jonathan Bloom | Ropes & Gray | September 2014 | |
| Alan Davis | Pinsent Masons | February 2015 | |
Morgan, Lewis & Bockius |
Kevin Robinson | Irwin Mitchell | March 2014 |
| Stephen Walters | Bird & Bird | April 2014 | |
| Tim Corbett | Wilmer Cutler Pickering Hale and Dorr | June 2014 | |
| Tom Cartwright | Pinsent Masons | June 2014 | |
| David Ramm | Edwards Wildman Palmer | September 2014 | |
| Frances Murphy | Bingham McCutchen | November 2014 | |
| *Counsel at Bingham McCutchen March 2014 to February 2015 | |||
The bullish mood is reflected in this year’s Global London survey, where the overall headcount of the largest 50 US firms in the City is nearing 5,000 after growing a robust 7% to 4,937 from 4,624 the previous year. Last year headcount rose 6%, after a modest 3% the year before. In comparison, the last highest headcount recorded was 4,444 in 2008, when firms were still in their boom-era shape ahead of the banking crisis. The total number of partners also grew to a new high of 1,403, up by 3% from 2013’s level of 1,364.
There was a return to the partner hiring frenzy, with total hires across the top 50 up 39% to 117, from 84 hires made in 2013 (Cooley’s 19-partner raid is not included in the figures as it was an office launch). Only one-third of these partner recruits came from the ten largest firms in our table, whereas last year 40% did.
In terms of overall headcount, 24 firms grew by 10% or more across the entire list, compared to 16 firms in our 2014 Global London report. It remains a volatile sector – with fortunes rising and falling dramatically at times – but the overall trend is one of strong growth with much of the investment coming from firms outside the top ten largest foreign practices in the City.
Breakdown of all lateral hires by practice area
Our results show it was the mid-pack that made the most lateral partner hires in 2014 and a large contributor was Akin Gump’s 21-partner hire in the UK from Bingham (which saw the firm jump up 25 places from 45th to 20th). The top five fastest-growing City offices were Akin Gump, which grew 147%, in fifth place and also Cadwalader, Wickersham & Taft (33%), Milbank, Tweed, Hadley & McCloy (31%) and Greenberg Traurig Maher (GTM) (27%), while the fastest-growing firm in the top ten by headcount was Jones Day at 22%.
GTM increased its London revenues from £13m to £14.5m and scored a coup when it hired Slaughter and May tax partner Graham Iversen in November, in what was a rare departure at partner level for the Magic Circle firm.
This is the third year running that Morgan Lewis has expanded its London practice, growing 19% after a 51% spike in 2013 and 75% in 2012, following the takeover of the former London, Moscow, Almaty and Beijing offices of the collapsed Dewey & LeBoeuf. Since 2009, the office has more than doubled its headcount.
Also having a strong run in the mid-pack is Covington & Burling, expanding its City base by 98% in the last five years and 6% in 2014. The firm’s all-equity, 23-partner office contributes 9% to the firm’s gross income totalling $64m.
Firm focus: Sullivan & Cromwell
London lawyer headcount 2009-14: 77 to 78
Speciality: Corporate, leveraged finance and private client
London office: 78 lawyers, 22 partners
Office head: Richard Morrissey
Representative London work
Represented Kraft on its multibillion-dollar merger with Heinz; acted for Cyberonics on its $2.7bn merger with Sorin Group; advised on Canadian insurance business Fairfax Financial’s $1.8bn takeover of speciality insurer Brit; and advised on Japan’s Nikon Corporation takeover of UK company Optos.
Sitting just outside the top 20 US law firms in London by headcount is Wall Street leader Sullivan & Cromwell. Although the firm doesn’t receive quite the fanfare it gets in New York, it has edged further into City work over the last three years through hiring external talent, launching new practice areas and expanding its English law offering.
The firm has managed to exceed pre-crisis headcount levels to 78 fee-earners and 22 partners, growing headcount by 22% in the last three years after a post-Lehman slimming of its London ranks.
The firm took on its first English law trainees in 2013, with two classes of four trainees annually since then, and the first class set to qualify as associates later this year. By 2016, Sullivan aims to increase annual trainee intake to 12 a year. ‘We have seen a 25% cut in trainee intake in most English firms, and trainee retention rates have also been variable depending on market conditions, so we are very excited by this,’ says corporate partner Ben Perry.
Sullivan also strengthened its high-yield practice after electing finance lawyer Chris Beatty to its partnership in London from New York, bolstering its City arm in one of the most strategically important current practice areas. ‘You have to be extremely confident at the English law financing and New York law high yield and banking – you have to be excellent at both and indifferent as to which one you want to use,’ says City head Richard Morrissey. ‘We have found it an increasing advantage in London to be able to operate in US or English law financing papers, whether it be through banks or high yield.’
In 2013, Sullivan became the only leading US law firm, aside from Cleary Gottlieb Steen & Hamilton, to offer a private client capability to high-net-worth clients from London after partner Basil Zirinis – a highly prominent name in the global wealth advisory community – moved to the City alongside an associate.
The same year Sullivan upgraded its finance and restructuring practice with the hire of highly-regarded Linklaters partner Chris Howard, a significant investment given the firm’s all-equity partnership. The move built on earlier hires in finance, with Presley Warner from Freshfields Bruckhaus Deringer recruited in 2011. The firm had already in 2007 brought in Tim Emmerson, a former corporate partner at Freshfields and Milbank, Tweed, Hadley & McCloy.
The firm’s M&A practice has scored some noteworthy deals this first quarter including Cyberonics’ $2.7bn merger with Sorin in February 2015, with Emmerson advising from London; and acting for shareholder Apollo on Fairfax Financial’s $1.8bn takeover of Brit, also led by Emmerson and Perry.
Morrissey comments on the year ahead: ‘We expect the M&A and private equity practices to be busy; restructuring will be busy as many companies in Europe remain under financial stress and we don’t see this changing. But this will produce opportunities in M&A and private equity and in that context, high yield will also be busy as the shift from bank lending to bond market continues.’
Fastest-changing London offices by headcount 2013-14
Compare this to King & Spalding, which in the last three years has leapt from 49th place to 34th, growing 15% in 2014, after a 64% rise the previous year. The firm managed a significant recruit when it hired former European vice chair of tax Daniel Friel from Latham & Watkins last month.
Though Gibson Dunn is viewed as having underwhelmed so far in London, with a strong US client base, revenues of $1.47bn and profits per partner of $3.04m, there is no doubt the 1,200-lawyer law firm has the means to become a serious City player if it can sustain its commitment.
Geffen argues the forces supporting US advisers are compelling. ‘Clients are increasingly fed up with the high partner/associate leverage model of the English firms. The top work demands lots of senior time yet the high leverage of the English firms is set up to deliver a more commoditised product. By contrast the top US firms have much lower leverage, which clients love. And the policy of the English firms to push partners out at 55, just when they are at their most experienced, emphasises the impression that senior time is not valued. Add all that to their higher profitability and it is hard to see the trend of top talent leaking to US firms slowing down.’
While 2014 saw considerable investment at smaller London offices – it was another confident year for more established players, particularly those reaping the benefits of Europe’s leveraged finance boom.
Wall Street leader Simpson Thacher & Bartlett, which sits among the more conservative band of US firms in the Square Mile, has nonetheless more than doubled its headcount since 2009 without aggressively hiring at partner level; though the firm did recruit Weil, Gotshal & Manges’ high-yield partner Gil Strauss in September.
Of its 93 fee-earners, 18 are partners, including 12 UK-qualified, alongside 67 English-qualified solicitors. The firm remains focused in its core areas of corporate and private equity with 14 partners in corporate/finance, two in funds and one each in disputes and competition.
Firm focus: Kirkland & Ellis
London lawyer headcount 2009-14: 82 to 149
Speciality: Corporate, private equity, acquisition finance, funds and restructuring
London office: 149 lawyers, 51 partners
Representative London work
Advised EMR Capital on the closing of a $450m fund; acted for KKR on the €241m direct lending for the Spanish pizza chain Telepizza; and represented Ontario Teachers’ Pension Plan on the £365m acquisition of Bridon, a specialist manufacturer for the construction and energy industries.
Characterised as one of the most thrusting firms, Kirkland & Ellis boasts the ability to buy in top City rainmakers in a way few peers can match. This was illustrated last May when Kirkland hired one of the best-known names in Europe’s leverage buyout community – Stephen Lucas from Weil, Gotshal & Manges – for around $8m annually under a three-year guarantee.
Since then the firm has continued to boost its ranks; adding Linklaters’ corporate partner and head of real estate M&A Matthew Elliott to its City partnership in February 2015, while Kirkland’s high billing former City head Jim Learner re-joined the firm early this year, after quitting to join US private equity house HGGC back in 2012.
Kirkland is renowned for providing its associates with a rapid path to partnership, reflecting its stance of making up large rounds of fixed-share partners before a shot at full equity. As such, Kirkland carried out one of the largest global partnership promotion rounds last year, making up eight of its London associates to partner in a round that saw 82 lawyers join the global partnership. While the Chicago-bred giant is ready to give a shot to new partners, it is also regarded as being intolerant of failure to meet high expectations in billing targets and business development.
‘We believe our model is very fair,’ argues one Kirkland partner. ‘It is not eat what you kill. We look at a partner’s contribution across the firm over a length of the time. No one gets thrown out of the firm if they’ve had a bad year. If their practice is declining, or their overall compensation isn’t in line with the value that they are bringing to the firm for an extended period of time, then adjustments are made. That’s the merit-based system and it is very transparent.’
The news of Learner’s return to Kirkland followed the departure of two significant London partners – former Allen & Overy banking partner Stephen Gillespie quit in December 2014 to join the City arm of Gibson, Dunn & Crutcher, while in October private equity partner and de facto London head Graham White joined Fried, Frank, Harris, Shriver & Jacobson to lead its local office. And since White’s exit, the seat for the firm’s London head has been unclear, although the firm insists it maintains a flat management structure. ‘We don’t really have formal heads. It’s a group that is in charge, not one person,’ says Learner. ‘I am certainly one of the senior people [at the London office] so I have a voice in the room, but my voice isn’t necessarily louder than anyone else’s.’
The recent revolving doors have led to much speculation as to the office’s leadership, with differing views over whether the City office will be effectively run by Lucas or Learner. The firm’s management committee election due in late April may resolve the issue.
While critics contend the office has been beset with internal tensions, there is no doubt that the top ten global firm has been highly successful in the City by bringing in high achievers focusing heavily on private equity – in particular for trophy client Bain – and related disciplines in finance, funds and restructuring. The question remains whether Kirkland has put in place the foundation to take its City practice beyond a charged boutique mentality into a wider institutional offering.
Shearman & Sterling, despite its recent ups and downs globally, is enjoying its fifth consecutive year of revenue growth in London, as the office celebrated bringing in $144.6m in London alone, contributing 17% towards overall revenue. The office houses 33 partners split between a range of practice areas. Fifteen sit within corporate/finance, five in capital markets, with the rest split between disputes, bankruptcy, competition, project finance and financial regulatory. Overall headcount was up by 20% last year and a substantial 52% since 2009.
Shearman managing partner for Europe Nick Buckworth says: ‘We made up two partners this year and made another two lateral hires over the period. We had a bumper year in 2013 and, while the pace isn’t quite as fast, it’s still incredibly strong and we’ve also invested a lot of time in attending to performance issues in the firm generally, and are tightening up. It was a three-year plan and the second year keeps us right on track.’
Last year saw seven partners join Latham, with six arriving from rival firms, including Clifford Chance M&A duo Kem Ihenacho and Tom Evans, and investment funds specialist Nick Benson from Weil Gotshal. The global giant has set the bar very high after achieving London revenues of $267m (£163m) in 2014, up from $211m in the previous year.
The hike is enough to make Latham the highest revenue generator in London for a foreign firm. The second-highest generator was White & Case, which also saw a robust increase in London revenues up from an estimated £140m to £155m.
Perhaps surprisingly, given its strength in buyouts and related finance, Weil Gotshal was relatively subdued through the year, seeing income edge up modestly from £75.8m to £79m.
Wilmer Cutler Pickering Hale and Dorr was among those firms staying flat, with a small drop in headcount despite expanding its US intellectual property (IP) practice to London with the hire of Anthony Trenton from Dentons. ‘We are different than some rivals as the firm has a strong litigation and arbitration focus and those priorities help with conflicts,’ says arbitration partner Steven Finizio. ‘We are open to laterals but we need to find people who fit into our culture of hands-on advocacy. Not everyone in London has that experience or is comfortable playing a hands-on advocacy role.’
Firm focus: Paul Hastings
London lawyer headcount 2009-14: 50 to 64
Speciality: Corporate, real estate, capital markets, finance and tax
London office: 64 lawyers, 23 partners
Office head: Ronan O’Sullivan
Representative London work
Advised OCEAN on its acquisition of German bank Düsseldorfer Hypothekenbank from US investor Lone Star for €12bn; represented Mulberry chief executive Bruno Guillon on his high-profile resignation from the British fashion label.
Paul Hastings had long appeared to be underperforming in the Square Mile, a reputation the West Coast thoroughbred was promising to challenge back in 2012, when it unveiled plans to more than double its 50-lawyer City arm by 2015. Those projections proved somewhat over-optimistic, though the firm has increased headcount by 28% over five years to now boast 64 lawyers in the UK.
At that time, Paul Hastings’ London head Ronan O’Sullivan was intent on bulking up in corporate, capital markets and energy, but concedes that the firm’s focus has since shifted, in line with many of its US peers, to focus more on the current boom in banking and leveraged finance in Europe.
‘The firm has been clear about developing a European leverage finance practice,’ he says. ‘Part of the game is to try and focus on those practice areas where we are globally strong and make them as relevant to our London clients as possible. Leverage finance is a great example of that and replicates what we have achieved in New York.’
The hire of high-yield finance partner Peter Schwartz from Milbank, Tweed, Hadley & McCloy in October was the firm’s first major step towards building a fully integrated bank/bond leveraged finance team in London.
The firm is currently in talks with banking partners at rival firms as it looks to beef up its English and US law practice, although O’Sullivan concedes there ‘is a limited pool of talent for finance in London’. Some would question if Paul Hastings’ brand in international finance will be strong enough to secure outstanding partners in the Square Mile, but Paul Hastings hopes that a substantial high-yield bond practice in the US and established term loan B coverage in New York, will help.
‘The finance market in Europe has generally lent towards US and NY law products; this is still a strong trend, so to compete at the top table in the finance world in London, you have to have all three constituents. Building the third is [our] core focus at the moment,’ adds O’Sullivan.
While Paul Hastings says it is performing well in London, the 900-lawyer firm’s global revenues heavily lean on growth in the US with global revenues breaking the $1bn mark in 2014 for the first time in the firm’s history, up by 6% on the 2013 level, keeping it comfortably inside the Global top 40 in revenue terms. Partner profits increased 9% to $2.36m, while revenue per lawyer grew 8% to $1.145m.
Around half (12 partners) of the 23-partner team sit in corporate/finance, with six in real estate, the latter practice reflecting a core area in the US and marking it out as unusual as a foreign adviser to invest heavily in property.
From the remaining five, two sit in disputes, with one each in bankruptcy/insolvency, tax and employment. The firm also saw partner Ashley Winton join from White & Case in November 2014 in technology/data privacy, and partner Ben Regnard-Weinrabe join from Hogan Lovells in October in payment systems – both of which were new practice areas in London.
While Paul Hastings has the resources and pedigree to do better in the City – most observers believe the firm will have to increase its commitment considerably to secure the breakthrough it desires.
The firm did lose long-serving arbitration partner Wendy Miles, who left the firm in September to kickstart a rival practice at Boies, Schiller & Flexner, the high-profile US disputes boutique that launched a London office in 2013. (As Legal Business went to press another major disputes player Jenner & Block announced it was to launch a disputes-focused City branch.)
Despite 2014 proving beneficial for most firms, some firms have continued to either struggle to maintain momentum or continue to reshape their UK practices.
Set against that, Mayer Brown did manage to continue growing its City revenues, with the firm generating around £111m, against £104m the previous year.
Mayer Brown senior partner Sean Connolly tells Legal Business: ‘We focus on serving our global clients out of London and equally look to export our London relationships around the globe. We have had a good start to the year but our cautious optimism about the year ahead is balanced by the inevitable uncertainty caused by the imminent election.’
Sitting in first place by headcount is Baker & McKenzie, with 397 lawyers, the same as in 2013, despite having flirted with the 400-lawyer landmark for the last four years. The firm did lift its IP/life sciences practice with patent litigator Hiroshi Sheraton, who joined from McDermott Will & Emery, but the firm’s biggest initiative in the region last year was a Belfast launch, as the firm became the first US-headquartered firm to open a legal services centre in the UK to offset low-value work. ‘Our Belfast operation has been one of the key things,’ says London managing partner Paul Rawlinson. ‘That’s a global initiative but one that is close to the heart of London.’
Fastest-changing London offices by headcount 2009-14
US leader Skadden, Arps, Slate, Meagher & Flom has been slipping in headcount, despite its prominence in high-end corporate and contentious work. The firm currently has 125 lawyers in the City, an 8% fall over the last five years while many of its peers have expanded. Nevertheless, the firm did bring in $174m in London revenues last year. The firm saw private equity veteran Allan Murray-Jones retire last year, leaving the firm to scout the market – so far without success for a credible partner to push forward its buyout practice. The firm did, however, make two notable hires during 2014 – Freshfields Bruckhaus Deringer’s non-contentious insurance practice head Robert Stirling and Dechert’s London arbitration head Daniel Gal, both joining at the beginning of 2015.
Firm focus: Milbank, Tweed, Hadley & McCloy
London lawyer headcount 2009-14: 47 to 98
Speciality: Project finance and deal finance
London office: 98 lawyers, 21 partners
Office head: Suhrud Mehta and Julian Stait
Representative London work
Advised Bahraini private equity group Arcapita on its sale of Freightliner Group, which was created as part of the privatisation of British Rail in 1996, for £490m to US railroad company Genesee & Wyoming. Represented the 21 banks drafted in to underwrite the $7.5bn sale of a Swedish power grid by Scandinavia’s biggest energy company Fortum.
While Milbank, Tweed, Hadley & McCloy’s London arm has previously had false dawns, having made a series of major hires in the early 2000s but failing to sustain momentum, the New York firm has renewed its UK push in recent years.
The office, now the 600-lawyer firm’s second largest, grossed £63m in 2014, 14% up on the previous year. While still trailing the likes of White & Case and Latham & Watkins, London co-head Suhrud Mehta says that the election of litigator Scott Edelman to global chairman in March 2013 has repositioned the traditionally conservative firm into one prepared to take risks and make international investment. ‘He’s trusting the partners in the field who are driving the business. We get the sense he’s completely behind us.’
While the project and deal finance partners at the firm have long worked as a cohesive unit, the firm has struggled to establish a credible corporate presence since opening in 1979. Even the hire of Tim Emmerson from Freshfields Bruckhaus Deringer in 2003 failed to make headway, with the well-regarded corporate partner quitting for Sullivan & Cromwell in 2007. As such the arrival of Linklaters corporate partner Mark Stamp in 2012 heralded a fresh attempt.
This time the push seems to have worked, with many feeling the retirement of global chairman Mel Inmergut in 2013 gave London a new lease of life, handling more control to the partners.
Milbank is now one of the fastest-growing US firms in the City and is set to add high-billing Linklaters duo Matthew Hagopian and Manzer Ijaz. Hagopian, who was global co-head of energy at the Magic Circle firm, and Ijaz will act as a useful bridge between the firm’s finance and corporate groups and fit well with the firm’s traditional strength in projects, having previously advised Glencore, BP and Eni. There is also organic growth in the corporate team, with Joel Harrison being made up to partner at the start of 2015, alongside leveraged finance specialist Laetitia Costa.
The number of lawyers at the top 50 global law firm has risen from 60 in 2012 to 98 in 2014. Stamp told Legal Business: ‘We’re prepared to take more risks as a firm, principally coming from the very top. Scott’s view of the world is very progressive and he’s prepared to put investment where he sees a business opportunity and really go for it.’
Mehta adds: ‘It’s now about converting the opportunity we have. The Magic Circle would like to have each one of our mandates. We’ve consistently delivered results and Scott wants us to grow.’
Milbank underlined its reputation for big-ticket work in March after acting as finance counsel on the €6.6bn purchase of Fortum Distribution, the owner of Fortum’s electricity distribution business in Sweden, by Borealis Infrastructure, fielding a team under Mehta, who also leads the firm’s European leverage finance team.
Other clients to regularly instruct the firm in London include private equity house Anchorage Capital, while the recruitment of senior DLA Piper litigator Julian Stait in 2009 has helped Milbank build a credible contentious practice. Stand-out work includes handling Libor-related work on both sides of the Atlantic, notably advising Rabobank on a $1bn settlement in 2013 with regulators in the US, UK and the Netherlands and follow on litigation. Stait is currently advising Visa in a high-stakes dispute over alleged infringement of competition law-related charges made to retailers.
Other firms lower down the pack to have faced challenges include Chadbourne & Parke, which suffered one of the highest drops in five-year growth, falling 23%. Meanwhile, McDermott and MoFo’s headcount fell 16% and 15% respectively last year. Despite this, McDermott won two new clients in London last year – apparel manufacturer Hanes and technology company Sabre Holdings, which sold lastminute.com earlier this year.
While there remain areas of work that US firms have largely yet to make their mark in – notably public M&A and major listings work and, to a lesser extent, banking panel instructions, it is clear that US firms have now established themselves as a serious part of the City legal market.
Indeed, in some areas that are currently driving deal flows and transactional work they appear to be increasingly leaving City rivals flat-footed. Also significant has been the substantial progress American-bred firms have made in high-end litigation and arbitration.
According to consultant David Temporal at Venturis Consulting Group: ‘UK firms are sleepwalking into oblivion’, and have ‘failed to address profitability and their overall business focus is mixed’.
While not everyone shares this view, the growing confidence of US pace-setters, as well as the mid-pack, is undoubtedly putting pressure on leading UK law firms.
Global London: Law of Averages
Ropes & Gray co-head of finance and London managing partner Mike Goetz comments: ‘Dominate is never going to be the right word. They [US firms] are part of the establishment [in the European market] in their chosen areas. Take a big investment bank that needs a super law firm in Europe; they aren’t necessarily going to turn to a US firm here, unless they already use them in the States. They are going to want a Clifford Chance or an Allen & Overy. They’re going to want the established names. That being said, in the areas where the US firms operate – such as finance, private equity, regulatory and government enforcement – a US firm may be more attractive.’
Part of the success has come not only from the relative strength of the US economy but the increasing tendency of US advisers to focus their European practice in London, rather than attempt to build a broader regional network, and to more tightly define their City practices. The concentrated focus has made US advisers more potent forces than they were during the mid-2000s.
‘There are obviously other countries where our clients are active, and we have reviewed whether it makes sense to have a physical presence there,’ says Kirkland & Ellis partner Jim Learner. ‘But we are comfortable partnering with local firms where we have long and deep relationships, and have them provide the local law expertise. This way we are able to use the best firm and the right people for the right matters.’
As US firms anticipate another robust year in 2015, UK rivals still appear to be searching for an effective strategic response. Because the initial contest has already been conceded. LB
jaishree.kalia@legalease.co.uk
Legal Business would like to thank Venturis Consulting Group for its sponsorship of the Global London survey.
Methodology
The firms that appear in Global London are the 50 largest non-UK originated firms in London, ranked by headcount. Partner and lawyer numbers were all requested as full-time equivalents as of 1 January 2015. All partner hires were up to and including February 2015. Total lawyer numbers include partners, associates, assistants and trainees but not paralegals. Unless firms provided a sterling figure, the US Internal Revenue Service average exchange rate for the year 2014 was used for Global London revenue calculations. This was $1=£0.632.