The Third Wave – high stakes City deals for Akin and Cooley highlight changing tactics

With Akin Gump and Cooley securing multimillion-pound teams, a wave of new entrants to the City are re-writing the playbook for expansion in London. What is driving the new breed?

Sitting in the airport lounge at Fort Worth, Texas, flicking through magazines and eating stale sandwiches, 25 maintenance staff waited to board flights to London, Frankfurt and Hong Kong. While they were less than thrilled to be spending their weekends rewiring computers, moving desks and changing security codes for a bunch of lawyers thousands of miles from home, the woman who sent them was jubilant, having just pulled off the deal that would reposition her law firm as a genuine international player.

Sitting high up in Bank of America Tower, Kim Koopersmith was in Akin Gump Strauss Hauer & Feld’s Manhattan office catching up on work following a hectic six weeks sealing what was by some measures the largest-ever lateral hire deal in the UK. Reacting to a period of high uncertainty at US rival Bingham McCutchen, the Akin Gump chair had secured the services of Bingham’s profitable London arm, and the considerable international restructuring practice attached to it. On Monday 20 October, Akin Gump would be 110 staff bigger, as 28 Bingham partners carrying over $50m of business transferred, doubling the size of its UK revenues. Koopersmith had fulfilled the promise she had made on being elected chair in October 2012 to turn the Texas-bred institution into an international force.

The success of Akin Gump’s rapidly upgraded practice is perhaps only the most high-profile illustration of the changing dynamics and tactics for foreign firms in London. While US firms through the late 1990s and 2000s often made bold expansion promises, almost without exception they struggled to live up to the rhetoric; mass was only achieved by firms with huge balance sheets that made sustained commitments or that secured a handful of transatlantic mergers. Even when such deals did occur, notably in Jones Day’s tie-up with Gouldens or Mayer, Brown & Platt’s marriage with Rowe & Maw, the results proved mixed at best, often beset with cultural tensions. It seemed the only progress in the City was slow progress.

Yet since the banking crisis recast the market, there have been a band of US firms that have defied the critics to rapidly build successful City practices – most notably disputes leader Quinn Emanuel Urquhart & Sullivan and Boston-bred Ropes & Gray – firms which now both generate more than £25m annually in the UK on margins comparable to their US practices.

And, of course, Akin Gump was not alone, with California tech leader Cooley in January finalising its equally emphatic City launch after months of talks with a 55-lawyer team from Edwards Wildman Palmer and (later in the day) Morrison & Foerster (MoFo).

If there was an initial wave of liaison branches set up by leading US firms in the 1970s and ‘80s, and a second wave in the late 1990s and early 2000s moving into English law – this third wave appears to be both benefiting from, and contributing to, an increasing momentum for US advisers.

With the winds of the global economy blowing in favour of such firms – fired by a robust national economy, a US-driven global regulatory push and the increasing vogue for European companies to tap investors on the other side of the Atlantic – this momentum looks more likely to build than ebb.

Martin Lane, Europe managing partner at K&L Gates, says: ‘There’s room for growth in the London market but it depends on being targeted with the areas you want to grow in. Ultimately there’s only growth in the areas that clients are growing in. That’s different to dividing up the pie a different way, which is happening in the City M&A, real estate and litigation markets because the amount of demand is fundamentally about the same. US-dominated alternative capital and US-led boardroom risks regulation is where the demand is.’

‘This never happened before’

Akin Gump’s New York financial restructuring trio Fred Hodara, Daniel Golden and Michael Stamer had long looked enviously upon Bingham’s London practice. Head of financial restructuring Hodara had been friendly with Bingham London head James Roome and restructuring veterans Barry Russell and James Terry for more than a decade and had ‘often discussed how good it would be to join forces’. He adds: ‘I met James in the 1990s when he was visiting the States [while at Simmons & Simmons] and it was at a time when there was not much cross-border financial restructuring. We had similarly global visions.’

Hodara and Golden had known American-born and Connecticut School of Law-educated Russell since the late 1990s and were increasingly becoming competitors in the US financial restructuring market. This competition took a more international dimension in 1999, when Hodara and Golden moved from Stroock & Stroock & Lavan to Akin Gump and Russell became part of then Bingham Dana when it merged with 55-lawyer Connecticut outfit Hebb & Gitlin. ‘The way that our group grew and James and Barry’s group grew mirrored each other, not just in terms of business, but in terms of timeframe,’ says Hodara. ‘We came to Akin because it had a tremendous US platform and a clientele focused on investment funds. Their team grew in a similar way but had more international links, not just in London, but in Hong Kong and Frankfurt too.’

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Bingham’s City operation looked even more attractive after the banking crisis of 2008, as it benefited from a stream of contentious and insolvency work across London, Frankfurt and Hong Kong. Moreover, the office was a cohesive unit at a time when many US firms’ London branches were still beset by internal tensions. This was in part due to the leadership of the clubbable Roome, a former Simmons & Simmons litigator with a droll sense of humour honed working on a series of high-profile fraud and insolvency cases in London, Hong Kong and the Middle East, including the collapse of BCCI and the sprawling Carrian liquidation in Hong Kong in the 1980s. Asked his biggest influences, Roome once responded: ‘Speculators, entrepreneurs and fraudsters.’

The particular elements to Bingham’s City practice – combining litigation, insolvency and regulatory work – had been a successful formula, benefiting from the new breed of funds and bondholders in the 2000s disrupting the City restructuring market previously dominated by banks. Roome – along with his former colleague and then competitor Andrew Wilkinson at Cadwalader, Wickersham & Taft – was cited as one of the best-paid lawyers in the City during the 2000s.

Hodara met Russell in the spring of 2013 in an attempt to lure him and the team to Akin Gump but the talks never progressed.

In some regards that was surprising as all was not well at Bingham. The firm had since 1994 been dramatically repositioned from struggling Boston institution Bingham, Dana & Gould under the energetic leadership of Jay Zimmerman, with the firm pursuing a string of acquisitions of smaller practices with succession issues or financial problems. Zimmerman also championed national and international expansion and was a big supporter of its London practice, as well as Roome himself.

Bingham became the subject of a celebratory Harvard Law School case study in 2011, ‘Combinatorial Mathematics’ as the firm’s counter-cyclical strengths saw it at the height of its powers. But its strategy for assimilating firms proved less successful at managing its two most ambitious deals: its 2002 union with 340-lawyer California practice McCutchen, Doyle, Brown & Enersen and the 2009 acquisition of Washington DC tax and structured finance specialist McKee Nelson. That latter deal in particular was problematic as Bingham had agreed a string of guarantees to McKee Nelson rainmakers to secure the merger, with a small group of high billers earning between $4m and $5m annually.

Neither had Bingham trimmed its expenses during 2009 and 2010 like many peers, as its practice powered through the initial period of the downturn.

When the crisis-related insolvency and disputes work began to fade during 2012, the level of guarantees proved a substantial strain and its cost-base was too high. As with the implosion of Dewey & LeBoeuf in 2012 the deployment of guarantees proved culturally toxic in creating an us-and-them dynamic. A $22.5m investment made in a back-office outsourcing centre in Kentucky also strained the firm’s finances and came too late to provide much help. The situation was further aggravated by the loss in 2013 of an 11-partner securities and regulatory team for Sidley Austin – depriving the firm of a productive team in one of the hottest lines of business.

When partners were told in January 2014 that Bingham had experienced a torrid financial year, revenues plunging by $110m to $762m, the situation was rapidly becoming untenable. The appointment of Steven Browne in October 2013 as managing partner further alienated Bingham’s London office, which believed Browne and his right-hand man Daniel Papermaster would not support the practice. Roome raised these concerns on a number of occasions and, alongside Russell and Terry, took Browne’s decision not to visit the City office as confirmation of their fears that the firm was becoming more US-focused. (Browne went on to successfully move over 200 partners to Morgan, Lewis & Bockius and the new leader made it immediately clear he was looking for a US-led rescue deal having also pursued talks with Winston & Strawn, Greenberg Traurig and Dechert. Bingham had been put up for sale.)

By the spring of 2014 Roome had indicated his team would likely depart. The Akin Gump talks were finally on in earnest, with Golden and Hodara initially leading the discussions.

The attraction wasn’t hard to see. The 800-lawyer Akin Gump has a strong reputation in the US in power, restructuring, funds and energy arbitration but had made little progress outside the US. It was a good fit with the Bingham London team, which would greatly bolster its international capacity in insolvency and regulatory work. There was enough cross-over for clear strategic common ground but not too much that a deal wouldn’t add strength in areas where Akin Gump needed to expand.

While Akin Gump had moved at the start of 2012 to bring in financial services duo Tim Pearce and Ian Meade from Simmons, its slim-line financial restructuring team still didn’t fit with the firm’s sizeable offering in New York.

Roome and Russell made it clear that they wanted to keep the London office together and Koopersmith was brought into the discussions in April. A conference room at Mayfair hotel Corinthia that month brought all the main players together for the first time. Hodara recalls: ‘Danny, Mike and I had the meeting set up and Kim happened to be in London on other business. We arranged with Kim that, if the meeting was going the way we hoped it would, then we would reach out to her and she would jump in a taxi. The meeting felt so good right from the get-go so we asked the guys if they would like to meet her and the answer: “Yes, absolutely.” She came right over.’

Hodara says that the meeting with Koopersmith, Golden, Stamer, Roome, Russell and Terry ‘led to huge amounts of enthusiasm on both sides’ and a rematch with a wider group of Akin Gump partners was arranged a fortnight later in Washington DC.

Roome, Russell and Terry were won over with Akin’s promise it would commit to hiring the entire office, but largely kept the offer to themselves until the following month after a showdown with Bingham’s management in the US. With Bingham touting itself to the highest bidder, the London trio made it clear that they would not be part of a merger with a firm without strong financial restructuring expertise.

A call was soon made to Koopersmith, informing her that they would like the deal to go ahead, but that they had agreed to give Bingham time to complete their own ‘sale’. For Roome, the work had only just begun. While he, Russell and Terry held a sizeable proportion of the key client relationships in the office, he still had over 100 people in need of convincing that London’s biggest lateral move was the right decision. After becoming frustrated from sitting on their hands, over August and early September Roome persuaded every London partner, bar restructuring specialist Elisabeth Baltay and competition lawyer Frances Murphy, to make the move. ‘Some of them literally didn’t know that Akin Gump were the people we were talking to until then,’ says Roome.

Koopersmith flew in at the start of September to present to every London, Frankfurt and (with one exception) Hong Kong partner, but the move would drag over the summer. Hodara adds: ‘The vast majority all came in one go and then there were just a couple of others in London, in other specialty areas, who just needed a little more time to sort things out. In Hong Kong there were issues with the regulatory authorities so that took a bit of time.’

On 3 September, Legal Business broke the news of the discussions online and the bulk of the group, including the entire restructuring team, handed in their resignations on 10 September. A week later the initial deal was officially confirmed with 22 partners agreeing to move over, including 18 in London. Over the coming weeks the number would swell to 28 partners, including two in Frankfurt and five in Hong Kong. Thirty-five other fee-earners and 50 support staff also moved over.

Outside of London, 14 lawyers including seven partners signed up for the switch. Helen Marshall, who was head of enforcement at the Financial Services Authority before being recruited by Roome in 2005, comments: ‘The Bingham office all enjoyed working together, and James and Barry have always provided good leadership. That fact we’re all here speaks for itself.’

Roome was appointed London co-head on arrival and Koopersmith has already moved to make Roome the first English lawyer on the firm’s global board.

The hires more than doubled Akin Gump’s practice in London and took it from being the 45th largest international law firm in the City to the 20th. On top of that, the Akin Gump office now has a regulatory practice, plugging an obvious gap. The firm also has a credible litigation team with the arrival of former Simmons managing partner Mark Dawkins, and has a new office in Frankfurt to boot. Marshall notes: ‘People were intrigued as it was something that had never really happened before. It was big, so people were curious. People wanted to know whether it was really the whole of London going, the whole of Frankfurt, the whole of Hong Kong. People couldn’t understand it as nothing like this has ever happened before.’

On paper at least the deal appears to have created one of the most distinctive US-backed practices in London with teams operating in the restructuring, contentious and regulatory space, geared heavily towards a funds and financial institutions base. The firm is also backed by substantial resources – Akin Gump earned $868m in 2014, with profit per partner of $1.89m.

Hodara comments: ‘Restructuring is the marque practice for us in the States and we thought “if we can match that reputation in London let’s go for it and build on that strength”. This gave us the opportunity to do that. I liked London before, but we’ve succeeded in building on our core strengths by bringing this group in, and it puts us in a very different position in the City.’

So what is next for a firm that has just pulled off one of the most audacious deals in the City? Sebastian Rice, co-head of Akin Gump’s London office, says the practice will remain clearly defined. ‘Our plans are to focus on our strengths. We’re full service in the US but we have no plans to be full service in the UK.’

Roome comments: ‘We’ve pulled together a powerful funds group. It’s not unique but that has strengthened us as a player in that market. We are not a full-service law firm. We’ve glued oil and gas, funds and financial restructuring, and regulatory with corporate, finance and disputes. That makes us specialised in the firm’s chosen areas and the three offices fit better within the rest of the firm.’

Last mover advantage

For Joe Conroy, making it to London had for years proved a thankless task. Recalling his early attempts to scout out the Square Mile, Cooley’s chief executive observes that he ‘couldn’t get his face slapped’ in the late 2000s, so low was the firm’s profile. The corporate and securities lawyer was head of one of the most prestigious and profitable law firms bred outside New York, boasting a commanding presence in the Californian technology and venture capital community.

Launched in 1920 in San Francisco, the firm in 1958 had advised on the creation of the first venture capital partnership in the West Coast and acted for several of the pioneering chip companies that put the Silicon into the Valley.

With major clients including Google, Facebook, Qualcomm and LinkedIn – the 800-lawyer firm had been increasingly ambitious in recent years at moving beyond its California heartlands, notably with its 2006 takeover of 110-lawyer New York dispute boutique Kronish Lieb Weiner & Hellman.

Conroy himself had joined the firm in 1999 in one of its first serious forays into the East Coast, joining a branch in Reston, after quitting Hunton & Williams.

While Cooley had made substantial job cuts in 2009 as the economy turned, laying off 114 staff that year, the firm maintained a muscular contentious practice with chairman Stephen Neal long established as one of California’s top trial lawyers. As such the firm has been well hedged, and managed a respectable rebound along with the resurgent technology sector and was soon back in growth mode.

Still, the path to a London launch proved anything but straightforward, so it was just as well that the straight-talking Conroy proved so personally committed to a UK launch.

Conroy had begun making the case for the firm to internationalise its practice soon after taking on the chief executive role in 2008 as a full-time manager. But the conservative partnership, particularly in California, took a while to come around. ‘They didn’t throw rotten fruit at me,’ recalls Conroy of the initial discussions, ‘because they didn’t have any to throw at me.’

The global aspirations of Cooley’s technology-heavy client base began to change such attitudes, as did the cultural impact of having built up a significant New York presence. The firm’s centre of gravity moved further beyond California in late 2013 with a takeover of Dow Lohnes, a venerable DC firm that had put itself up for sale amid succession issues.

A real opportunity to launch seemed to arrive in the shape of Olswang, a firm with a broadly comparable industry focus and a strong UK brand. The firms entered a loose referral relationship in 2010 lasting 18 months, during which they examined a merger.

Olswang’s then chief executive David Stewart, who was pushing to take his firm global, advocated a tie-up. But the large gap in profitability and Cooley’s unwillingness to consider some form of model that maintained separate partnerships was a major block. That would mean stripping Olswang to what it considered the quality elements of its practice. It wasn’t happening (Stewart left Olswang in late 2014 amid differences over strategy).

It wasn’t until news emerged in the somewhat unlikely shape of tensions at the City practice of Edwards Wildman in late 2013 that a breakthrough appeared.

The operation was the result of a merger between the then Edwards Angell Palmer & Dodge with 40-lawyer City outfit Kendall Freeman, a spin-out of DJ Freeman that was heavily focused on insurance, litigation and regulatory work. The team also included a well-regarded intellectual property (IP) team in the shape of litigators Nicholas Bolter, the former London head, and Akash Sachdeva, and corporate IP specialist Sarah Pearce. Though the City office was successful financially under respected litigators like Laurence Harris and reinsurance specialist David Kendall, it had become distant from its US parent. Disagreements over partnership pay in London fuelled the tension, with partner departures beginning in early 2014. As with Bingham, the situation was aggravated by poor trading in the US, with Edwards Wildman ultimately seeing a 9% fall in revenue for the 2013 year.

Harris had initiated discussions with Cooley in the spring, which widened to include a large team – by the early summer reports were emerging that Edwards Wildman was looking, or at least willing, to offload the entire office. A group of five influential corporate partners held discussions with management, which was trying to resolve the situation.

Lengthy discussions continued and lack of clarity over what was happening caused some frustrations, with some feeling that Harris failed to communicate internally. One former partner told Legal Business during the talks: ‘Cooley may open in London this year, or maybe next year, or maybe in five years. I have a family to support, I wasn’t willing to wait around for Harris to get us this deal – and lots of others felt the same… so everyone started leaving.’

By October the firm had lost its entire City corporate team. The length of time it was taking to do the deal was putting a major commitment on Conroy – who visited London more than ten times through 2014; ‘it was his life last year’, recalls a Cooley staffer. In truth sealing the deal was an epic undertaking. The talks were complicated by Edwards Wildman’s ongoing merger discussions with Locke Lord (the pair finally sealed a merger on 1 December), not to mention the fate of Edwards Wildman’s London property. Over nine months of committed discussions there were dozens of meetings between Cooley partners in the US and UK between the transferring London lawyers.

The deal was also partly being held up because Cooley was intent on bringing in another team to reflect the firm’s corporate and technology strengths.

The solution came in the shape of a five-partner team from MoFo headed by London head of corporate Justin Stock and including corporate and IP partners David Bresnick, Chris Coulter and Ed Lukins. The modish West Coast firm was yet another of a long line of sizeable and profitable American law firms that had never quite hit its stride in the City. The MoFo team had entered the frame by October but these talks moved at lightning speed in comparison to the drawn-out Edwards Wildman process.

Stock recalls: ‘Joe is a charming guy and he was what drew me to the firm. When I first went to see him, I wasn’t even looking to move, I just wanted to scope out the competition. It’s a big task but he’s massively committed to making it work and that makes all the difference. He’s prepared to take a few risks to make this work.’

An additional complication was that Cooley was intent on having as fully-formed a launch as possible, which meant taking on the 23,000 sq ft offices Edwards Wildman was occupying in 69 Old Broad Street. By the time the firm was finally ready for the announcement on 12 January that the deal had been completed, the signs had already been changed on the offices and the party balloons would be out that week.

The launch team which totalled 55 lawyers, included 14 Edwards Wildman partners and the MoFo five, moving a practice estimated to generate around $40m annually in turnover.

Stock, who was made chair of the London office, comments: ‘We made a splash. That was intentional. A lot of the US firms don’t get to that critical size where they can actually compete for the work. We wanted to make sure the market knew that we weren’t going to come here, get to 25 lawyers and then stall. We want to get to 100-plus lawyers as we need to get to a big enough size so the clients can feel comfortable we can handle the work.’

The result, says Stock, has been the opening of an office with ‘a crisp, clear message’ focusing on three core areas: life sciences, tech and emerging companies. He adds: ‘The other approach we’re taking for London is to work at what we’re known for as opposed to trying to be all things to all people like so many top firms in London already do that we won’t be able to compete with.’

Though some have raised eyebrows that Cooley would look to bring in such an insurance-heavy team, Conroy responds that the firm has long been heavily focused on contentious work, citing the quality and profitability of the team’s work. The firm is set to gear up for significant further expansion, that will further ground out its technology and venture capital work with the talk of an aim to rapidly move the practice to a critical mass of around 100 lawyers.

It is a message that has helped the firm to recruit three more partners since launching in January, adding life sciences duo John Wilkinson and Nicola Maguire from Reed Smith and the former head of private equity at Olswang, Stephen Rosen.

Cooley also debuted in London with a following wind having seen its revenue surge 19% in 2014 to $802m – thanks in part to the Dow Lohnes takeover – and profits per partner rising 11% to $1.74m.

Conroy argues convincingly that the firm’s focus on getting the culture right and genuinely engaging with its London operation will stand it in good stead. Underlying this point, Harris and Bresnick have both been appointed to Cooley’s management committee while two other partners from London have reserved spaces on its compensation body (one from Edwards Wildman and one from MoFo, though the firm declined to say whom).

Conroy argues this ‘sticky’ culture, where partners have a strong sense of ownership, will help the office integrate with the rest of the network and won’t take partners for prisoners. Interviewed in the wake of the deal, Conroy added: ‘We haven’t ever tolerated partners that don’t act right – I call it my hand truck speech – no matter how much business you develop, partners that don’t act in the right way, it’s gonna be you, the hand truck and your stuff going out. Life is too short.’

Conroy jokes that the firm has a ‘last mover advantage’ in having taken its time to put everything in place and learn from the mistake of other US players who made major investments without sufficient local knowledge.

New arrivals – in numbers
Newcomer revenue
Firm	Year opened	2014 revenue	2013 revenue	Percentage increase
Quinn Emanuel Urquhart & Sullivan	2008	£26.2m	£19.8m	32%
Ropes & Gray	2009	£40.4m	£31.1m	30%
Greenberg Traurig Maher	2009	£14.5m	£13m	12%
Locke Lord	2012	£8.1m	£8.7m	-7%
Fastest growing launches
Firm	Lawyers	Partners	Laterals in 2014
Ropes & Gray	97	24	3
Greenberg Traurig Maher	47	19	5
Locke Lord	32	12	3
Quinn Emanuel Urquhart & Sullivan	31	12	2

The formula

The scale of the deals brokered by Akin Gump and Cooley represent a new milestone for the internationalisation of London and the rising influence and sophistication of foreign advisers.

Akin Gump, now the 20th largest international firm in the City, and Cooley, now the 27th, have gained traction that eluded the likes of Orrick, Herrington & Sutcliffe, McDermott Will & Emery, Winston & Strawn and Cadwalader, Wickersham & Taft.

This approach largely appears to have come from a simple strategy of entering the City with a tightly constrained practice geared towards what a parent firm is best known for, allowing for rapid progress where full-service generalism repeatedly failed.

That approach has been similarly notable in the rapid development of Ropes & Gray and Quinn Emanuel, which have respectively focused heavily on private equity/funds and litigation. In the last year alone, Ropes & Gray has increased the number of lawyers in London by 17% to 97, while Quinn Emanuel’s headcount climbed 11% to 30.

Ropes has grown dramatically since hiring finance duo Maurice Allen and Mike Goetz to launch its practice in 2009, defying claims that the high-profile duo were past their prime, especially to build out a platform for a Boston-bred player with a modest profile in the City.

The practice has benefited, of course, from shifts in the market, with US sponsors becoming far more of a force in Europe, while the vogue for leveraged buyouts to tap US investors in place of retrenching banks plays hugely to the firm’s focus on sponsor-side work on private equity buy-outs.

In the last 12 months alone, Ropes has been engaged on four deals for Bain Capital, including the £414m purchase of the concrete and clay businesses of FTSE 100 firm CRH in December, and its $2.1bn acquisition of fuel systems supplier TI Automotive the following month. A regular client, Ropes also acted on Altice’s purchase of telecoms rival Oi’s Portuguese assets in a €7.4bn deal, backed by a €4.6bn high-yield bond.

The firm hired 40 London lawyers in 2013, almost doubling the size of the office, and last year added another 15. Less than six years after opening in the City, Ropes & Gray has the 17th largest international office in London and grossed $64m during 2014.

The firm – which was last month awarded US Law Firm of the Year at the 2015 Legal Business Awards – secured another high-profile hire in the form of Travers Smith private equity head Phil Sanderson in August and has begun to make hires in real estate after an increase in the activity of real estate funds in London. Ropes hired Carol Hopper from Allen & Overy (A&O) at the start of this year as it seeks to grow in this area and is also focused on building its regulatory and investigations practices.

Underlining the firm’s ambitions, Ropes last year signed a deal to move to larger offices in September 2015 at 1 New Ludgate, nearly doubling its current space. The 45,000 sq ft site can hold as many as 180 lawyers. The firm aims to have between 120 and 150 lawyers in the UK by 2017, targets that certainly look achievable given its track record.

Goetz comments: ‘We are not doing that much different from the other firms that are trying to grow in London. We are in the same growth trajectory as a Kirkland [& Ellis] or a Weil [Gotshal & Manges]. But the fact that we opened up during a terrible downturn allowed us to reshape our strategy to meet the current market. We are working with the investment, hedge, credit and private equity funds.’

Quinn Emanuel, of course, is even more niche, having made waves in 2008 launching in the City with its we’ll-sue-banks calling card and more robust disputes style.

While the firm has moved away from that message in the City as its practice has broadened, there is little doubt its influence has been significant in encouraging a wave of dispute specialists firms such as Enyo Law and Signature Litigation.

The firm could do no wrong in the first five years, posting a 28% rise in income from £21.8m in 2011 to £27.5m in 2012, and the addition of City veterans such as Ted Greeno from Herbert Smith Freehills and A&O arbitration duo Stephen Jagusch and Anthony Sinclair at the start of 2013 added credence to the firm’s strategy. But a sharp fall in revenue for 2013 after a number of big-ticket cases concluded gave weight to critics’ claims that the firm’s model was unsustainable.

Quinn Emanuel, however, answered such claims with revenue bouncing back from £19.8m in 2013 to £26.2m in 2014. As significant, the firm has in recent years operated on a margin of well over 50% in the City.

Richard East, co-managing partner of Quinn Emanuel’s London office, comments: ‘We have had a good financial year on the back of a large number of medium-sized matters. This is where we want to be – not too dependent on any one case and getting work from lots of different sources and places.’

The firm has recently expanded its arbitration team with the hire of litigator Nick Marsh from DLA Piper and has added to its associate base. While it is looking at expanding into patent litigation and white-collar crime in London, Quinn Emanuel has largely stuck to its guns in London and stayed tightly focused, with East noting ‘we’re not into hiring masses of people’.

A different model

There are a number of parallels between the examples and apparent success of Cooley, Akin Gump, Quinn Emanuel and Ropes.

All relatively late entrants – they have concentrated their practices for the UK market and leveraged their brand-name strengths. All have also been substantially opportunistic in their hiring, while still making their investments against a clear playbook.

More to the point, the group have benefited from avoiding mainstream M&A and banking work – the two areas that have proved the most resistant to US advisers – and have similarly avoided a heavy focus on bluechips and investment banks.

The rise of such firms is linked to a relative loss of dominance by banking groups in the global economy and legal market in place of a new breed of funds and investors, comprising private equity, hedge funds, venture capital, special situations funds, direct lenders and sovereign wealth.

Such funds – either bred in the US or increasingly drawing on American capital – have proved ideal for US law firms looking to build in the City as such clients are less institutionalised and portable.

On a wider level the rise of sponsor or funds-driven international law firms appears to be steadily changing the dynamics in the City as a new kind of model emerges to challenge that of the London law firm.

Ropes understandably makes much of its connections to Harvard and Boston, a key hub not for banks but investors and funds. The point even extends to the disputes work that is increasingly being snapped up by US advisers – which has been backed by the willingness to take cases against banks – and the extent that US enforcement is shaping contentious work globally.

It is telling that none of the four law firms were bred in New York, as with some other larger firms like Latham & Watkins and Kirkland & Ellis, which have both proved pace-setters in London with a heavy focus on private equity and funds.

The rapid inroad of US advisers in private equity is perhaps the most dramatic evidence of this wider trend, an ominous development given the evolution of many of the top houses into multi-product line ‘shadow banks’.

Nick Buckworth, Europe managing partner at Shearman & Sterling, argues that this focus will be rewarded by asserting that a group of around ten US firms are making huge gains in the City because ‘the Magic Circle has ignored the shift in the finance market’. He adds: ‘Private equity is an increasingly US-dominated space and all of the PE houses are moving to US firms.’

What is less clear is what the prospects are for a wider band of US firms with a less defined practice in the City, which explains the doubts some harbour over the recent investment of Gibson, Dunn & Crutcher.

A managing partner at a US law firm comments: ‘We don’t really see Ropes but they’re very good at PE and they’ve got the potential. However, I don’t see Gibson Dunn or Fried Frank [Harris, Shriver & Jacobson] getting a huge amount of benefits from these big recruits.’

The maturing of the City market as a home to foreign advisers means that now US advisers have the option of moving wholesale teams, which has meant that Cooley and Akin Gump’s new recruits were able to carry clients and work across to their new employers.

The message is clear that for every US firm that fails to back its investment in the City, there will be a rival that will.

On top of this, the raids on Edwards Wildman and Bingham meant Cooley and Akin Gump were able to take over the leases on those offices, and just change the signs outside. The managing partners knew the costs and the partners had little interruption. Both firms are intent on growing but have not made the boasts that previous entrants to the market have. Will it work? Roome seems to think so.

‘We’ve got every chance of making a success and building a really credible office here as we’re building on each other’s strengths. My group feel we’ve succeeded for the 15 years we’ve been together and we’re looking more forward than back at the horrible things that could have happened.’ LB

tom.moore@legalease.co.uk, alex.novarese@legalease.co.uk

Additional reporting by Sarah Downey