Without a paddle

The continued exodus of high-profile partners from White & Case’s City operation suggests the Global London leader still has serious management issues. It’s time someone took charge

In last year’s Global London issue, White & Case’s newly appointed London executive partner Oliver Brettle reacted defiantly to LB’s suggestion that the office had morale issues. It wasn’t correct that ‘one or two vocal former members of the team should give rise to a more general impression that there is a problem with morale in the office’, he insisted.

Although he remained tactfully ambiguous, he was almost certainly referring to finance supremos Maurice Allen and Michael Goetz, who left to join Freshfields Bruckhaus Deringer in March 2008 and are now at Ropes & Gray. At the time Brettle also stressed that, despite projects partner Michael Scott having just left to join Reynolds Porter Chamberlain, and seven equity partners leaving throughout 2008, the office’s inner turmoil was a thing of the past.

Fast-forward a year and the firm is once again reeling, this time from the departure of a four-partner London finance team and a nine-partner international projects group to rival Latham & Watkins in February. The audacious move has significantly weakened two of White & Case’s core London practices and raises serious questions about its relationships with a number of key clients, including Deutsche Bank, Goldman Sachs, Nordic Capital, Saudi Aramco and Qatar Investment Authority.

It is also a worrying indication that, despite undertaking yet another structural reshuffle in December 2008, the firm’s management issues are far from resolved. Brettle continues to face an almighty task. Fifteen partners have now left the London office in the past six months alone – almost 20% of the total partnership (see box, ‘A difficult year’, page 39). The firm hasn’t made a lateral hire in London for two years.

To reclaim its former glory, White & Case London needs a firm hand at the tiller.

Management merry-go-round

Most of the issues White & Case has had in London have boiled down to management. Or, more accurately, a lack thereof. With a relentless programme of breakneck expansion transforming the office beyond all recognition over the past decade, the firm has experimented with a plethora of management structures as it has struggled to maintain control of the runaway office.

When Allen’s banking team first arrived from Weil, Gotshal & Manges in 2000 to kick-start the hiring frenzy, London executive partner John Bellhouse ran the office. As the business grew, a five-partner executive committee was established in June 2003 to handle support functions, such as IT, business development and marketing. The following September, Bellhouse stood down and the executive partner post was abolished, with project finance partner Neil Upton assuming a new role as chief operating partner. The move freed the executive committee of its administrative burdens, resulting in a rebranding as the strategy committee to reflect its newly narrowed focus on strategic and client matters.

Then, in May 2005, Upton stepped down and a new executive committee – comprising the practice heads for corporate, banking, capital markets, projects and dispute resolution – was formed. The firm’s global chief operating officer Jim Latchford relocated from New York to head the group, while corporate chief Peter Finlay was appointed to a new, largely external-facing senior partner position. The executive committee was then subtly amended once again, taking on ‘seconds’ from each practice to broaden the management base and ensure effective functioning in the event of diary conflicts. Quite a list.

‘Losing partners is a setback, but this firm remains 110% committed to the London market. Period.’
Oliver Brettle, White & Case

The constant changes meant that the London office was effectively left to its own devices, allowing the alpha males at the time – Allen and projects head Philip Stopford – to rule the roost. It’s fair to say that the pair didn’t always see eye to eye.

‘The London office was pretty divided at a management level,’ one former executive committee member says. ‘People weren’t screaming in the hallways, but it was pretty unpleasant. Any law firm will have different groups with different views on how it should be run, but you need strong management to control that, and we simply never had any. There had been a power vacuum, which made it very difficult to get anything done.’

In an attempt to finally resolve the issue, the firm implemented a global rejig in December 2008 that saw local strategy committees ditched in favour of a series of regional practice streams. It was this change that saw Brettle, then an employment partner, become head of the office. With most of the strategic decision-making now resting with the regional operations councils, his reinstated executive partner post is a largely administrative position. One London practice head describes it as a ‘thankless task that nobody wanted’, and even Brettle admits that he didn’t volunteer for the role. You can see why – the challenges he’s faced have been considerable.

Brettle under fire

In previous years, the London office required little management. Buoyed by the clement market conditions, and with Allen pulling many of the strings, the firm enjoyed years of unprecedented growth. Fee-earner headcount increased by a Global London-topping 750% in the space of a decade. When Brettle took over, the environment was different. The global economic downturn was already in full swing – consolidation, rather than expansion, had suddenly become the order of the day. He was immediately faced with the prospect of applying the brakes and trimming what had become an unwieldy cost base down to size. As with almost every other firm in the market, this included freezing associate salaries and cutting staff. Following a three-month consultation process, in June 2009 over 50 lawyers lost their jobs.

Brettle has subsequently been subject to a series of stinging attacks by anonymous bloggers that seem to hold him personally accountable for the firm’s recent travails.

On the positive side, White & Case is still one of the few firms to have genuine strength in finance on both sides of the Atlantic

‘It’s been a challenging period,’ he concedes. ‘There are those that seek to be detractors to this firm, but you can’t allow your life to be ruled by people that post anonymous comments on websites. Yes, you take note of it, and obviously if there are valid criticisms then you learn from it, but otherwise you have to carry on doing what you think is correct.’

All of the partners interviewed for this feature agreed that Brettle had performed as well as could be expected, given the circumstances, and even his critics felt that the sniping was unfounded.

‘People blame him because he ran the redundancy schemes, but he’s done as well as he could in terrible circumstances,’ one partner says. ‘It just goes to show that you shouldn’t take jobs you don’t want – it exposes you to a lot of potential misery and grief. Brettle may be a bit pompous sometimes, but he’s also tougher, more robust and opinionated [than previous management]. He’s not afraid to stand up, which is exactly what we’ve needed for years. He shouldn’t carry the can for this.’

Passing the buck

The question, then, is who should? Former American president Harry Truman kept a sign on his desk in the Oval Office which said: ‘The buck stops here.’ It was a simple reminder that ultimate responsibility must always rest with the man at the top, and at White & Case that man is global chair Hugh Verrier.

Verrier’s election victory in August 2007 over firmwide banking chief Eric Berg came as a surprise to some. But as a French Canadian who had spent time at White & Case in Jakarta, Istanbul and Ankara before becoming executive partner in Moscow, Verrier was seen by many partners outside the US as a safer, more sympathetic choice than Berg.

‘People were afraid that Eric would shake things up and make the firm a place that would no longer be comfortable for them,’ one former partner explains. ‘They were afraid that he would drive the firm harder, focus on higher quality, profitability and accountability. There was a feeling that he’d question whether we need offices in places like Bratislava and Almaty.’

The result wasn’t universally welcomed, however. Much of the traditional New York powerbase fully expected Berg, who manages some of the firm’s biggest client relationships, including Deutsche Bank and Morgan Stanley, to win. ‘We all thought he was a shoo-in,’ one says. ‘They had practically written the press release already.’

Verrier’s selections for his executive committee – New York M&A partner Anthony Kahn, IP litigator Dimitrios Drivas and Turkey office head Asli Basgoz – also raised eyebrows, not least because Verrier appeared to have reneged on an earlier promise to offer a place in his cabal to the runner-up should he win the management election. It remains unclear whether Verrier actually offered Berg a place – a spokesperson for the firm said it was a ‘confidential and internal’ process. As it happened, Berg didn’t even end up on the partnership committee – despite receiving the required number of votes, he turned the position down, although he did accept a promotion to global banking head in December 2008.

But it was Verrier’s decision to agree to a request by New York Times journalist Alan Feuer for an interview that would result in his first major setback. When the article was published on 5 June 2009, Verrier found himself posing cross-armed for a photo in the firm’s boardroom, below the title: ‘A study in why major law firms are shrinking’. (The story was subsequently followed up in the paper’s business section as ‘The incredible shrinking law firm’.)

‘Hugh invited them in hoping to get some positive coverage, but it really backfired,’ says one former partner. ‘He sent a very defensive e-mail around the partnership trying to explain what had happened, but it was an early warning sign for us that things weren’t going as planned.’

The largely negative article focused on Verrier’s announcement that the firm was to make 200 lawyers redundant, having ‘already laid off 70 young lawyers’ and ‘watched top partners flee to competitors’. It later stated that the firm’s Avenue of the Americas headquarters had seen ‘the happy buzz of business gradually replaced by a melancholy pall of diminished billable hours’. A colourful puff piece it was not.

Under attack

While painful, at least the redundancies were under Verrier’s control. The recent Latham raid was a different matter entirely.

The firm was busy gearing up for its annual partner retreat in Paris when London bank finance co-head Chris Kandel announced in late January that he would be leaving with three other partners – Brian Conway, Sam Hamilton and Jayanthi Sadanandan – to Latham & Watkins. Just three days later, with the firm still coming to terms with Kandel’s revelation, Riyadh sponsor Mohammed Al-Sheikh dropped another bombshell – the firm’s Middle East partners would also be joining Latham. All of them. In a region not known for such drastic upheaval, it was an even more devastating blow.

While management had already been informed (Kandel personally called regional banking and capital markets head David Barwise to break the news; the projects group followed suit with Stopford), the majority of the partnership first learned of the development when arriving at the Le Grand Intercontinental hotel for the conference. It left a dark cloud hanging over the three-day event, which one partner says was ‘hijacked’ as a result.

Although both groups have joined the same firm, they are the result of two entirely separate strategic plays.

Kandel’s group appears the more straightforward of the two hires. Having been personally brokered by Kandel and Latham partner Christopher Hall, who previously worked together at O’Melveny & Myers, the move bolsters the Latham banking practice in London to complement its existing high-yield offering (it also reunites Kandel with another former colleague – leveraged finance specialist Dan Maze, who joined Latham from White & Case in February 2008). Strong relationships with clients such as Deutsche Bank, which Kandel has advised for over a decade, Goldman Sachs and Nordic Capital will also have proved attractive.

But it’s the second team that is the most intriguing. Latham has so far declined to comment on either move (indeed, it remains strangely silent for a firm that has just pulled off such a dramatic coup), but it seems a particularly clinical attempt to target two of White & Case’s major clients: the world’s largest oil company, Saudi Aramco, and, to a lesser extent, sovereign wealth fund Qatar Investment Authority, which is already a sizeable Latham client.

‘It was a pretty cleverly thought-out strategy,’ one source close to the firm says. ‘They’ve made it very difficult for Aramco to go anywhere else.’

Each of the nine partners – completed by global metals and mining co-head Glen Ireland and fellow projects partner Craig Nethercott, who last summer held regular meetings in Napket café on Threadneedle Street to discuss the move, and Christopher Cross and Clement Fondufe in New York – had ties to Aramco. When White & Case acted on its $9.9bn joint venture with Sumitomo Chemical in March 2006, for example, the team included Nethercott, Cross, Al-Sheikh and Fondufe (then an associate).

‘People blame Brettle because he ran the redundancy schemes, but he’s done as well as he could in terrible circumstances.’
Partner at White & Case

It is not a client that will be easily dislodged, however – White & Case has acted for Saudi Aramco and its predecessor, the Arabian American Oil Company, since the 1950s. And while Al-Sheikh was the client’s man on the ground in Riyadh, the main relationship has always been tightly held in New York by Wendell Maddrey and Eugene Goodwillie. The latter has been ‘semi-retired for years’, according to one partner, but with Maddrey now dividing his time between New York and Dhahran to shore up the relationship, it should be a fascinating tussle. The outcome is far from certain – LB understands that Al-Sheikh has already been informed by Aramco that the team will receive work at Latham, although several partners at White & Case claim the firm has received similar assurances.

This uncertainty is mirrored in the other affected client relationships. Although it’s true that Kandel was the firm’s relationship partner for Deutsche Bank in London, several other partners, such as Barwise, litigation head John Reynolds and restructuring guru Mark Glengarry, also boast strong ties to the client. Jeremy Duffy, one of a number of associates to have developed relationships through secondments at the bank, has just been made partner. Another, Tanya Bedi, has left to rejoin Allen and Goetz as a counsel at Ropes & Gray. Deutsche Bank’s general counsel Simon Dodds declined to be interviewed, but sources at White & Case say he has ‘gone out of his way’ to reassure the firm that it remains a supportive client.

It’s a similar story with Nordic Capital. While Sam Hamilton was the client’s main finance contact, having taken the reins from Allen, the overall relationship is held by Stockholm partner Claes Zettermarck – who visited the London office in February to brief finance associates on the client – and Helsinki office head Petri Haussila. Swedish corporate partner Ulf Johansson, London investment funds partner Matthew Judd, US M&A head Oliver Brahmst and Andreas Stilcken in Frankfurt also regularly act for the Nordic private equity funds group. Brussels-based competition partner Pontus Lindfelt is the client’s sole adviser for merger filings.

While painful, at least the redundancies were under Verrier’s control. The recent Latham raid was a different matter entirely

Where gaps have appeared, White & Case has moved quickly to plug them. Stopford and Singapore projects partner Doug Peel immediately flew to the Middle East the day the group tendered its resignation to assess the situation. Peel is due to permanently relocate to Abu Dhabi as the office’s new executive partner, while London project finance specialist Saul Daniel and New York corporate partner Kenneth Ellis – an expert in advising sovereign states – will move on a temporary basis to Abu Dhabi and Doha respectively.

The task of identifying a new local sponsor in Riyadh has fallen to M&A administrative partner Neal Grenley – a process that is ‘progressing well, but is still ongoing’, according to a White & Case spokesperson. On this front, Grenley has form – he was one of two partners who brokered the firm’s original Saudi association with Law Office of Hassan Mahassni back in 1989. Stopford – who has been active in the Middle East since working on the Qatar liquefied natural gas projects in 1994 – will make regular visits while the new practice beds in.

Stopford says that the firm will relocate additional partners to the region in April, while two Abu Dhabi-based associates – Zeeshan Ahmedani and Philip Power – have been promoted to partner. Stopford ‘fully expects’ the firm’s Middle East presence to be ‘more than replaced’ by the end of the year.

London has been home to a similar game of musical chairs. New York bank finance partner Jake Mincemoyer – another with close ties to Deutsche Bank – has relocated on a permanent basis, while Jonathan Weinberg, co-head of the firm’s CEE/CIS finance group and another newly promoted partner, will now split his time between London and Prague. Perennial crisis manager Eric Berg also finds himself back in London, having spent time this side of the Atlantic sorting things out after Allen and Goetz left two years ago.