‘Supercharging it’ and ‘pretty wild’ are not superlatives usually cropping up on your average conference call with Freshfields Bruckhaus Deringer. If the conversation with Ethan Klingsberg (pictured), the Wall Street M&A star that led a four-partner team exit from Cleary Gottlieb Steen & Hamilton, was not very Freshfields, Edward Braham’s unrestrained enthusiasm for the hires when the news broke in October was similarly striking for the unfailingly understated senior partner. Reinforcing how much Freshfields had riding on this, Braham was in New York personally supervising the move upon announcement.
Even critics of Freshfields’ slow-and-steady US strategy are applauding the Cleary haul – the prominent M&A veteran Klingsberg, Meredith Kotler, Pamela Marcogliese and Paul Tiger – as the kind of daring statement that has been previously missing. ‘I admire them for having a go,’ admits one ex-partner, now at a US firm, expressing the consensus view.
As the fanfare subsides, Braham is as bullish as Klingsberg on the move, reiterating to Legal Business that the firm’s 20-year stateside campaign has resulted in it becoming tier one in antitrust, white collar and litigation. Braham even goes as far as to insist the new hires now take Freshfields into the top tier for M&A in the US, straying into the hyperbolic.
‘Ethan is often called the best West Coast lawyer on the East Coast,’ gushes one Freshfields partner, referencing Klingsberg’s marquee corporate client roster in the Bay Area, including household names Google and Levi Strauss.
Cynics could argue that Cleary is still a stronger brand in Wall Street for securities and antitrust than corporate, but no one is disputing that this is a serious team in a market that does not find many transfers serious.
Braham, meanwhile, points to Freshfields’ recent successes in securing mandates out of New York, such as advising Starbucks on the $7.15bn sale of its consumer packaged goods and foodservice business to Nestlé; Novartis on the $5.3bn acquisition of assets associated with Xiidra; and the London Stock Exchange Group on the $27bn acquisition of Refinitiv from The Blackstone Group.
And Klingsberg gives a full-throated message to Freshfields’ M&A ambitions, exactly the tone that has been previously missing in years of contradictory statements on what the City giant was trying to achieve. On the day of his hire, Klingsberg told Legal Business: ‘What we are doing here is fundamentally different. The nature of the practice is more than just a book of business. It’s not just about explaining a merger agreement to a board of directors. Litigation is a big part of it – here in the US we like to sue each other – and we have Meredith addressing the biggest concerns: liability and exposure of directors.’
Klingsberg cites Marcogliese, a well-known figure at the Securities and Exchange Commission, as critical to the team in a market increasingly defined by shareholder activists and strong-arming sponsors. Tiger, meanwhile, is lauded for having a ‘great book of clients’, having recently advised on deals for TPG, Google and Barclays Capital. The haul gives Freshfields a total of ten corporate partners in New York.
Such hires do not come cheap, with no one attempting to deny the claims that Klingsberg was recruited with a $10m package guaranteed for a precedent-setting five years, putting him at roughly twice the top of Freshfields’ recently overhauled lockstep.
Notes Braham: ‘We have a strong lockstep culture but also the flexibility to do what we need to do strategically.’ Braham declines to comment on claims that some partners in the US had been asked to surrender equity points to help cover the cost of the investment.
Talk has circulated about potential plans to cement Freshfields’ US commitment by having at least one member of the new leadership based out of New York, a point on which Braham is also tight-lipped. ‘The broader point is, why is the US so important? The US is so important to clients and in that context it is a priority,’ says Braham.
That said, Klingsberg comes in as US head of corporate and had been viewed as a natural successor to Peter Lyons, the veteran M&A partner Freshfields recruited from Shearman & Sterling back in 2014 when it launched its US M&A practice, even though the title of US regional managing partner was handed to M&A partner Matthew Herman in November.
While Lyons was widely viewed as lacking the drive and standing Freshfields needed, Klingsberg has a more dynamic reputation, even if his robust style may sit a little uneasily with some more traditional colleagues.
Beyond New York, Braham stresses his confidence in the firm’s Washington DC bench, which last year secured two headline-grabbing antitrust veterans, Eric Mahr and Aimen Mir. The priority now will be accessing the kinds of clients Freshfields has had on its wish list, but the strategy will not work if that is at the expense of further growth. It will be the work of years for Freshfields to reach critical mass in the US and it will involve sustained investment of the kind that will not be universally popular.
Such is the significance of the team move that there is even talk that it could become part of Freshfields’ looming senior partner race, if Braham looks to make another run. As it was, another touted leadership figure, Alan Mason, is cited by some as a key figure in bringing in the team.
Such considerations underline the extent to which the US question has taken on such huge significance for Freshfields’ identity and strategy, with a large camp maintaining that the firm must secure a decisive breakthrough stateside to fulfil its ambitions. Few neutral observers would assert that even such a striking team hire by itself constitutes that breakthrough, but it does represent at the least a very substantial step forward. And on Wall Street those are few and far between.