Jaishree Kalia reports on the Los Angeles firm’s recent London hiring spree
Although relatively late to the game, Gibson, Dunn & Crutcher is the latest US firm with aggressive expansion plans in London, with its recently announced hire of former Ashurst senior partner Charlie Geffen attracting much attention last month.
The US giant has made enough noise of late to signal its intention to build a serious presence in the City, but is well aware it still needs some credible names if it intends to shake up competition.
‘We are not a new entrant to the London market,’ says executive committee chair and managing partner Ken Doran. ‘What is new is a renewed focus on building our English law private equity and cross-border M&A capabilities. We expect to compete and gain market share for complex private equity, cross-border M&A and finance/restructuring matters.’
Ashurst has been the Los Angeles-based firm’s primary hunting ground. Geffen, who joins this month as chair of the London corporate practice, is the fourth Ashurst corporate partner to arrive at Gibson so far this year: Mark Sperotto also quit Appold Street with Geffen, joining Nigel Stacey, who left Ashurst in June, and Jonathan Earle, who departed in April.
But Ashurst hasn’t been the only target in Gibson’s sights. Clifford Chance’s global co-head of private equity, Jonny Myers, was understood to be in advanced talks to join the top 20 global firm last month, but this fell through despite being backed by Gibson Dunn’s partnership. Other US firms have also been targeted, with Kirkland & Ellis’ senior partner of European debt finance, Stephen Gillespie, also understood to have been approached by the firm.
Geffen says: ‘For me, it was the attraction of going to one of the best US firms with a great culture, a clear vision and the firepower to execute it. There is still a gap in the market for a top-quality dual capability firm and I am very much looking forward to helping them build that. Gibson Dunn’s corporate offering in the US is very strong and we will continue to develop that in London. It also has a fabulous world-class regulatory capability, which is going to be a critical factor in developing corporate relationships.’
But, while Gibson Dunn has a strong brand in the US and is recognised in the UK market for its credible litigation and public M&A offering, breaking the European private equity market, even with names like Geffen and Earle on the teamsheet, is a different prospect.
Rivals question the firm’s ability to win over key clients that already have established relationships with private equity-focused advisers in London and, crucially, the US. One senior London-based private equity partner comments: ‘A top private equity house is like a jewel in the crown – everybody wants to work for the top sponsor clients. But just hiring one guy alone cannot deliver this and private equity clients are very loyal.’
But Geffen argues quality makes for a compelling offer, which can sway clients, even in private equity. And the firm does have an attractive overall platform. In 2013, Gibson Dunn posted a 7% rise in revenue to $1.39bn, while turnover over the last five years has shot up 45%. The firm’s profit margin is equally as impressive, coming in at 62% at the end of the last financial year, second only to Wachtell, Lipton, Rosen & Katz in the Global 100. Profits per equity partner (PEP) stood at $2.9m – just ahead of Cleary Gottlieb Steen & Hamilton at $2.88m, though behind Simpson Thacher & Bartlett, whose PEP totalled $3.17m.
‘It was the attraction of going to one of the best US firms with a great culture, a clear vision and the firepower to execute it.’
Charlie Geffen, Gibson Dunn
The firm’s key corporate clients include The Blackstone Group, UBS, Investcorp, Deutsche Bank, Stroz Friedberg, Marriott International, Westbrook Partners, Colony Capital, Barilla and Lone Star Funds, with recent deals including advising Dresser-Rand as co-counsel on its $7.6bn acquisition by Siemens; representing Vivendi in the $8.2bn sale of its interest in Activision Blizzard; and acting for Lone Star Funds in the $1.3bn acquisition of DFC Global Corp.
In London, Gibson Dunn has largely focused on disputes thus far, with our Global London report in April showing its UK arm shrank from 57 lawyers in 2008 to 48 in 2013. However, the firm has been clear about renewed ambitions to build out a fully-fledged English law practice and covering mainstream corporate work. UK headcount currently stands at 57, with 23 partners, including Geffen and Sperotto. Corporate now accounts for 43% of the London partnership and disputes 30%. The remainder are split between finance and restructuring, competition, real estate, tax and employment.
The firm’s recent lateral hiring spree is augmented by its latest acquisition of 75,000 sq ft of office space near Blackfriars Bridge and builds on progress made in 2013, when Gibson Dunn made a spate of hires including Ali Nikpay, head of the cartel and criminal enforcement division at the Office of Fair Trading, to head up its City competition practice; and Skadden, Arps, Slate, Meagher & Flom litigation and arbitration specialist Penny Madden.
However, another City corporate player at a rival US firm comments: ‘This is just another example of a US firm thinking they can do what has already been done. Its recent hiring is not necessarily a threat, as it is very difficult to manage new teams.’
And while the firm is clearly building a credible corporate bench, the next challenge will be to strengthen the infrastructure around this practice area and create respectable tax, high-yield and regulatory offerings to support the core practice.
Doran adds: ‘We are in the midst of a concerted effort to build our English law private equity and M&A capabilities, and this will require further investment in finance, debt and equity capital markets, as well as increasing our already strong dual regulatory capability. We are also looking to add to our strength in New York and other markets, which will be very complementary to our efforts in London.’
jaishree.kalia@legalease.co.uk