One man band: Can Ropes & Gray maintain the momentum without Allen?

Madeleine Farman and Victoria Young ask the firm’s leaders about growth in the City.

Ropes & Gray’s rapid growth in London is an ascent which any newcomer would aspire to. Although the Boston firm was late to the party when it officially opened in 2010, its sole European base has enjoyed an impressive upward trajectory. Revenue was up by almost a third in 2015 to $83m, a successful result on the back of a 30% increase in 2014 when City turnover was $64m.

Such has been Ropes’ impact in the City since its launch that the firm has twice won US Law Firm of the Year at the Legal Business Awards (in 2013 and 2015), following which the office’s ambitious founders, Maurice Allen and Mike Goetz (pictured, R-L), signed a deal to double London office space to accommodate its targeted 150 lawyers by 2017. However, with London headcount at 135 and finances seemingly levelling out it would appear the meteoric rise of Ropes & Gray in London has hit the buffers. The firm is unusually coy about London revenues for 2016, giving only an imprecise range of ‘£80m-£100m’.

In Boston, firmwide managing partner David Chapin says a drop-off in growth for London was inevitable as the office started from such a low base: ‘Our London headcount in 2016 slowed down dramatically and that’s going to have an impact on our revenue growth. But when your base is up somewhere in the £80m-£100m revenue range, growing that yet again by 30-40% becomes virtually impossible.’

The London outpost’s slowing growth coincides with a time of significant change for the office. The decision of veteran senior partner Allen to step down into a consultant role for Ropes (as well as DLA Piper) presents a challenge for his more reserved and long-time partner-in-crime Goetz, who is left in the managing partner position without a senior partner.

Allen, cited by former and current colleagues as ‘the ideas man’, made the decision to retire as the office enters its next phase: consolidation. Goetz, widely acknowledged as ‘an executor’, will lead the office as it looks to bed down new hires and client relationships. Given the well-documented Allen-Goetz dynamic, which has run in various guises since the pair first met at White & Case’s London office in 2000, an executor could be what the City office needs right now.

However, Goetz, perhaps tired of being billed as Allen’s straight man for so many years, is defensive when asked about his leadership style or how he will go about developing business for the London office: ‘I really don’t want to say what kind of manager I’m going to be. I was the co-managing partner of White & Case for that office, I’ve been doing this a long time. People know what my style is and what I do and it doesn’t make sense for me to proclaim what it is.’

Goetz, who has no plans to follow Allen into semi-retirement, has committed to the firm for ‘the foreseeable future’ and is supported in the City by an executive committee, established as part of succession plans made a year ago.

Chapin says: ‘We put in place a structure internally with an executive committee of six partners that is helping to manage the office. It’s got to be quite a lot bigger than it was originally. That’s all part of the succession planning.’

Chapin refuses to say which six partners are on this board, claiming it is ‘against Ropes’ culture’ to name members on management committees. However, Legal Business understands Philip Sanderson, who joined Ropes from Travers Smith in 2015, is one of the six.

For now, holding on to Goetz is seemingly enough to keep the firm’s clients happy. As one key client says: ‘Every law firm needs a Mike. He has some grey hair and is interested and passionate about his work. If things get tricky, we know he can get involved. Ropes has a quality team now. They don’t need Mike and Maurice from my perspective, but I would not feel comfortable with them both gone.’

However, when asked whether the business would stay if Allen moved to another firm, the client adds: ‘I would be significantly less sticky.’

‘Ropes has a quality team now. They don’t need Mike Goetz and Maurice Allen from my perspective, but I would not feel comfortable with them both gone.’
A key client

There is a next generation of lawyers and clients that remain confident about Ropes’ offering, as another major client says: ‘Maurice is one of the best in the business and he is one of the best in a generation and there’s no question he played an important part in the success of Ropes London, but they have a very deep bench, and I can still pick up the phone to Mike.’

Allen, for his part, says: ‘When partners move on sometimes clients move on and clients have a lot of choices; you will have to accept the inevitable. I still bring in quite a lot of business but I have been giving the lead role to others because I knew that I was moving on.’

Key names in the firm’s London finance practice include Matthew Cox, who joined from Freshfields Bruckhaus Deringer in 2010, as well as high-yield partner Robert Haak, who joined as an associate from White & Case, and rising star associate Haden Henderson, who joined from New Zealand’s Bell Gully. In a bid to add another more senior hand to the finance team, the firm also appointed Herbert Smith Freehills’ former UK and EMEA head Malcolm Hitching, bringing its offering up to 12 partners.

In addition, the firm’s global finance co-head, Jane Rogers, who moved over from Ropes’ Boston office to London in 2009 to work on Liberty Group’s landmark €2.5bn high-yield financing, is also a strong name in the practice. In 2016 the office completed two ground-breaking deals for Virgin Media: the world’s first ever issuance of receivables financing notes and the first-ever handset securitisation in the UK.

However, the apparent bench strength in finance is belied by rumblings of discontent internally: Legal Business understands that Mark Wesseldine, who joined from Fried, Frank, Harris, Shriver & Jacobson in 2013, and Fergus Wheeler, who was made up to partner after moving from A&L Goodbody, both notable for their work for KKR, are looking to leave.

PE power

Meanwhile the private equity (PE) group in the City, which was a key plank behind the launch of the London office, is leveraging off Ropes’ strong PE credentials in the States and has grown slowly but with some well-established names. These include Sanderson and Will Rosen, who joined Ropes in 2011 from DLA Piper. More recently the practice returned to Travers Smith to hire rising star Helen Croke last summer, who regularly advises Bridgepoint Development Capital, bringing the office’s PE partner headcount up to five. The London office can name Baring Private Equity, Carlyle, Exponent and TPG as clients, while it has picked up some recent work from CVC Capital Partners, Bridgepoint, Smedvig and HIG.

However, given Ropes’ longstanding PE pedigree in the US for clients such as Bain Capital, rivals are more sceptical about the firm’s buyout prowess. As one City partner says: ‘It hasn’t got the attraction that they were either expecting or targeting. They have done a few [Bain deals] to be fair, but it’s often been where there’s a US element.’

Chapin says it was never the firm’s intention to come to London and replicate its US offering. ‘Because we’re so closely identified with Bain in the US, when we first came here people said: “They’re coming here for Bain.” In fact that had nothing to do with it, because there’s a significant private equity market here. The general counsel of Bain [Sean Doherty], who is a former associate at Ropes, likes to divide the world 50/50 between the US and the rest of the world. To be successful in London I’d love to do some more work for Bain, as long as that doesn’t cannibalise other work we’re doing around the world for them.’

‘I’ve been doing this a long time. People know what my style is and what I do and it doesn’t make sense for me to proclaim what it is.’
Mike Goetz, Ropes & Gray

When it comes to wider corporate mandates Goetz has little appetite for expansion.

‘We didn’t start our London office with the aspiration of getting on FTSE 100 panels or bank panels,’ he says. ‘It was very much geared to a different segment of the market. We’ve very much stayed true to that vision.’ In a similar vein, Ropes has no plans for European expansion beyond jurisdictions outside London.

Uninterested in developing a wider corporate practice, Ropes has made smaller bolt-ons but claims not to want to develop too much further.

The firm picked up McDermott Will & Emery’s media and technology chief Rohan Massey in 2015, a move made by McDermott’s co-chair of global privacy and data Heather Sussman, who also left the firm for Ropes. Similarly, while Ropes hired securities litigator Thomas Ross from K&L Gates in 2015 in a bid to launch a disputes practice, management say that a wider disputes practice is ‘not for everyone’.

As Chapin puts it: ‘From a growth standpoint we’re pretty happy with the footprint we have now in terms of the sectors we have and the people we have. Most of our growth will be organic rather than significant bolt-ons.’

Referrals from the US have leapt from 30% of London revenues in 2015 to 40% in 2016. While the firm had started with a backbone of Allen and Goetz’s clients Liberty and Altice, the growth has come from more London partners getting involved in the firm’s global client programme. Allen continues to work with the firm on the project, which launched in 2010 but has been significantly ramped up in the last year. The aim of the programme is to expand relationships across practices and join them up with other offices within the network. As Allen puts it: ‘We have been getting more partners in the London office involved, the first three years we brought in Liberty and Altice but the last three have been more about the firm’s historic clients, and getting some snow to form on the ground. With those global clients we have a significant relationship with 20-30 of them. The focus is for London staff to pay back more, such as the CVC relationship in London which we are trying to grow.’

After making a strong start, Ropes’ challenge in the City is more about keeping the team spirit with the effective departure of one of its office founders and a significant personality.

One client concludes: ‘Ropes in Boston needs to be careful and they need to pay a fair bit of attention as it won’t be the first time an office founder left and then things leaked away.’

madeleine.farman@legalease.co.uk, victoria.young@legalease.co.uk