Travers Smith has always been one to plough its own furrow and last month the firm confirmed it was reviewing its roster of US best friend firms.
The corporate powerhouse is reviewing its line-up in the wake of a raft of US firms strengthening their own London offerings.
‘Ropes & Gray and Proskauer Rose are looking to take some food off our table so we feel we probably shouldn’t be using them,’ said Chris Carroll, Travers’ senior partner. ‘But Ropes has only got 15 to 20 partners in London and they don’t really start becoming a pest until there are about 200 lawyers in London.’
The firm has traditionally used Ropes & Gray, Proskauer Rose and Goodwin Procter in the US as referral partners. Ropes opened in the City in 2009 and now has 36 lawyers in the capital. Similarly, Proskauer Rose opened in London in 2007 and now has 17 fee-earners after hiring funds partners Nigel van Zyl and Oliver Rochman along with six associates from SJ Berwin last year.
‘Everyone is trying to be international but not making
any money. Why not stay where we are?’
Chris Carroll, Travers Smith
Travers is also looking to squeeze more value from its US referral partners by using fewer New York-based firms. ‘A lot of the Americans, especially in New York, are expensive and that is something that we are looking at,’ said Carroll.
The firm has bucked the trend by steadfastly refusing to open international offices, bar a small English-law only presence in Paris and a brief but failed foray into the Berlin market back in 2007.
Travers has stuck to a loose best friend referral network with relationships that are very much determined by ‘personal chemistry’, according to Carroll.
The firm has between two and four referral firms it uses in each country it works in, although the firm won’t reveal which firms are on its roster. They are believed to include Garrigues in Spain, Noerr and Hengeler Mueller in Germany and Gide Loyrette Nouel in France.
‘It’s organised chaos,’ said Carroll. ‘That’s what works for us. We have a central store of five staff who can direct partners to people if they aren’t sure. But generally we encourage partners to get on the road and meet people.’
Carroll said the firm has no plans to open any new offices and is damning of moves made by others into international markets. ‘You’ve got the Magic Circle. Then the likes of Ashurst and Herbert Smith. Then everyone else trying to be international but not making any money in the process. Then you have us. We say, why not stay where we are?’ said Carroll.
Travers has stuck to a tight strategy of focusing on corporate work, particularly private equity, with the corporate practice bringing in around half of the firm’s £72m revenue. The firm has been buoyed by the UK private equity market in the past two years, with profits and revenue rebounding after a difficult 2009.
Profits per equity partner (PEP) stood at a healthy £650,000 during the last financial year and the firm had a profit margin of 40%. However, Travers has still not returned to its pre-recessionary peaks; the firm’s turnover is down 11% on its 2007/08 record of £81m, while profit per lawyer stood at £109,000 this year, down from its 2006/07 peak of £160,000.
The firm is hoping to have a promising 2011/12, mainly thanks to a raft of mid-market work in the £100m to £500m range driven by its private equity clients. Carroll told LB that despite a dip in high value private equity deals in the past six months, the firm will not be hard hit as its focus is firmly on the mid-market.
In February Travers advised legal process outsourcer CPA Global on its sale to private equity firm Cinven. Corporate head Chris Hale led the Travers team on the $1.5bn deal that saw Freshfields Bruckhaus Deringer and DLA Piper land roles advising Cinven and CPA’s management respectively.
The firm also took a lead role on Doughty Hanson & Co’s £250m acquisition of oil and gas logistics company Asco. Edmund Reed led the Travers team that advised the selling shareholders, which included Phoenix Equity Partners, Indigo Capital and Asco’s senior management team. Skadden, Arps, Slate, Meagher & Flom M&A partner Allan Murray-Jones advised the UK private equity house on the transaction which saw the group take a majority stake in Asco.