On the face of it it looks like a mess. A jumble of lateral partner hire announcements to complement a busy summer of moves. Look a little closer and it makes a bit more sense.
The relentless London partner vacuum cleaner that is Kirkland & Ellis clicked on again this week and sucked in top individuals from Allen & Overy and Clifford Chance, while Fried Frank Harris Shriver & Jacobson, Akin Gump Strauss Hauer & Feld and Dechert all made hires. Few, if any, of these moves are shocking though and there is some method in the madness.
Kirkland’s U.K. office has almost all of its eggs in the private equity basket so appears to be building up in the areas around mainstream buyouts. Infrastructure, more of a non-cyclical asset class, is likely to be popular as the global economy falters. Cue the hire of A&O’s global infrastructure co-head Sara Pickersgill and CC’s infrastructure financing and restructuring specialist James Boswell.
Kirkland and its ‘come one, come all’ strategy will never suit everyone though. Investment funds regulation partner Colin Sharpsmith, who joined four years ago, has opted to rejoin his former colleagues at Dechert.
Another firm that could be preparing for a rise in restructuring and distressed asset work is Akin Gump Strauss Hauer & Feld, which has brought back financial restructuring partner Sam Brodie after just a year at Shearman & Sterling.
Meanwhile, the private equity revolving door just keeps on spinning. Fried Frank, which has been looking to rebuild its London team after three partners left earlier this year, tempted away 20-year Travers Smith bigwig James Renahan.
That all these hires were to U.S.-led law firms goes without saying. The trend is nothing new, but fresh evidence emerged this week that such hiring strategies are bearing fruit.
Habiba Cullen-Jafar took an in-depth look at the change in advisers to FTSE 100 companies over the last 10 years. The leaders, led by the seemingly indomitable Slaughter and May, remain unchanged. But the number of U.S.-headquartered firms or Transatlantic firms that feature in the lower part of the annual table has increased significantly on 2012.
Newcomers to the list say their progress is in no small part thanks to their heavy investment in lateral partner hires from the top U.K. firms. Philip Broke, the EMEA section head for M&A and corporate at White & Case, who himself joined from Ashurst in 2006, said: “Lateral hires are not a necessity [to growing a successful public M&A practice] but they accelerate the process”.
Perhaps it is notable that the biggest hire by a U.K. firm this week was by Clifford Chance, which was one of the few U.K.-led firms to rise those FTSE 100 rankings.
A simple way to explain the economics here is to take a quick look at the Global 200 revenue table, out this week, and see all the familiar U.K. institutions in the top 20. Then take a look at the Global 100 ranked by average profits per equity partner and strain your eyes to see how many U.K. firms you can see in the top 40. The hires are simply following the money.
The frantic hiring market is not confined to private practice either. U.K. book retailer Waterstones’ general counsel Elisabeth Sullivan has left for another job after just nine months.
Neither is the battle for partners only taking place in the U.K. Check out the scrap going on between Linklaters and Latham & Watkins in Spain, for example. At the start of the month Latham hired Linklaters’ Spain senior partner. In 2021, it hired a longtime Linklaters restructuring partner. This week Linklaters responded by hiring the former chairman of the Spanish Securities and Exchange Commission from Latham.
So much for recruiters’ predictions in July that London lateral partner hires would slow dramatically in the second half of the year. July and August were the busiest for five years and September just has not stopped.
But bear in mind that many of these hires appear to be a repositioning, an attempt by firms to get ready for a different kind of market that is fast approaching. Opportunistic and sensible, yes. But, with the clouds looming, this level of activity is unlikely to be sustainable.