Breaking the Circle

In 2002 LB made the bold move of placing Herbert Smith into the Magic Circle. But ten years on, has the firm kept up the pace?

What a difference a decade makes. In the April 2002 edition of LB, we sparked widespread debate when we placed Herbert Smith into the Magic Circle (see ‘Fellowship of the Circle’, LB123). We called it the ‘biggest change at the very top of the legal market since the merger of Clifford Turner and Coward Chance’ and praised the UK firm for its leading European corporate practice, its stellar financial performance and its successful challenge to the perception that it was a litigation-only firm.

A turbulent ten years have passed since then, with the UK legal market shifting dramatically. Stagnant financial markets and struggling economies mean that none of the Magic Circle, and by extension our Global Elite firms, look the same as they did at the turn of the millennium.

So how does Herbert Smith, a firm that has suffered a debilitating ride of diminished corporate mandates, global partner exits, a failed European merger attempt and, most notably, poor financial performance compared to its rivals, justify its continued position among the leading UK firms that form the Magic Circle?

Herbert Smith’s existence in the exclusive group has been hotly debated over the last ten years, among not only partners and management at rival firms but also consultants, recruiters and those involved in the legal sector.

‘It wants to be a Magic Circle firm and it has some claim to that, based on the fees it brings in and revenue, although it’s not quite there,’ says a partner at a City firm.

However, another says: ‘Herbert Smith gets big deals. It’s a very impressive place.’

Impressive? Undoubtedly. But a decade after earning its stripes, the firm’s business and its position in the market need reassessing. Here we review LB’s 2002 decision to include Herbert Smith in the Magic Circle and ask whether the reasoning still holds water.

International incidents

Ten years ago, the firm’s lofty international ambitions looked like they were coming to the fore. It had just signed a three-way alliance with Germany’s Gleiss Lutz and Benelux firm Stibbe. The trio of firms was also courting Spain’s Cuatrecasas, Gonçalves Pereira and Italy’s Pavia e Ansaldo.

Late last year, Herbert Smith launched a review of the firm’s international platform led by CIS managing partner Allen Hanen, dubbing it ‘Project Blue Sky’. The goal of the strategic review was to focus on expanding in a number of key jurisdictions, including Europe, Australia, New York and Asia. Part of the review involved approaching its European alliance partners Gleiss Lutz and Stibbe to formally merge. But the request was rejected and Project Blue Sky fell at the first hurdle.

Many explanations have emerged over the collapse of the alliance. Some Herbert Smith partners say that the relationship with Gleiss and Stibbe is still alive, while others point to the fact that something needed to happen between the three firms because the relationship wasn’t going anywhere. However, the simple reason why the alliance fell apart was because the two European firms did not want to merge with Herbert Smith.

‘To become part of a global firm would have meant significant changes to our partnership,’ explained Gleiss managing partner Rainer Loges to LB in February (see LB221).

Stibbe’s former Brussels managing partner Olivier Clevenbergh told LB at that time: ‘There are two options – to be a global firm or one of the top three firms in your market. I think that Herbert Smith’s strategy is to be a global brand. They recognised that it was not always easy to sell the alliance to its global clientele.’

Former partners have been particularly scathing about the affair. ‘The European alliance was a dog’s dinner. Management wanted a deal but Gleiss and Stibbe didn’t. They played a canny game,’ explains a former Herbert Smith partner.

‘The simple reason why the alliance fell apart was because the two European firms did not want to merge with Herbert Smith’ 

Another says: ‘It [the alliance] was a product of the early 2000s and the risk was that the relationships weren’t moving on.’

Before Herbert Smith can begin again in Europe on its own, it has to see out a one-year non-compete clause contained in the Alliance Tripartite Agreement, meaning the firm cannot open an office in Germany until next year at the very earliest. It leaves Herbert Smith with a gaping hole in a continent its Magic Circle rivals conquered years ago.

‘The alliance served us well, but it only took us so far,’ comments David Willis, the firm’s global managing partner. ‘We wanted to move on.’

The collapse of the alliance has left Herbert Smith with little to no presence in Europe, putting it miles behind its competitors. The firm has just 32 partners and 141 fee-earners across its Paris, Brussels and Madrid offices. Allen & Overy (A&O) houses 150 lawyers in Paris alone.

One might argue that Europe as a whole is a dead market for the ambitious Global Elite firms, who have moved on to new and exciting markets in Asia and Latin America. There is a school of thought that losing the alliance has allowed Herbert Smith to ditch some heavy baggage. However, this is naive. As Skadden, Arps, Slate, Meagher & Flom’s recent hires in Frankfurt show, Germany has plenty to offer. The US firm hired capital markets partners Stephen Hutter and Katja Kaulamo from Shearman & Sterling.

‘Germany is without doubt a very important market,’ says Austin Sweeney, Herbert Smith’s South-East Asia managing partner. ‘Europe is not dead. Germany has withstood the ravages of the last couple of years and we should be there,’ he adds.

But despite this setback, the firm still has its sights on bigger merger opportunities in key markets. At press time, Herbert Smith was still in talks with leading Australian firm Freehills about a possible merger. This would greatly enhance its already formidable Asian presence and put the firm back on the global map.

‘Australia is significant, as big Australian banks are well capitalised. Asia is very interesting and Australia is strategically important in that region,’ says Martyn Hopper, who heads Herbert Smith’s financial services litigation practice.

The proposed merger with Freehills excites partners based in Asia. Sweeney sees it as a good opportunity to increase the firm’s bench strength in the Asia-Pacific region, but he did have some reservations at first.

‘I was initially sceptical, I just didn’t get it. Although after meeting with its [Freehills’] people, seeing the quality of the clients and the transactions, I am a fan,’ he says.

Sweeney thinks that the merger is important as he sees future growth coming from emerging markets such as those in South East Asia (see box, ‘Asian Dominance’, page 7). Increasing Herbert Smith’s footprint in the region would secure the firm’s ability to tap into these markets.

‘This [Freehills merger] will be expensive. There is a lot of risk around it. The real issue is if it doesn’t happen. That will be a big problem in terms of strategy. Herbert Smith’s place in the Magic Circle depends on whether it can pull it off,’ says one ex-partner.

Complications may arise depending on the type of merger the firm tries to use. Some former Herbert Smith partners have questioned the way in which the firm is going about the merger, particularly given its suspicion of the Swiss Verein structure adopted by the firm’s more progressive international rivals.

According to another former partner: ‘Freehills is a 100% equity firm. Herbert Smith doesn’t know what to make of it. They are moving ahead very slowly. They are not considering a Swiss Verein.’

Members of the Magic Circle have also already swamped Australia. A&O moved into the region in early 2010 after initially hiring 14 partners from local heavyweight Clayton Utz. Clifford Chance (CC) followed a year later, taking over Chang, Pistilli & Simmons in Sydney and Cochrane Lishman Carson Luscombe in Perth. Linklaters has just signed an alliance agreement with heavyweight Allens Arthur Robinson.

However, Herbert Smith should look out: according to Australian site firmspy.com, Freshfields has even been alleged to be in the frame for a tie-up. While this is pure speculation, the last thing Herbert Smith would want is to be gazumped in Australia by a bigger rival. Outside of confirming that the firms are in talks, Herbert Smith partners refuse to say anything more.

If the firm pulls off the Freehills merger, it could be the most significant the market has seen to date. If it goes through, it would propel the firm into the top 15 law firms globally by revenue, pushing past the $1bn mark, gifting Herbert Smith an added 199 partners and would make the firm a true global force.

Also contained within ‘Project Blue Sky’ is the firm’s desire to finally expand Stateside. This will see the firm open in New York later this year.

‘We looked carefully at the States and have deliberately chose to establish a focused disputes capability in New York,’ says Willis.

Willis insists that the New York office will not take on the US firms in New York and will concentrate solely on international arbitration, investigations work and other litigation. Another benefit of having an office in New York could be access into Latin America as the area traditionally looks north to New York for legal advice.

‘Brazil is an important jurisdiction. I fully expect us to open a Latin American office at some point but no decision has yet been taken as to when,’ says Malcolm Hitching, who heads the global finance practice.

Other partners agree that Latin American plans are still in the ‘embryonic’ stage, while there are more concrete plans for South Korea. The firm has already sussed out office space in Seoul and is in the process of applying for a local licence to operate in the jurisdiction. CC is the only other Magic Circle firm to apply for a licence in the region.

‘Herbert Smith realises that having international outposts is vital in convincing its peers that the firm belongs in the Magic Circle’ 

The firm can also stake claim to possessing a strong India-focused practice, run out of its London office by corporate partner Chris Parsons.

‘The starting point for anyone who wants to be successful in India, is to ask “how can I help India?”,’ he says.

Clients in the region include the Tata Group, which has turned to the firm for advice on its acquisitions of Corus, Land Rover and Tetley Tea. Parsons says that on the back of the Tata work, the firm has one of the leading cross-border practices for outbound work from India.

The firm famously acted for India’s Bharti Airtel on its $10.7bn acquisition of Zain Africa in 2010.

However, Herbert Smith is not alone in enjoying success there. Parsons freely admits that Freshfields and Linklaters are also strong in the region, with the latter having a particularly strong capital markets team. Nonetheless, the firm does seem to have the formula right, enjoying close relationships with corporate and governmental clients in
the region.

Despite mistakes in the past, Herbert Smith realises that having international outposts is vital in convincing its peers that the firm belongs in the Magic Circle. Having little European coverage is damaging and Herbert Smith is late to the game. It also seems that the firm’s Global Elite status is now pinned on securing the Freehills merger. For now at least, the firm is way short of the mark as far as global coverage is concerned.

Willis believes the concept of the Magic Circle is outdated: ‘Our objective is to be regarded as one of the Global Elite firms, so inevitably this now has more relevance to us than the Magic Circle term.’ Which is in itself an admission that Herbert Smith isn’t a Global Elite firm yet.

Management questions

Up until 2008, the firm didn’t have a managing partner, with partners putting sole reliance on the then senior partner David Gold. Willis is the firm’s first managing partner since 1992, and entered the leadership role as the global markets went into meltdown and the firm was facing all kinds of performance issues. One year later Jonathan Scott was elected to the senior partner role taking over from previous incumbent Gold, who has since retired from the firm.

Priority number one is financial performance for this relatively new team. During the last ten years, the firm’s finances have gone off the boil. The big question is whether the financial crisis provides an excuse that masks inherent problems within the firm.

While Herbert Smith has steadily grown global revenues over the last five years, predominantly on the back of the firm’s litigation and finance practices – the only two practice areas to grow through the recession – profitability has waned.

Litigation revenues grew 69% between 2006/07 and 2010/11, growing from £99m to £168m. Finance went from £29.4m to £44.2m during the same period, growing almost 50%.

But the firm’s profits have continued to struggle behind Magic Circle competitors. In 2010/11, the firm’s PEP stood at £892,000, placing it behind A&O (£1.05m), CC (£1m), Linklaters (£1.16m), Freshfields (£1.3m) and Slaughter and May (£1.7m). Its profit margin is comfortably the lowest of the Magic Circle at 25%.

Similarly, profit per lawyer (PPL) has also significantly lagged and last year came to £87,000. By contrast, two of the firm’s Magic Circle rivals posted PPL of over £100,000, while the other three saw PPL above £200,000.

Managing the firm’s finances has been a top priority for Herbert Smith management. In a presentation delivered to partners in May 2011, Scott told partners that despite some outstanding performances, the management team was ‘disappointed by the overall outturn’ of the firm’s financial performance. He also told partners, according to documents seen by LB that the firm had to ‘distinguish between difficult markets and structural issues’. Criticism of the firm by former partners and competitors centres on the firm’s ‘nice’ culture of keeping underperformers in place, which can weigh down on profits.

‘The corporate practice, for years, was made up of people who weren’t go-getters,’ comments a partner at a rival firm. ‘Herbert Smith has 30% too many people.’

At the May 2011 meeting, Scott said to partners: ‘The challenge for Herbert Smith is always our apparent lack of self confidence.’ He also insisted that the firm was not advocating that it becomes a clone of Linklaters and Freshfields, but that if it were to ‘deliver strategy and increase profitability, we will need to move the dial’.

‘Managing the firm’s finances has been a top priority for Herbert Smith management’ 

Willis smiles when asked whether the firm has been complacent about managing out underperformers. He says the firm never underwent the same kind of headcount management process that other Magic Circle firms went through during the downturn.

In 2009, A&O reduced its global partnership by 9%, while CC went through the same exercise and saw the departure of 15% of its global partnership.

‘Performance management is an important part of running our business and we have developed our own approach,’ according to Willis. ‘It’s not straightforward – measuring contribution is important but we are also a supportive culture and want to give partners the opportunity to get it right.’

The firm has been quietly de-equitising partners and last year had more non-equity partners than equity partners. It operates a nine-year lockstep, which starts at 43 points and plateaus at 100 points. Like most firms, it has been accused of keeping too many partners at the top, putting a strain on profits. The firm also paid out a reduced instalment to partners during its February distribution, which Willis says is not a big deal as the firm had a slightly disappointing cash collection period, which it has sorted.

‘The biggest challenge at Herbert Smith now is convincing people to stick around. The profitability needs help and the lockstep needs an overhaul,’ says a former partner.

In 2002, LB pointed to the fact that Herbert Smith, much like Slaughters, retained its top talent making it a leading firm. But ever since there has been a trickle of stars leaving for greener pastures. In 2007, real estate heavyweight Chris de Pury left the firm for Berwin Leighton Paisner, kickstarting a steady stream of partner departures. In 2009, highly regarded litigation partner Christa Band left the firm for Linklaters. Her departure, according to some, ‘shocked management’.

2011 has seen the highest number of partner departures, with the exit of investigations and corporate crime chief Peter Burrell, who left for Willkie Farr & Gallagher; energy duo Paul Griffin and John Geraghty who joined A&O; and a trio of partners quitting the firm’s Paris office.

The firm’s small but at one time formidable capital markets practice has also been drained by departures (see below).

Corporate speak

In 2002, we praised Herbert Smith for ‘making bigger firms jealous’ of its M&A practice and pointed to the firm’s ability to win equity capital market deals in a depressed market.

Ten years ago, the corporate practice made up 50% of Herbert Smith’s business and accounted for £100m of the firm’s £209m global fees. This even eclipsed litigation (£70m) and finance (£21m), while the remainder came from the firm’s real estate practice.

By 2010/11 corporate contributed just 35% of the firm’s £465m turnover, bringing in £165.4m in fees. In 2010/11, CC’s corporate practice made the firm £365m, accounting for 30% of the firm’s business, while Linklaters’ corporate practice made £475.3m, 39% of the firm’s business.

Herbert Smith’s corporate practice truly thrived during the M&A boom leading up to the financial crisis.

In 2006, the firm took front seat on a plethora of big money deals, including acting for Mittal Steel on its £21.9bn acquisition of Arcelor; BAA on its £15bn takeover by Spain’s Ferrovial Group; and Tata Steel on the £6.2bn contested takeover of Corus.

The firm’s Asian arm acted for Industrial and Commercial Bank of China (ICBC) on its 2006 $12bn IPO.

Even during the crisis, Herbert Smith landed roles on a number of rights issues. ‘During the [wave of] UK rights issues, the market saw a lot more of Herbert Smith,’ comments Stephen Thierbach, who joined the firm from rival Linklaters in March 2010 and now leads the capital markets practice. ‘We consolidated our position with the investment banks and now we’re seeing some high-quality work.’

Herbert Smith acted for Bradford & Bingley in 2008 on its £300m rights issue under a team led by corporate partner Michael Walter. In 2009, the firm acted for longstanding real estate client Hammerson on its £584.2m capital raising and acted for Deutsche Bank, Bank of America Merrill Lynch and Morgan Stanley on National Grid’s £3.3bn rights issue in 2010.

‘The volume of transactions is down significantly. There is uncertainty among buyers and sellers,’ comments Thierbach on the current state of the capital markets across the firm’s major network of offices.

Herbert Smith, much like its peers at the top, has struggled with the lack of activity in both the equity and debt capital markets. With deals continuing to dwindle, the cracks in the firm’s corporate practice started to appear in the summer of 2011, when a chunk of capital markets partners started to exit the firm.

The firm’s Hong Kong practice saw the biggest losses. In July 2011, Asia US capital markets chief John Moore kickstarted a stream of exits from the firm’s Asian hub. He headed to US rival Morrison & Foerster and was followed by Melody He-Chen a few months later. In November 2011, capital markets partner Carolyn Sng left for Fried, Frank, Harris, Shriver & Jacobson.

‘Herbert Smith, much like its peers at the top, has struggled with the lack of activity in both the equity and debt capital markets’

But the biggest blow came when rival A&O hired the firm’s capital markets head Jim Wickenden and fellow partner Adam Wells in London. Some partners cite management’s refusal to deal with underperforming partners as a reason to leave, while others say the true lack of cross-border capabilities pushed them out the door.

Thierbach says that to a certain extent, reduced levels of activity in the global capital markets has given the firm the opportunity to consider its strategy at a time when activity levels are down. The firm also doesn’t have a glut of work.

‘It wanted to compete at the top table in capital markets work but the market doesn’t see it as being top notch,’ says a partner with a rival City practice. ‘It’s not like Slaughter and May and I think Herbert Smith forgets its strengths because fundamentally it is a good firm, it just spends too much time thinking about what everyone else thinks.’

Herbert Smith’s global corporate group, which organises itself by practice, sector and client and counts 104 partners globally, continues to lag. According to global corporate head James Palmer, the practice is unlikely to meet its targets for a second year running.

Last year the corporate practice missed targets for the year by £20m, resulting in a retuning of the practice’s partnership. Roughly 20 partners were asked to leave the practice, with Palmer now insisting that each partner fully focus on both retaining and winning clients and work.

According to mergermarket data, Herbert Smith doesn’t even factor in the top five for European M&A deals during the first quarter of 2012 by either volume or value. Linklaters sits comfortably at the top of the table, having advised on 41 deals worth $76.6bn. Freshfields advised on 33 deals worth $76bn, A&O acted on 28 deals worth $22.2bn and CC acted on 31 deals worth $19.7bn.

‘We are still below what we want it to be,’ explains Palmer, who took over leadership of the group in 2010 from Michael Walter. ‘We’re looking at how much of that is due to the markets and how much of that is down to ownership.’

Therein lies Herbert Smith’s biggest issue when it comes to the way its business has performed during the downturn and indeed during the last decade. It has failed to maintain work levels during depressed markets, relying heavily on one-time deals to see it through, just as it relied on the Gleiss and Stibbe relationships to prop up its European M&A practice. ‘We are building continued greater focus, on clients and client service, says Palmer.

While the firm can’t solely be blamed for struggling during difficult markets (Magic Circle peers did see a fall off in activity and some firms cut partners as a result), Herbert Smith has had a hard time pulling itself back together again. The Magic Circle hasn’t.

Contentious issue

Despite transactional woes, Herbert Smith has always enjoyed a fearsome reputation for litigation. As Hanen puts it: ‘Once you see one of the big Herbert Smith battleships [litigators] turning towards you with the guns rolling out, it’s just an awesome sight.’

But Herbert Smith, as it was when we looked at its business ten years ago, is still trying to shake its image as a pure disputes heavyweight.

‘When you think of Herbert Smith, you think of litigation,’ says a partner at another firm.

Sonya Leydecker, Herbert Smith’s global head of disputes, points to the successes of the practice. ‘There currently seems to be more appetite for litigation,’ she says. ‘Businesses are now more confident about litigation than immediately after the financial crisis.’

Last year, litigation heavyweight Ted Greeno led a team advising BSkyB in a claim for deceit, misrepresentation and breach of contract against IT supplier EDS and successfully recovered £300m. The work won the firm the Dispute Resolution Team of the Year award at the 2011 Legal Business Awards.

Herbert Smith has benefited from the counter-cyclical nature of litigation and as Leydecker says: ‘When there is an economic downturn, contentious issues tend to arise.’

Disputes undoubtedly remains a core part of Herbert Smith’s business. The practice has 85 partners globally, 58 based in London and the firm is diversifying into specialist contentious areas. During 2010/11, the disputes practice billed £168m, making up roughly 40% of the firm’s overall global business. This is a significant increase from 2006/07 when the disputes practice made £99m and contributed to 30% of overall revenues.

‘There is a danger of us being apologetic about our litigation brand,’ says Hopper. ‘Increasingly what we are doing is seeing how to use that brand. Litigation is a key selling point and we shouldn’t be apologetic about it.’

In fact, Hopper says that one of the things that attracted him to Herbert Smith from the Financial Services Authority (FSA) in 2004 was its strong litigation brand. He found it odd that a firm known for its litigation prowess was not often at the other side of the table when he worked for the FSA.

‘Herbert Smith has always enjoyed a fearsome reputation for litigation’ 

The success of Hopper’s practice is demonstrated not only by its growth from one partner to its current tally of five, but also the number of high-profile mandates his team has won from the banks. For example, Hopper’s team is understood to have acted for The Royal Bank of Scotland (RBS) last year after the FSA conducted an investigation into the bank and its board to determine whether any fraudulent behaviour had taken place in the lead up to its part-nationalisation in 2008. The FSA cleared the bank’s name, thanks to Hopper and his team.

Part of Leydecker’s strategy to move the practice forward is to bolster its offering outside of straight litigation. In 2005, Herbert Smith set up an arbitration practice based in London and Paris. But the severity of the 2008 financial crisis arrested its development. ‘When we had the big crash in 2008, arbitration plateaued,’ says Paula Hodges, who co-heads the global practice with Paris-based partner Charles Kaplan.

But this drop off in work did not last long and according to Hodges, there has been a deluge ever since, returning to the traditional model in which a downturn sparks disputes.

The strength of the international arbitration practice complements the ‘twin-engined’ model of the firm mentioned by almost every single partner interviewed for this piece, who consistently speak about the twin forces of corporate and disputes driving the firm forward. And while litigation and corporate complement each other well, arbitration and energy also make good bedfellows.

‘Arbitration and energy go hand in hand,’ says Hodges. ‘Corporate and disputes have always worked together incredibly closely and to great effect.’ Justin D’Agostino, head of the Greater China arbitration practice, says the firm always brings in an arbitration partner for international energy projects in Hong Kong because arbitration is essential for clients who do a lot of work in energy markets where they don’t want to be involved in local courts.

It is specialist contentious work, such as international arbitration, that sees the firm finally expanding across the Atlantic. By the end of 2012, Herbert Smith plans to launch an office in New York. The firm is currently recruiting on the ground.

But despite the undisputed strength of its disputes practice, which has won successes for clients such as Goldman Sachs (2006), Eurotunnel (2007), Apple (2007) and Chevron (2009), the firm is still keen to shake off the suggestion that it is ‘litigation heavy’.

‘We are a full practice office, not just litigation. This idea of Herbert Smith as a litigation firm is changing in clients’ minds and the market perception is also changing,’ comments Paris-based corporate partner Hubert Segain.

Some former Herbert Smith partners find it odd that the firm may be distancing itself from litigation. ‘The decision to downplay litigation by [former senior partner] David Gold was a big mistake. It really needs to define itself through litigation. It’s not one or the other. It’s not a corporate firm,’ says a former partner.

A senior partner at a City firm argues that many firms have built their reputation on their litigation prowess. US disputes powerhouse Quinn Emanuel Urquhart & Sullivan is one such example. In 2011, the firm made $723m, a 31% rise on the previous year.

By numbers, Herbert Smith’s disputes practice sits very close to CC. The former’s practice billed £168m during the 2010/11 year while the latter’s contributed £183m, or 15%, to global revenue. But neither can touch Freshfields’ disputes practice, which billed £275.9m last year, making it the biggest in the City.

But can Herbert Smith be evaluated as a Magic Circle firm based on the strength of its disputes practice?
Arguably no. In 2002, Herbert Smith was ranked as the leading disputes firm in the
The Legal 500 UK. By 2006, it was forced to share that crown with CC and Freshfields. CC and Freshfields now arguably have stronger disputes practices in London and abroad, while both firms are significantly stronger in corporate or finance. It appears that Herbert Smith’s greatest strength has in some ways become its greatest weakness.

Leaving the circle

‘While I think the Magic Circle term is now less relevant to us, we are stronger now than we were ten years ago,’ comments Willis.

Partners interviewed at the firm are all on message that they don’t believe that Herbert Smith is a Magic Circle firm anymore.

Palmer challenges the term Magic Circle, while the firm’s energy chief Mark Newbery asks what the relevance of the classification is anymore.

Leydecker says that the term ‘Global Elite’ is better suited to the firm. While Herbert Smith partners wish to waste time debating whether the Magic Circle is still a valid term, it all smacks of throwing up a smokescreen. Put another way, does Herbert Smith still belong alongside those firms with UK origins that make up our Global Elite? The answer is not right now.

And Herbert Smith partners’ views are firmly in tandem with the market’s perception of the firm: it is no longer part of the Magic Circle. Reaction from partners at peer firms, former partners and members of the legal community alike, is that the firm’s challenged corporate practice, lack of international reach and struggling profits puts it behind A&O, CC, Freshfields, Linklaters, and Slaughters.

While there is no doubt that Herbert Smith remains a top quality firm with talented lawyers, it still has a lot of work to do to lift it to the next level, much like it did in 2002. So far it hasn’t lived up to its promise. LB

emma.sadowski@legalease.co.uk

david.stevenson@legalease.co.uk