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Comment: 2006 and all that – an oh-so-familiar mess at Linklaters

The most hackneyed cliché of the pundit is history repeating itself, a claim that rarely holds up upon closer examination. But with the recent departure of Linklaters’ private equity co-heads Ian Bagshaw and Richard Youle for White & Case, well, sometimes you just can’t escape the past.

Personality clashes, a mid-market practice not gelling with Linklaters’ M&A business, finance supposedly not supporting sponsor clients, prolonged rumours over exit talks, and, finally, a dramatic exit to a big spending US rival; yes, it’s 2006 all over again when Graham White and Raymond McKeeve quit for Kirkland & Ellis.

All in, it’s better that this was resolved than the soap opera kept running – no wonder Linklaters’ management asked for a pledge of loyalty from the pair following earlier discussions with Ropes & Gray and Fried, Frank, Harris, Shriver & Jacobson.

Still, it’s a set-back for Linklaters that over a decade after embarking on its bid to become a force in private equity, it has a practice that not only lacks the potency expected of Silk Street, but one in which it can’t even retain partners. With due respect to Sweden and its lawyers, you don’t expect to be drafting in partners from Stockholm to re-enforce your City operation.

The departure earlier this year of Chris Howard for Sullivan & Cromwell had deprived Youle and Bagshaw of one finance partner comfortable with leveraged buyouts but, given the depth and calibre of Linklaters’ deal finance team, it’s hard to see lack of debt coverage being a problem.

Linklaters is a superb firm but it seems at present to struggle to sustain the trick seen at Freshfields Bruckhaus Deringer and Slaughter and May of balancing institution-wide links in corporate with that splash of entrepreneurial drive essential to the best M&A teams; there’s just a little too much office politics these days. At least it can reboot with a practice more fitting its business and sensibility and now the firm boasts a broader buyout team than back in 2006. But, for Linklaters, you have to wonder if the goal of having a self-standing private equity team – as opposed to functional coverage – is really worth the trouble.

And White & Case? Well, the reputed multi-million dollar, multi-year guaranteed deal certainly looks aggressive. You have to give the firm credit in one regard – after its European banking team was gutted in 2010 by Latham & Watkins, the firm has come back swinging in a far more emphatic style than expected. But many would question how smoothly the strong-willed pair will integrate into White & Case, a firm which has also had more than its fair share of office politics in London.

The wider backdrop has changed in one key respect from 2006. Despite prolonged convulsions in the debt markets severely cutting the buying power of private equity houses, it has turned out that client portability has trumped deal size; US advisers have continued a steady and sustained encroachment into the City private equity market at the expense of London’s finest.

White & Case may not look the most threatening in this regard but there is no shortage of rivals out there. With Charlie Geffen prompted to re-examine his options last month – US law firms will surely try to secure one of the genuine heavyweights of the City buyout scene.

Click here for more analysis on Linklaters’ private equity practice