First, the case for the defence. Given that private equity partners gossip like fishwives, you can be somewhat sceptical over the received wisdom that the latest in a line of significant departures from Clifford Chance (CC)’s buyout team represents a terminal decline.
The firm retains a sizeable roster of partners, with 11 covering private equity in the City, including seasoned players such as David Pearson and Jonny Myers, not to mention practice head Oliver Felsenstein, one of Germany’s most respected PE men (CC should, however, avoid mentioning Matthew Layton in this camp – good as he is, it’s embarrassing to invoke your new chief executive as a deal runner).
The junior ranks are also solid with the likes of Amy Mahon and Caroline Sherrell. And while the client roster has had some reverses of late with US rivals eating into the Carlyle and KKR relationships, and Permira less active in recent years, this remains a broad practice with a wide roster, including Bridgepoint, Clayton Dubilier, CVC and Equistone, to call on. Of the US rivals most threateningly at its door, only Latham & Watkins has the inclination or chops to genuinely compete with CC across the wider European, Middle East and North African stage.
For range and quality in private equity, CC remains at the upper reaches of the European market. Latham, Simpson Thacher & Bartlett and Weil, Gotshal & Manges arguably now have more potent practices, built on a run of expensive recruitment and the rising importance of US-targeted financing, but they still have narrower offerings.
And in the specific case of Carlyle, a relationship Latham in February reinforced with the recruitment of the well-regarded CC partner Kem Ihenacho, it always looked a matter of time before the Los Angeles-bred firm in Europe reclaimed what has historically been one of its key global client relationships. Indeed, it’s a credit to CC that it has taken Latham so much time and expense to colonise the relationship in the Square Mile.
Perhaps most importantly for CC is that, while its buyout practice remains a key element of its brand, its wider corporate practice has been on solid form in recent years, maturing respectably globally and on sector lines.
That’s about where the silver linings end for CC, which, to be blunt, cannot keep leaking partners at this rate in strategically important areas without serious consequences in the medium to long term. CC has now over the last five years faced the worst loss of City talent yet seen by a Magic Circle firm, worse than Allen & Overy during its angsty 2004-06 period.
The departures of global private equity head David Walker and partner Tom Evans last year for Latham were significant, with Evans touted as one of the stars of the future. As the latest Latham departure, Ihenacho had even higher hopes resting on his shoulders. The erosion of the Carlyle link is a side-show, as he was never a major contact with the client. But as the kind of astute, popular and pragmatic operator that buyout clients become highly attached to, not to mention a key figure in taking CC’s PE franchise into Africa, this is not the kind of lawyer you want to lose.
While hardly short of solid hands, neither is CC boasting the bench it had back in the 30C glory days, when it really stood a country mile over any rival. Harking back to that period also invokes culture. The team was then always renowned as a tight-knit, cohesive group. People will talk about better packages at US rivals, and that’s obviously a factor, but I doubt that’s determinative. In cohesive, ambitious teams that are progressing, individuals can resist a few more coins, especially if they think it will set back their personal practice. Most of these guys won’t jump unless they think they can develop their careers alongside their pay cheques. The question CC’s new head of corporate Guy Norman has to address is why too many of his colleagues are deciding their ambitions will be better served elsewhere.
See CC’s Tinkler addresses recent private equity departures , an interview with London head of corporate Simon Tinkler, for further insight.