If the news in late 2017 that Freshfields Bruckhaus Deringer private equity veteran David Higgins was joining Kirkland & Ellis was an insult to his Magic Circle firm, the announcement barely into 2019 that Kirkland was following up with his colleague Adrian Maguire looks like grievous injury.
The record-breaking transfer of Higgins was a symbolic reverse and a significant demonstration of Kirkland’s determination to push into mainstream sponsor work in Europe. Yet it was not entirely unexpected – there had been indications that Higgins was becoming disenchanted due to issues with Freshfields’ finance practice and a lack of a more meaningful leadership role. Where he went was more surprising than the matter of his departure.
There is no such caveat with Maguire, who without doubt topped the hiring wish lists of the elite private equity teams in the City. As Kirkland celebrated, Simpson Thacher & Bartlett is in mourning to have missed the opportunity and the firm is not alone.
If Higgins could be (just about) cast by critics as seeking the kinder deliverables of management and a final chapter to his career, Maguire is in his mid-forties prime and a universally-liked operator in a field that breeds abrasive individualists by default.
He was regarded as a team player and staunch Freshfields loyalist. As such the consensus among buyout veterans is that this loss is considerably more damaging for the City giant than the Higgins episode.
Reasons given for the abrupt change of heart are apparently some familiar concerns regarding the calibre of Freshfields’ finance practice at a time when expectations of Anglo-American debt coverage have never been higher. Some point to the presence of his old friend, Rory Mullarkey, at Kirkland, in addition to a host of familiar Freshfields hands having already moved, as making the understated Maguire comfortable to sign up. Despite earlier protestations of loyalty, over a lengthy sabbatical beginning in early summer the die was cast.
It is not even that by the standards of the stratospheric numbers that get kicked around in private equity you can class the move as an obvious dash for cash. Maguire was regarded as less money motivated than many peers and his hire was a good deal cheaper than the $10m transfer of Higgins. Other firms would have matched or exceeded his package.
Freshfields has inevitably moved into damage-limitation mode.
Certainly, the appointment is a demonstrable sign of the extent to which Kirkland’s thrusting culture and ambitions are edging closer to establishment norms, a core aim of chair-elect Jon Ballis. As one Kirkland hand notes: ‘We’ve always wanted to hire [Maguire]. Five years ago he wouldn’t have even returned our call.’
Freshfields has inevitably moved into damage-limitation mode and, despite a period in which only the charitable could say it has been a confident few years at Fleet Street, has a solid case to make in the context of private equity.
For mainstream European-centric sponsor work, it remains the pacesetter, with an enviable roster of clients, deals and talent (though the excessively-derided Clifford Chance still stands up considerably better than most peers allow). But the gap with key US rivals continues to close and on European deals with a clear US influence, it is no longer first choice.
Overall, Freshfields’ response remains unsatisfying and in places bordering on
the naïve. The ground is shifting underneath it sufficiently that it will need a more substantive strategic answer to such losses of talent in future. In contrast, Kirkland is to announce another year of robust growth. The firm has taken another notable step forward.