If a good chunk of the latest issue of Legal Business is focused on technology and machines replacing lawyers, our extended focus this month on private equity is an interesting contrast. After all, what good would a supercomputer be in the clubby, driven and entrepreneurial world of leveraged buyouts?
But then private equity has for years been an outlier in City law. Leading law firms built their businesses around banks and multinational clients, ushering in globalisation, one-stop-shopping and customer relationship management programmes.
But private equity – despite being on the cutting edge of financing and capitalism in the last 20 years (for good and ill) – has remained a people business both for sponsors and the law firms servicing them.
As corporate and banking advisers have become increasingly pasteurised in response to more bureaucratic plc clients, private equity lawyers have stuck out even more as the buccaneers of City law.
The irony is that as global law firms have striven to institutionalise, they have become more, not less, beholden to the buyout boys. Partly, that is the interplay between the lateral hiring market and private equity; as clients still often move with the talent in private equity, it is one of the few lucrative practice areas in which hiring partners can transfer millions in fees quickly. As such it has become a uniquely intense battleground for advancing US law firms and the original City players.
There is also no other area of mainstream corporate practice in which the pecking order has proved so volatile. The City’s hierarchy has changed much over the last five years and is barely recognisable from the mid-2000s credit boom.
In that time, Clifford Chance (CC) has seen its once-unquestioned dominance severely challenged, though probably not quite to the extent that is typically claimed. Freshfields Bruckhaus Deringer, meanwhile, has emerged as the firm to beat, having achieved the best balance between individual star power and institutional support, while the similarly resilient Travers Smith has strengthened its grip on the mid-market.
Elsewhere, it is all change, with Latham & Watkins emerging as the most threatening player thanks to a series of raids on CC and an unmatched finance platform. But Latham still has much to prove if it is to genuinely transcend its roots as a finance shop (and be more than house counsel to The Carlyle Group) to build a full-blooded corporate business.
Weil, Gotshal & Manges and Simpson Thacher & Bartlett, of course, remain potent players, though the former is held back by succession issues and the latter by conservatism.
Unsurprisingly, as the Marmite of global law, Kirkland & Ellis divides opinion like no other, but even discounting much of the backbiting, there is a sense that it remains underweight in its corporate practice given the size of its team and strong US pedigree.
The surprise is the rise and rise of White & Case following the recruitment two years ago of Richard Youle and Ian Bagshaw from Linklaters. The dramatic expansion of their practice is a reminder of what can be achieved in private equity when, in the words of Bagshaw, you have the ‘right people and right clients’.
It’s an interesting point for global law firms. While such firms trade heavily on industry nous, in many regards the job of corporate law has become about the logistics of managing mountains of documents.
In comparison, the sharply-applied commercialism, judgement and client skills may make the typical private equity lawyer sound like they’re auditioning for a Mamet play, but it’s one approach that leading law firms may want to adopt more in the age of globalisation and automation. Less AI, more ABC. Always. Be. Closing!
For more analysis, read ABC – the brutally simple world of a private equity lawyer (£)