Legal Business

Comment: Allen & Overy’s election delivered an all-star line-up but have the big issues been resolved?

Comment: Allen & Overy’s election delivered an all-star line-up but have the big issues been resolved?

Towards the end of 2019, Legal Business remarked that the issue at the heart of Allen & Overy (A&O)’s looming leadership election was if the process would resolve whether the winners could achieve the right to genuinely lead the City giant. Now that the election has concluded, with the re-election of Wim Dejonghe (pictured) as senior partner and the elevation of projects and energy head Gareth Price as managing partner in place of Andrew Ballheimer, it is far from clear that the point has been settled.

That is not a criticism of the calibre of the candidates and winners. Generally regarded as the best managed of the Magic Circle’s four internationalists, A&O certainly attracted a line-up of heavyweight candidates, by no means a given in law firm leadership run-offs. This was most obvious in the contest between Dejonghe and banking co-head Philip Bowden for senior partner and Price and litigation head Karen Seward for the managing partner brief.

Being saddled with the difficult baggage of A&O’s marathon-but-recently-abandoned bid to merge with US firm O’Melveny & Myers, a re-election for Dejonghe that would have a year ago been a shoo-in was regarded instead as a knife-edge call against the much-liked Bowden. Had Dejonghe not been aided by Ballheimer’s decision not to go for re-election, increasing the case for a continuity figure in the core leadership team, it may have tipped the other way.

Seward-versus-Price appeared another close contest, with some disappointment that A&O didn’t become the first Magic Circle firm to elect a woman to its c-suite. But in truth Price brings a very strong consistency, being cited for his energy, intelligence and drive both inside the firm and by informed outsiders. Having led one of A&O’s most celebrated practices, Price has also supported its global drive in projects and pulled off the notable feat of establishing himself after celebrated figures like Graham Vinter and Anne Baldock departed. He also benefited from A&O’s preference for having a finance figure in senior management.

This is not the time for split-the-difference attempts to fudge the choices A&O is facing.

‘Lots of energy and a fizzing brain. Fierce intelligence,’ notes one former partner, while another former A&O man at a US firm observes: ‘Gareth is a smart guy, really clever and a good choice. Personally, I’m surprised they didn’t elect Karen. It’s about time the Magic Circle elected a woman managing partner. All things being equal, Karen should have got it, but maybe all things weren’t equal.’

Which brings us to the unresolved issue. Many feel that Seward’s candidacy would not have been helped by being seen as too close to Dejonghe – both are viewed as committed globalists with a strong working relationship, while Price is seen as more likely to stand his ground on key strategy points. There are mixed views on how committed Price will be to expensive foreign expansion. But certain key matters of policy certainly need to be resolved, most pressingly around governance, US strategy and, for obvious related reasons, remuneration. The abandoned O’Melveny talks dragged on for so long largely because it would have involved wholesale reform of A&O’s partnership to accommodate the Americanisation of its business.

What remains to be seen is how effective the pair will be at providing the clarity that A&O needs if it is to keep competing in what has become a more challenging global market. A few cynics have claimed Price will undercut Dejonghe’s determination to secure a US breakthrough and push forward the kind of governance reforms needed to speed up decision-making. A bigger pool of opinion is that all the candidates were on board with the need for A&O to materially raise its game in the US but that still leaves difficult questions about the pace of investment that the A&O partnership is ready to stomach.

All of that indicates A&O – like its City peers – is potentially still stuck at the same strategic roadblock. These firms, with the exception of Linklaters, which has been consistently bearish on US investment, in theory accept the need for a dramatic improvement in their US businesses, without being willing to accept what will be required in practice to make such aspirations a reality.

But this is not the time for split-the-difference attempts to fudge the choices A&O is facing – the last leadership contest at Freshfields demonstrated the limitations of that approach in a more competitive global market. A&O did at least thrash out much of the detail on what major reform could look like during the O’Melveny process, including a model that could have paid a few select stars $8m a year, with the understanding the model could deliver $6m deals for a wider pool of high performers. There will also be a tricky debate about lowering voting thresholds, currently as high as 90% on some matters, to a level more conducive to effective decision-making, such as the 60% to 75% range.

Moreover, it barely needs saying with the coronavirus outbreak spreading disruption and fear across Europe, A&O is now facing the kind of severe upheaval that it last encountered during the banking crisis. That was a period in which A&O distinguished itself with clarity and clear communication. The firm is fortunate to have two-highly regarded individuals at its helm. Now they must find a common cause and move A&O decisively forward while there is still time.

alex.novarese@legalease.co.uk

Legal Business

A&O takes coronavirus threat to task with raft of belt-tightening measures

A&O takes coronavirus threat to task with raft of belt-tightening measures

 Allen & Overy has pre-empted a likely financial hit from the coronavirus crisis with a host of measures, including altering profit distribution to partners, increasing partner capital levels and freezing some investments and recruitment. 

The firm confirmed today (31 March) what it described as prudent management measures’ as part of its ‘ongoing scenario planning’ as the Covid-19 continues to affect international businesses.  

In a statement, the firm maintained it was in ‘a very strong financial position but given the unknown nature of the evolving challenges, and their long term impact on our markets’, the move was sensible. 

‘[The measures] include adjustments to the phasing of profit distribution to partners, increasing partner capital levels, deferring certain investments and recruitment, and cancelling events,’ the firm said. 

For staff, including fee earners and business support staff, we have decided not to undertake annual salary reviews in the first quarter of the forthcoming financial year.  We will still award bonuses for this financial year, with bonus payments for fee earners and our more senior support staff split between our normal payment date in July and October’s payroll,’ the statement added. 

A&O said it was ‘confident in our resilience if economic conditions worsen’ due to its good diversification across practices and broad international offering. 

Nevertheless, the Magic Circle firm has struck a defiant note in the face of the crisis, yesterday going some way to fulfilling its transatlantic ambitions with the re-appointment of IP litigation partner Paul Keller from Norton Rose Fulbright in New York. 

Last year, A&O’s financial performance was on trend with the pace set by its Magic Circle peers to post solid but unspectacular financial results, increasing its top line by 5%, sending revenue up by £75m to nearly £1.63bn. A pacier 8% growth in profit before tax to £708m was more heartening, even as profit per equity partner (PEP) rose just 1% to £1.66m amid a 2.4% uptick in headcount for the year.

As the full extent of the pandemic’s impact is unlikely to be known for months to come, it seems inevitable that firms will continue to make financial contingencies to minimise the fallout. 

Earlier today it emerged that Reed Smith has ringfenced a portion of its cash reserves against partner distributions as the crisis unfolds. The measures will see monthly drawings reduced by 40% for full equity partners and 15% for fixed share partners globally. 

nathalie.tidman@legalease.co.uk 

Legal Business

A&O defies coronavirus turbulence to lure back New York litigation partner

A&O defies coronavirus turbulence to lure back New York litigation partner

 Allen & Overy has not let market turmoil wrought by the Covid-19 pandemic get in the way of its US recruitment ambitions, having re-hired IP litigation partner Paul Keller from Norton Rose Fulbright in New York. 

The move, announced today (30 March), comes as part of its strategy to accelerate investment into its US business after its failure to merge with O’Melveny & Myers last year. It is the third US hire announced in a week after adding Billy Jacobson and Jonathan Lopez, both veterans of the fraud section of the US Department of Justice, from Orrick Herrington & Sutcliffe in Washington DC. 

The hires come at a time of significant flux for A&O as it looks to transition leadership and also when firms are scaling back strategic recruitment as the global coronavirus pandemic unfolds. Gareth Price is preparing to take the managing partner baton from Andrew Ballheimer on 1 May to join incumbent senior partner WimDejonghe at the helm.  The hires are in line with Ballheimer’svow last September to approach US investments with ‘more focus and speed of execution’ than the firm had previously delivered.

Keller originally joined A&O in 2010 and left in 2015 for NRF, where he became head of the New York intellectual property disputes group and co-head of the autonomous vehicle international business group.  His practice is mainly focused on patent and trade secret matters in automotive and fintech. 

Tim House, A&O’s US senior partner, said: ‘As we further build out our US IP litigation practice, starting with Paul’s hire, A&O will be the only firm to offer scaled and high-quality capabilities in each of China, Europe, and the US, which represent the three most important IP markets in the world.’ 

Keller added: ‘Although the timing of this move is unusual given all that surrounds Covid-19, the changes and innovations that will likely take place because of the current crisis may match, if not surpass, those stemming from the 2008 financial crisis.  Healthcare, transport, energy, finance, consumer and retail sectors, as well as many other areas, will all be impacted.  Allen & Overy is not only uniquely positioned to assist clients through this turbulent time but also with the disruption and opportunities that are likely to follow.’ 

nathalie.tidman@legalbusiness.co.uk 

Legal Business

Allen & Overy’s election delivered an all-star line-up but have the big issues been resolved?

Allen & Overy’s election delivered an all-star line-up but have the big issues been resolved?

Towards the end of 2019, Legal Business remarked that the issue at the heart of Allen & Overy (A&O)’s looming leadership election was if the process would resolve whether the winners could achieve the right to genuinely lead the City giant. Now that the election has concluded, with the re-election of Wim Dejonghe (pictured) as senior partner and the elevation of projects and energy head Gareth Price as managing partner in place of Andrew Ballheimer, it is far from clear that the point has been settled.

That is not a criticism of the calibre of the candidates and winners. Generally regarded as the best managed of the Magic Circle’s four internationalists, A&O certainly attracted a line-up of heavyweight candidates, by no means a given in law firm leadership run-offs. This was most obvious in the contest between Dejonghe and banking co-head Philip Bowden for senior partner and Price and litigation head Karen Seward for the managing partner brief.

Legal Business

A&O bullish on US investment drive with hire of federal enforcement firepower in DC

A&O bullish on US investment drive with hire of federal enforcement firepower in DC

Allen & Overy  has again thrown itself behind its strategy to accelerate investment in its US business after fruitless merger talks with O’Melveny & Myers, having hired a pair of federal enforcement partners from Orrick Herrington & Sutcliffe in Washington DC. 

The addition of Billy Jacobson and Jonathan Lopez, both veterans of the fraud section of the US Department of Justice, is another shot in the arm for the City giant’s lofty stateside ambition to redouble investment in DC and New York at a time of leadership transition for the firm. It also comes at a time when firms are scaling back strategic recruitment as the global coronavirus pandemic unfolds. 

The hires take place as Gareth Price prepares to take the managing partner baton from Andrew Ballheimer on 1 May to join incumbent senior partner Wim Dejonghe at the helm.  The hires are in line with Ballheimer’s vow last September to approach US investments with ‘more focus and speed of execution’ than the firm had previously delivered. 

Jacobson and Lopez joined Orrick in 2014, with the former having served five years at oil and gas services multinational Weatherford International as senior vice president, co-general counsel, and chief compliance officer. Jacobson had been a partner at Kirkland & Ellis and Fulbright & Jaworski and in his latest tenure at the DOJ was responsible for half of all Foreign Corrupt Practices Act (FCPA) investigations as assistant chief for FCPA enforcement. 

Before joining Orrick, Lopez worked at the DOJ for 11 years, with roles including its inaugural deputy chief of the bank integrity unit, working on matters including anti-money laundering cases involving HSBC and MoneyGram. The addition of Jacobson and Lopez brings the DC office’s partner count to 13.  

A&O has had mixed fortunes on the US front recently, adding US capability in London in the form of financial services regulation counsel Knox McIlwain as a partner from Cleary Gottlieb Steen & Hamilton in September, while the following month losing New York leveraged finance partners Alan Rockwell and Michael Chernick to Shearman & Sterling. 

The failed deal with O’Melveny also encouraged some corporate partners to shop around at US rivals, with the departure from London of respected corporate partners Simon Toms and George Knighton to Skadden, Arps, Slate, Meagher & Flom only 10 days after the merger collapsed seen as significant collateral fallout. 

Nathalie.tidman@legalease.co.uk 

Legal Business

Magic Circle trio ask City staff to work from home as coronavirus crisis deepens

Magic Circle trio ask City staff to work from home as coronavirus crisis deepens

Allen & Overy (A&O), Slaughter and May and Clifford Chance have asked City staff to work from home in a bid to mitigate the spread of coronavirus.

The moves come as the UK’s infection rate today [16 March] rose to 1,395 cases, 35 of which have proved fatal.

An A&O spokesperson said in a statement: ‘Allen & Overy is strongly encouraging all partners and staff in its London office to take advantage of its existing flexible working arrangements to work from home for the next few weeks in response to the spread of Covid-19. We are keeping the situation under constant review and have introduced various different working arrangements in other offices across our global network.’

Other measures the City giant has taken include international travel restrictions, in place since 1 March, cancelling larger meetings and encouraging other meetings to be handled remotely.

Slaughters has followed similar steps, asking all staff to work from home ‘where feasible to reduce overall numbers of people in the office and traveling to work.’ The arrangements will initially be in place until Friday 3rd April, with the situation kept under review, and follow a successful trial of working from home measures conducted at short notice last week.

Meanwhile CC, whose APAC employees have been working remotely for some time, has rolled out working from home for its UK, US, European and Middle East offices, and has business continuity procedures in place across all its offices.

A CC spokesperson said in a statement: ‘The firm is taking precautions seriously and is closely following all relevant government and WHO advice to ensure that we are ready to adapt to the latest guidance. Our primary focus is on ensuring the health and wellbeing of all our staff and their families.’

The London office of Linklaters, meanwhile, remains open, although a spokesperson for the firm said people are not expected to come into the office if they feel uncomfortable doing so. The firm ran a mass test last week in order for people to experience remote working. The firm has shut its Milan and Madrid office, while its Paris staff started working from home from today and its German teams will follow suit from tomorrow.

Elsewhere, Baker McKenzie has moved its London and Belfast offices to full remote working from today. A spokesperson for the firm said the offices will be closed ‘for all but essential services such as IT, couriers, post and printing so as to support the delivery of all client services, including closings and court hearings’. The firm will continue to ‘keep the position under close review’ but expected measures to be in place at least until the end of the month.

Last week, as law firms around the world were forced to take ever more radical steps in an attempt to contain the spread of the virus, Reed Smith asked its staff to work from home as Taylor Wessing closed its London office altogether after a member of staff tested positive.

nathalie.tidman@legalease.co.uk

Legal Business

Seward misses out as A&O names its Price for managing partner successor

Seward misses out as A&O names its Price for managing partner successor

After a hard-fought election which saw four vie for leadership, the Allen & Overy (A&O) partnership has thrown its weight behind Gareth Price as its new managing partner.

The global head of both the projects and energy group, Price joins Wim Dejonghe, who was earlier this week re-elected to a second stint as senior partner, to complete the City giant’s leadership.

He will take over from the venerable Andrew Ballheimer on 1 May 2020, following his retirement after 35 years at the firm.

While the senior partner contest was a two-horse race, with incumbent Dejonghe going head-to-head with the popular banking co-head Philip Bowden, the managing partner spot saw a more diverse pool throwing in for the role.

The hotly-tipped and high-profile litigation head Karen Seward was the other London candidate, while Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, and Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels, were also in the running.

Price trained at A&O and made partner in the projects practice in 2003. He has been global head of the projects and energy group for the last eight years.

He commented: ‘I am very grateful for the support of the partnership in being elected to this role. A&O has always been a place of innovation and entrepreneurship and I look forward to working closely with Wim as senior partner to ensure the firm continues to flourish and push the boundaries in legal service delivery as a global elite law firm.’

Price and Dejonghe will have a challenging four years ahead if they are to fulfil the US ambitions dashed by Ballheimer and Dejonghe’s forced abandonment of a merger with West Coast firm O’Melveny & Myers last autumn. The plan will have to include sustained investment in the US business, along the lines of Ballheimer’s promise last September for ‘more focus and speed of execution’ in its Stateside recruitment push.

Ballheimer announced his intention to retire in December, having been managing partner since May 2016 and, before that, global co-head of corporate.

nathalie.tidman@legalease.co.uk

Legal Business

A&O re-elects Dejonghe for a second term after heavyweight challenge

A&O re-elects Dejonghe for a second term after heavyweight challenge

After what was viewed as a too-close-to-call contest, Allen & Overy (A&O) partners have elected Wim Dejonghe as senior partner for a second four-year term.

The move is a vote of confidence for Dejonghe (pictured), who had stood against another heavyweight candidate in the form of Philip Bowden, the City giant’s well-regarded banking co-head. The election also came in the wake of a contentious failed bid for a US merger.

Dejonghe has been part of A&O’s senior leadership team since 2008, first as global managing partner, and since 2016 as senior partner. He joined A&O in 2001, having previously been a partner at Loeff Claeys Verbeke since 1993. He led A&O’s Belgian offices from 1996 until his election as A&O’s global managing partner. He also co-headed the firm’s global corporate practice.

The managing partner role is set to be decided later this week on Thursday (27 February) and is the more open field of the two since incumbent Andrew Ballheimer said in December that he would retire from A&O at the end of his current term on 30 April 2020.

The London candidates in the running are global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures who have been considered serious contenders. Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, is also in the race, as is Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels.

The leadership elections come at a critical time for a firm having to come to terms with tricky strategic decisions around its US strategy after Ballheimer and Dejonghe were forced to abandon marathon merger talks with West Coast firm O’Melveny & Myers last autumn.

The successful candidates will be expected to take up the baton of redoubled investment in the US, with Ballheimer promising last September ‘more focus and speed of execution’ in its Stateside recruitment push.

The collapse of the O’Melveny talks was seen by some as a very public reversal for the A&O leadership that could potentially have damaged Dejonghe’s bid for re-election.

Since then, the firm has had mixed fortunes on the US front, adding US capability in London in the form of financial services regulation counsel Knox McIlwain as a partner from Cleary Gottlieb Steen & Hamilton in September, while the following month losing New York leveraged finance partners Alan Rockwell and Michael Chernick to Shearman & Sterling.

The long-sought deal with O’Melveny also caused some corporate partners to shop around at US rivals, with the departure from London of prominent corporate partners Simon Toms and George Knighton to Skadden, Arps, Slate, Meagher & Flom ten days after the merger collapsed seen as significant collateral damage.

Both successful candidates will take up their posts on 1 May 2020.

nathalie.tidman@legalease.co.uk

For more analysis on A&O’s leadership election click here 

Legal Business

Keeping pace with change: A&O becomes latest City firm to usher in parental leave reforms

Keeping pace with change: A&O becomes latest City firm to usher in parental leave reforms

Allen & Overy (A&O) has become the latest City firm to update its policies for working families, ushering in extensions to parental leave allowances.

The move will be a fillip for an industry still beset by out-dated policies and the ongoing battle to retain women into senior partnership.

The new policies include increased paternity leave from two to 12 weeks’ paid leave and new provisions for maternity and shared parental leave (SPL), including a phased return from maternity leave and SPL using accrued annual leave over an 8-week period.

They will take effect on 1 March 2020 and will initially be rolled out in the UK and UAE region, after the Magic Circle firm undertook a review and consultations.

The policies also allow for additional time off work for families whose baby is born prematurely or requires neonatal unit care, as well as a fertility treatment leave policy which provides five days’ paid leave over a 12-month rolling period for fertility treatment.

In addition, the firm has rebooted its adoption leave policies for both prospective parents to attend meetings and appointments in addition to eligibility for all parental leave entitlements.

After the rollout in the UK and UAE, other regions of the A&O network are expected to follow suit.

Sasha Hardman, A&O’s global HR director, said: ‘The face of family life is changing so we have listened to what’s important to our people to make sure we’re keeping pace with change. We want to make it clear that you can have a family and build a successful career at A&O.  There is more support, flexibility and encouragement to do this than ever.’

Ashurst last November took steps to modernise its parental leave models and the following month Linklaters announced that parental leave extended to 12 months would come into play in January.

nathalie.tidman@legalease.co.uk

Legal Business

Essential to success: A&O reviewing equity point cut in Germany

Essential to success: A&O reviewing equity point cut in Germany

Allen & Overy (A&O) is reviewing equity points for partners in Germany, following a gruelling few years which saw a shift to corporate from a declining banking business.

The proposal, reported to amount to a 15% reduction in equity points but still under discussion, will be an unwelcome development among partners in the firm’s Frankfurt, Hamburg, Düsseldorf and Munich offices. It comes after unease bred from the firm’s previous restructuring led to a number of high-profile departures in 2018, including Frankfurt global head of employment and benefits Tobias Neufeld and German dispute resolution head Daniel Busse, who both set up their own boutiques.

A spokesperson for A&O said: ‘We, like every lockstep-based firm, manage and review our financial performance on a regular basis. This is essential to our success. Discussions are taking place internally. Due to our significant restructuring in 2017, we expect any changes to be relatively minor.’

A&O will require significant financial clout if it is to make good on plans to accelerate investment in its US practice in the wake of its failed merger with O’Melveny & Myers. The tie-up fell over last autumn after marathon negotiations that rumbled for more than 18 months.

Since then, the firm has had mixed fortunes in its stateside strategy, adding US capability in London in the form of financial services regulation counsel Knox McIlwain as a partner from Cleary Gottlieb Steen & Hamilton in September, while the following month losing New York leveraged finance partners Alan Rockwell and Michael Chernick to Shearman & Sterling in New York.

The aborted deal also caused some corporate partners to shop around at US rivals, with the departure from London of respected corporate partners Simon Toms and George Knighton to Skadden, Arps, Slate, Meagher & Flom just 10 days after the merger collapsed seen as collateral damage.

Meanwhile, election fever will have taken hold in London with all eyes on whether senior partner Wim Dejonghe will beat out competition from Philip Bowden, the City giant’s well-regarded banking co-head.

More hotly-contested is the managing partner spot after Andrew Ballheimer said late last year he would retire from A&O at the end of his current term on 30 April 2020. The London candidates are global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures who will be considered serious propositions. Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, has also thrown in, as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels. All of the candidates are said to have bought into A&O’s need to invest heavily in the US as pressure heats up to secure its place in the global elite before it is too late.

nathalie.tidman@legalease.co.uk