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

Legal Business

A&O gains Shanghai approval on the back of double-digit Asia-Pac growth

A&O gains Shanghai approval on the back of double-digit Asia-Pac growth

After boosting its Asia Pacific turnover by more than 10% last year, Allen & Overy (A&O) has become the latest City giant to receive approval to practise law in China’s Free Trade Zone (FTZ).

The arrangement comes by way of a joint operation with local firm Shanghai Lang Yue Law Firm – called Allen & Overy Lang Yue (FTZ) Joint Operation Office – which received approval from the Shanghai Bureau of Justice, A&O said today (7 January).

The move makes it the second Magic Circle firm to commit to the region, with Linklaters in May 2018 striking a similar arrangement with local firm Zhao Sheng. FTZ rules allow international players to tie-up with domestic firms and practise local law.

For Linklaters, the agreement contributed to double-digit revenue growth in the firm’s non-European offices in the year to April 2019, with Asia-Pacific turnover surging 15% to £226m, its LLP accounts published in November showed.

The latest deal will combine Lang Yue’s PRC law capability with A&O’s international platform to advise on corporate, M&A, private equity, venture capital investments, capital markets, regulatory advisory and compliance matters.

Victor Ho, A&O’s Beijing & Shanghai managing partner, told Legal Business the two firms have been working together on mainly in the corporate/M&A, DCM and ECM areas.

He commented: ‘For example, the teams are currently advising a number of Chinese domestic clients with their overseas IPO projects, in particular by way of red chip or H share listing in Hong Kong.  Other examples include assisting on the Chinese portions of large global transactions.  All of these projects require close collaboration between PRC firms and their international counterparts, the joint operation allows our teams to bring this collaboration to a very high quality level.’

Wenxin Zhou, partner at Lang Yue, said the firms were introduced by a mutual contact a few years ago and have worked together on a significant number of client mandates.  ‘The success of that work is what led to discussions for the Joint Operation and is a continuation of an exceedingly close collaboration.’

Simon Makinson, corporate partner and head of A&O’s Myanmar practice, has played a leading role in the cooperation and will continue to do so.

On A&O’s strategy, Ho added:  ‘Growing our China related business is one of our global strategic priorities as we are committed to providing our clients with the best quality legal coverage wherever they operate and where we can. This includes not just representing MNC clients in China investing in China and Chinese clients investing abroad but assisting our global network with the growing number of Chinese-related projects, Chinese counterparties and China regulatory-related issues.’

A&O’s recently-published LLPs were a fillip for a firm that saw its plans for global elite status stymied by its much-publicised failure to secure a merger with O’Melveny & Myers.

The firm benefited from a foreign exchange gain of £9m, which contributed to 5% revenue growth to £1.627m from £1.552m in 2018, as well as an 8% uptick in pre-tax profit to £708m from £653m the previous year. Profit per equity partner (PEP) was up 1% to £1.66m from last year’s £1.51m, excluding foreign exchange gains and last year’s £21m in exceptional property costs.

Revenue rose across the board geographically, with Asia-Pacific’s income increasing to £244.5m from £221.7m, an uptick of more than 10%.

Meanwhile, A&O is gearing up for a February leadership election that has seen Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, standing for the managing partner role. The spot is hotly-contested after Andrew Ballheimer said in early December that he would retire from A&O at the end of his current term on 30 April 2020.

Liu will be up against London candidates including global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures, as well as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels.

Senior partner Wim Dejonghe is standing for a second term and will be up against Philip Bowden, the City giant’s well-regarded banking co-head.

Other firms to have entered the FTZ include Hogan Lovells, through its association with Fidelity Law in October 2016 and Baker McKenzie, which a year earlier became the first international firm to launch a joint office in the area with Beijing firm FenXun Partners. Holman Fenwick Willan, meanwhile, formalised a local partnership with Wintell & Co in April 2016.

nathalie.tidman@legalease.co.uk

Legal Business

LLP accounts: Pension costs hurt CC profits as A&O leadership sees pay increases

LLP accounts: Pension costs hurt CC profits as A&O leadership sees pay increases

Operating profit at Clifford Chance (CC) UK LLP fell 5% to £260m in the year to 30 April 2019 amid rising pension costs while management at City rival Allen & Overy (A&O) saw a 8% pay rise to £16m, the two firms’ recently published accounts have revealed.

The fall in profits at CC’s LLP – which includes its UK headquarters and eight of its overseas branches – came despite a 4% global revenue increase to £1.693bn as the firm added £70m to its top line.

Operating profit from all of the firm’s 32 offices rose by just £2m to £628m, with the accounts showing a £11m loss in relation to its global pension scheme. The firm’s pension deficit stood at £284m at the end of the financial year, slightly up on £283m the previous year. The firm aims to eliminate the deficit by the end of May 2026, with £17m to be paid into the scheme in the current financial year.

Overall staff costs rose 8% to £766m, while staff costs in the firm’s UK, Abu Dhabi, Amsterdam, Beijing, Brussels, Dubai, Moscow, Seoul and Shanghai branches (which are part of the LLP) rose 17% to £104m, as pension costs in those offices tripled to £6m.

Average staff headcount grew by 200 to 6,208 overall and by 94 to 957 in the LLP. CC’s highest-earning partner received £3m, while the remuneration of the 13 members of the firm’s executive leadership group was £22m; both figures were flat on the previous year.

CC’s accounts also provided a breakdown of the income from different groups of the firm’s clients, showing progress on managing partner Matthew Layton’s long-stated aim of reducing the firm’s reliance on banks. Billings from financial investors rose 8% to £519m, while banks provided £550m, up 4% on 2018, and corporates £624m, up 2%. It means banks accounted for 32% of the firm’s revenue, down from around 50% ten years ago.

Speaking to Legal Business last year, Layton (pictured) said: ‘We saw from December [2018] onwards some volatility resulting from the geopolitical environment: China-US trade wars, slowdown in China and Eurozone growth and the US shutdown and continued uncertainty [over Brexit]. Despite that we had a very strong year.’

Meanwhile, A&O benefited from a foreign exchange gain of £9m, which contributed to 5% revenue growth to £1.627m from £1.552m in 2018, as well as an 8% uptick in pre-tax profit to £708m from £653m the previous year. Profit per equity partner (PEP) was up 1% to £1.66m from last year’s £1.51m, excluding foreign exchange gains and last year’s £21m in exceptional property costs. The firm highlighted more than 20% revenue increase in its Advanced Delivery & Solutions businesses as well as strong performance from its banking, corporate and ICM practices.

After an arduous year involving failed transatlantic merger talks with O’Melveny & Myers, the firm’s management team, including senior partner Wim Dejonghe and managing partner Andrew Ballheimer took home £16m, an 8% increase on the £14.8m they earned the previous year.

The results were slightly marred by staff costs inflated by £49m to £610m from £561m in 2018 due to headcount and pay increases while other operating costs were down by £5m to £308m as the exchange gains kicked in.  Revenue rose across the board geographically as the UK generated £633.3m, up from £620.1m in 2018; continental Europe generated £512.5m, up from £491.9m last year; Asia Pacific’s income increased to £244.5m from £221.7m; the Americas generated £136.4m (£129.4m in 2018); and Middle East and Africa saw an uptick to £100.2m from £89m.

The partnership saw a slight decrease in headcount to 536 from 538 while the number of fee-earners increased to 2,517 from 2,434 in 2018.

The firm had unused committed bank facilities of £150m. Partners’ capital contributions totalled £138m compared with £134m last year and subordinated loans totalled £56m compared with £56m last year.

On the day election fever struck the UK generally, the firm announced on 12 December Dejonghe would be standing for a second term as senior partner, up against Philip Bowden, the City giant’s well-regarded banking co-head. The managing partner spot is more hotly-contested after Ballheimer said earlier that month 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.

The board comprises Dejonghe, Ballheimer and six independent partner directors: Paris-based Laëtitia Bernard, Denise Gibson, David Lee and Daniel Shuman in London, Christian Saunders in Dubai, and Tim Stevens in Amsterdam. Pamela Chepiga in New York and Roger Lui in Hong Kong are the two co-opted board members.

The executive committee is made up of Dejonghe, Ballheimer, David Benton, Bowden, Ian Ingram-Johnson, Astrid Kruger, Liu, Meeus, Seward and Barbara Stettner.

Marco.cillario@legalbusiness.co.uk

Nathalie.tidman@legalbusiness.co.uk

Legal Business

Dejonghe to stand again as A&O senior partner as six leadership hopefuls revealed

Dejonghe to stand again as A&O senior partner as six leadership hopefuls revealed

As voters head to the polls on UK general election day, Allen & Overy (A&O) has confirmed the names of six partners who will vie for leadership in its own election in February.

Senior partner Wim Dejonghe (pictured) is standing for a second term and will be up against Philip Bowden, the City giant’s well-regarded banking co-head.

The managing partner spot is more hotly-contested after Andrew Ballheimer said earlier this month that 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.

The leadership race comes at a crucial time for a firm grappling with thorny strategic decisions around its US strategy after Ballheimer and Dejonghe were forced to abandon marathon merger talks with West Coast firm O’Melveny & Myers in the autumn.

Ballheimer was elected as managing partner in May 2016 and before that was global co-head of corporate. He succeeded Dejonghe, who took up the role of senior partner at the same time.

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

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 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 damage.

The election process will see voting take place in February with the senior partner to be announced on 24 February and the managing partner on 27 February. The successful candidates will take up their posts on 1 May 2020.

Nathalie.tidman@legalease.co.uk

For more analysis on A&O’s election see our recent comment piece ‘If A&O’s new leadership team can’t get a mandate, who can?’

Legal Business

Comment: If A&O’s new leadership team can’t get a mandate, who can?

Comment: If A&O’s new leadership team can’t get a mandate, who can?

Writing at the end of November, with this issue hitting desks only a day or two before the candidates for Allen & Overy (A&O)’s leadership elections are announced – this column is truly hostage to fortune. Who will emerge to lead what has for many been the Magic Circle’s most effectively-led player will have significance spreading well beyond A&O’s City HQ. Still, a good track record cannot be counted on swinging re-election for senior partner Wim Dejonghe, thanks to the firm’s marathon but unsuccessful merger attempt with O’Melveny & Myers. That deal had many supporters but also some entrenched opposition, not least a vocal group of City corporate partners. And even many who were sympathetic grew understandably uneasy at the length of time the deal dragged on. Consequently, this looks to be no rubber-stamping exercise for a second term, even if many believe Dejonghe will run again and stands a good chance of re-election. The open nature of the race was further underlined by the late-minute announcement from managing partner Andrew Ballheimer that he would not seek a second term.

Potential candidates are currently keeping their powder dry, but for months there has been talk that the popular and effective banking co-head Philip Bowden will stand as senior partner, representing a serious candidate with a huge constituency. Even a two-horse race is hard to call, but there has also been suggestion that infrastructure head David Lee could throw his hat in. And the managing partner role is expected to attract a wider field: projects head Gareth Price has been cited, another rock solid candidate, while litigation chief Karen Seward must be weighing her chances.

How this plays out will have major consequences for A&O as the firm strives to face thorny strategic issues post-O’Melveny. The current management has been resolute on securing a compelling operation in the vast US market, requiring either a marquee merger or a decade of uncertain investment (and quite likely both). Given that A&O has spent five years scouting for potential suitors there are very few options open – with the firm even struggling to sign up a smaller firm that had, despite a decent pedigree, been falling behind US peers for a decade. But the alternative of building organically will take the kind of sustained investment that A&O’s partnership has historically baulked at.

Yet pressing as such matters are, they remain largely a symptom of a wider malaise, which is the struggle of A&O and its City peers to navigate the tougher post-Lehman environment with their current governance, remuneration and business models. The old Magic Circle formula that developed in the 1990s allowed small groups of individuals to make big decisions, thereby responding decisively and boldly to a changing industry. But for the largest City firms that once-productive model has progressively broken down as these institutions have become sprawling outfits that no longer defer to a handful of influential London figures to make the tough calls, nor give their elected c-suites a clear enough mandate to govern.

The real issue in this election is whether the ultimate winners can secure the right to genuinely lead, which for A&O would require an overhaul of compensation and big answers to big questions on strategic investment priorities. It is less that there are right and wrong answers, more that the Magic Circle keeps avoiding the questions entirely, with a resulting decline in influence globally. If A&O can break that deadlock it will have done itself, and the wider City profession, a huge service

alex.novarese@legalease.co.uk

nathalie.tidman@legalease.co.uk