Legal Business

Comment: Latham vs Kirkland means everyone else loses – They own the global elite now

Comment: Latham vs Kirkland means everyone else loses – They own the global elite now

Skadden Arps, Clifford Chance, Linklaters and, currently, Kirkland & Ellis – over the last 30 years these firms have all at one time had claims to have been the most influential law firms of their age, the pioneers that defined the top of the profession through dash, ambition and imagination.

And many senior lawyers would think that list is missing the name of the institution that looked unchallenged until the Kirkland effect gripped the market in the last three years.

That firm is Latham & Watkins, the Los Angeles-bred giant whose ascent was as predictable and well trailed as Kirkland’s was rude and disruptive. With a history of strong leadership, strategic clarity and an envied culture, its rise seemed unstoppable.

While no one expects the firm to dominate big-ticket deal work reserved for rarefied sections of Manhattan, on the wider international stage, spanning key hubs in the US and Europe, Latham was the pace-setter for global law through most of the 2010s.

Yet Latham enters the 2020s in a more ambiguous position than expected a few years back. That is partly due to the loss of its managing partner in 2018 under surreal circumstances that badly undercut Latham’s slick image. But the far more substantive issue has been the relentless challenge of Kirkland in many of its core markets, a campaign that has seen the Chicago outfit outstrip Latham in revenue, growth and profitability. Even worse, Kirkland is now regarded as a more potent performer in a number of Latham’s marquee business lines like leveraged finance, private equity and restructuring.

The fierce competition with Kirkland is concentrating minds in what is emerging as a more hard-edged outfit under the leadership of Richard Trobman.

For a firm that had forgotten how to play defence, this came as a shock and there is no doubt that a minority of Latham partners would like a more individualistic approach that responded more directly to the threat of Kirkland and its $10m-plus offers for rainmakers.

Other questions remain for a firm whose many strengths and sheer brand power often obscures its flaws. In public M&A, the firm’s US business remains patchier than the sales pitch, with a bench too shallow and lacking younger stars. Neither is it as apparent that Latham’s bond-centric, bank-heavy business is quite the asset it used to be. It is also debatable if even as an outfit as institutionally robust as Latham has been able to fill the vacuum left by the 2015 departure of Bob Dell, one of high-end law’s most revered leaders.

None of which changes the conclusion that Latham 2020 remains a singularly formidable outfit that will not be dislodged from the upper reaches of the global market anytime soon. If anything, the fierce competition with Kirkland is concentrating minds in what is emerging as a more hard-edged outfit under the leadership of Richard Trobman.

That shift will fall far short of reinventing Latham in Kirkland’s image. Despite common ground of strong leadership, expansive vision and an affinity for lev fin, these beasts are polls apart in culture and model, with Latham far more diversified and team-oriented than its buccaneering rival. But that also means that for broader-service work to major plcs, in many European markets Latham is still a more ominous threat for London rivals than Kirkland. Between them, with their collective City revenues closing in on $1bn, the pair are leaving precious little space for rivals. In short, global law in the 2020s belongs to this pair, everyone else is just along for the ride.

alex.novarese@legalease.co.uk

Click here for our feature on Latham & Watkins, ‘Heavy hangs the crown’

Legal Business

Heavy hangs the crown – Can Latham remain the global firm to beat?

Heavy hangs the crown – Can Latham remain the global firm to beat?

Early March 2018 looked like the best of times to be a lawyer at Latham & Watkins. At the end of February the Los Angeles-bred giant had become the first law firm to report revenues above $3bn. This distinction crowned two decades in which it had been the most upwardly mobile firm in BigLaw, smoothly transitioning from West Coast challenger to global trailblazer, upsetting established hierarchies in New York and London along the way.

But by the end of the month, its 700 partners spread across 30 offices throughout the world were to get an email summoning them to a conference call. Latham’s two vice-chairs Richard Trobman and Ora Fisher informed the global partnership that the firm’s executive committee had accepted the resignation of global chair and managing partner, William Voge. Only three years into his role, Voge was leaving with immediate effect following a series of ‘voluntary disclosures’ relating to personal conduct.

Legal Business

Legal 500 Data: Behind the story

Legal 500 Data: Behind the story

The Legal 500 : Latham & Watkins focus

The success of Latham & Watkins’ expansion globally in recent years is backed up by Legal 500 data. Fifty-seven of its practices have achieved top-tier rankings globally across The Legal 500 in 2019/20, compared to 40 in 2014-15. While only one of these 17 new top-tier rankings is in the UK, the firm’s growing dominance in London is still supported by the UK Legal 500 data.

Legal Business

Latham vs K&E means that everyone else loses

Latham vs K&E means that everyone else loses

Skadden Arps, Clifford Chance, Linklaters and, currently, Kirkland & Ellis – over the last 30 years these firms have all at one time had claims to have been the most influential law firms of their age, the pioneers that defined the top of the profession through dash, ambition and imagination.

And many senior lawyers would think that list is missing the name of the institution that looked unchallenged until the Kirkland effect gripped the market in the last three years.

Legal Business

Latham and Hogan Lovells move to remote working globally amid alarming coronavirus spread

Latham and Hogan Lovells move to remote working globally amid alarming coronavirus spread

Latham & Watkins and Hogan Lovells have become the latest law firms to ramp up their response to the increasingly global spread of COVID-19 by sending all their staff home.

The news comes as the number of casualties continues to rise around the world, with the latest figures reporting over 200,000 confirmed cases while the death toll has passed 8,000. 

Latham confirmed today (18 March) that its staff is working remotely across all the 2,270-lawyer firm’s 30 global offices.

Chief operating officer LeeAnn Black said in a statement: ‘Except where a jurisdiction has moved to a lockdown, our offices around the world remain physically open although the vast majority of our lawyers and professional staff are working remotely.’

Hogan Lovells also confirmed that the firm has moved to remote working globally.

The 2,642-lawyer transatlantic firm extended yesterday the measure to its UK, American and Australian offices, while its continental European outposts had already been working remotely since earlier in the month.

A spokesperson for the firm said in a statement: ‘We tested our remote working capabilities in the US last week and the UK and Europe this week, and had successful results.’ They added that the firm was ‘confident that we have the tools in place to conduct our business as usual’.

A number of firms have moved to similar arrangements over the last few days, including City firms Linklaters, Clifford Chance, Slaughter and May and Allen & Overy as well as transatlantic firm Eversheds Sutherland.

marco.cillario@legalease.co.uk

Legal Business

‘Building on the momentum’: Latham appoints banking veteran Kensell as London head

‘Building on the momentum’: Latham appoints banking veteran Kensell as London head

Latham & Watkins’ executive committee has appointed Stephen Kensell as London managing partner, just four years after he joined from Allen & Overy (A&O).

The appointment, effective yesterday (5 March), sees the banking veteran take over from fellow finance partner Jay Sadanandan, who leaves the post after five years.

Alongside London deputy managing partner Catherine Drinnan, who has been re-appointed, Kensell (pictured) will be responsible for setting and implementing the office’s strategy alongside ExCom.

It is the latest in a long list of management roles held by Kensell, one of the most senior banking lawyers in the City. He co-headed A&O’s own banking group alongside Andrew Trahair between 2008 and 2016 and took over as Latham’s banking vice chair in February last year following the departure of Chris Kandel to Morrison & Foerster.

‘I have always combined the managing partner role with a full practice, which is what I will be doing here,’ Kensell told Legal Business. Except for the firm’s chair Rich Trobman and the two vice chairs, very few of Latham’s partners in management roles get any discount on billable hour targets.

Discussing his strategy for the office, Kensell said: ‘For us it’s about continuing to build on the momentum. We are the second largest office of the firm and we see future growth.’

One of the priorities in London is to build out its public M&A practice and Kensell stressed the importance of combining lateral hiring with organic growth: ‘One of the hallmarks of the mature practice we have is that we are attracting fantastic laterals but also we have a fantastic group of associates. A really important part of the plan is bringing through our London associates and we are starting to see people who trained at the firm make partner here.’

Decided by the firm’s nine-member key executive arm after soundings with the partnership, terms of London managing partners are flexible but they are normally expected to stay on for three to five years.

The appointment of Kensell’s predecessor Sadanandan in 2015 was touted as a significant move in the firm’s efforts to improve gender diversity in its management ranks under former chair Bill Voge. Latham’s largest office – its 515-lawyer New York base – is led by finance partner Michele Penzer.

During Sadanandan’s term the firm grew London headcount 40% to 450 lawyers and consistently outpaced the firm’s global revenue growth, generating about $450m in 2019.

The office has recently passed the 100-partner mark, with recent hires including Freshfields Bruckhaus Deringer’s M&A rising star Sam Newhouse and Taylor Wessing’s TMT head Mike Turner.

Also hired during Sadanandan’s term, Kensell joined the firm in September 2016, a few months after missing out on A&O’s senior partner post to Wim Dejonghe.

marco.cillario@legalease.co.uk

Legal Business

Coronavirus fallout continues as Latham suspends NY partner conference while Bakers re-opens London branch

Coronavirus fallout continues as Latham suspends NY partner conference while Bakers re-opens London branch

Fears around the spreading coronavirus have yet again affected the business of law, as the world’s second-highest grossing firm Latham & Watkins called off its annual global partnership meeting in New York citing safety concerns.

Meanwhile Baker McKenzie has re-opened its London office today (2 March) after an employee taken ill with suspected symptoms last week tested negative to the COVID-19.

Latham chair Rich Trobman said in a statement on Friday (28 February) that the firm had taken the ‘difficult decision’ to cancel its annual partner meeting ‘with the health and wellbeing of our colleagues and clients foremost in mind’. He added: ‘While we perceive the risks to be small, safety is our first priority, and we thought this decision was in the best interests of all concerned given the uncertainty surrounding COVID-19.’

The conference was due to take place this week, bringing together partners from its 30 offices across the world in Manhattan. Latham has 514 equity partners and 276 income partners.

Elsewhere, Bakers’ London operations were back to business as usual today after the firm shut its 1,000-employee office on Friday citing concerns over a staff member showing suspected symptoms after travelling to northern Italy, Europe’s worst-affected area. The employee underwent tests for the virus and on Sunday the firm received news they were negative, so notified staff that they could return to work as normal today.

A spokesperson for the firm said: ‘Our priority is the health and wellbeing of our people and our clients, and we took these pre-emptive measures out of an abundance of caution.’

Fears around the impact of coronavirus on businesses have been mounting in recent weeks, with many concerned it could have financial crisis-level effect on the global economy. Last Friday news came that US stock markets had suffered their worst week since the 2008 financial crisis, with the three main indexes falling by 10% or more.

Shearman & Sterling has imposed a travel ban for China and Hong Kong, limiting non-essential travel to contaminated jurisdictions and putting in place remote working measures. Dentons has temporarily closed its office in Wuhan, where the virus originated.

Outside law, oil major Chevron last week sent its 300 staff home from Canary Wharf as a precaution, along with Crossrail, which shares the same building.

Marco.cillario@legalbusineess.co.uk

Legal Business

Latham rampant for second year running as surging City growth helps revenue hit $3.7bn

Latham rampant for second year running as surging City growth helps revenue hit $3.7bn

Latham & Watkins has reported its second consecutive year of double-digit growth as its revenue surged to $3.768bn in 2019 while profits per equity partner (PEP) hit $3.78m.

The results announced today (26 February) mean the Los Angeles-bred giant has improved its performance for the fourth year in a row, with the 9.5% surge in PEP outpacing the 6% increase achieved in 2018.

An unsurprisingly bullish chair Richard Trobman (pictured) predicted that such growth will become the new normal at Latham: ‘We expect to see growth rates in line with what we have seen in the last couple of years,’ he told Legal Business. ‘Our business model is strong, we have a clear strategy and a great culture.’

Latham added $381m to its top line in 2019, an increase of 11% on 2018, while net income rose 16%. Revenue per lawyer was up by a very credible 4% to $1.385m as Latham grew its legal staff 7% to 2,720 and partner headcount 8% to 790.

The firm does not officially disclose revenue for its London arm but Trobman said it grew at a much faster pace than the firm globally, hiking revenue ‘well in excess of 15%’. The firm’s 98-partner City office is now believed to generate in the region of $450m, bolstering its reputation as one of the most potent foreign practices in the high-end UK legal market.

Trobman said that Latham’s Asia Pacific business grew at its fastest rate ever and the US was ‘incredibly strong’. ‘Not only are we seeing significant growth, but profitable growth. What we are proud of is that what’s driving that growth is our ability to continue to utilise our global platform, work together as a team, collaborate and support one another.’

He pointed to the fact that the firm’s top 50 clients engaged Latham’s lawyers from on average 23 offices around the world, up from 19 offices in 2018.

The firm’s list of European deals in 2019 included work on the liquidation of travel group Thomas Cook, advising EQT on the financing for the acquisition Nestlé’s $10bn skincare business, and Interswitch on its partnership with Visa. Global deals included advice to Mellanox Technologies in its $6.9bn sale to NVIDIA Corporation.

The firm also made some significant laterals in the City in Linklaters’ insurance partner Victoria Sander and Clifford Chance’s infrastructure and real estate veteran Stephen Curtis in 2019. Even more significant were the moves at the start of 2020 as Latham renewed its push into London’s public M&A space with the hire of Freshfields Bruckhaus Deringer’s rising star Sam Newhouse and expanded its City emerging company capabilities through Taylor Wessing’s Mike Turner and Bird & Bird’s Shing Lo.

The 2019 results mean Latham has added $1.16bn to its top line in five years, growing revenue 44% and PEP 30% on $2.61bn and $2.9m in 2014, when it became the highest-grossing law firm in the world and the first to ever pass the $2.5bn revenue mark. The firm has doubled both revenue and PEP between 2009 and 2019.

‘We are in this for the long haul,’ concluded Trobman. ‘We are going to continue to invest in the same way that the partners who came before us did.’

The results temporarily make Latham the highest-grossing law firm in the world. Yet US rival Kirkland & Ellis, which is expected to announce its own 2019 financials shortly, only needs to marginally improve its 2018 figures to remain ahead; the Chicago giant last year reported turnover of $3.76bn. Unsurprisingly, indications from Kirkland are that the outfit will this year become the first law firm in the world to break the $4bn barrier.

marco.cillario@legalease.co.uk

Legal Business

Freshfields loses key rising star Newhouse as Latham renews City M&A push

Freshfields loses key rising star Newhouse as Latham renews City M&A push

In the latest blow to the UK Magic Circle, Latham & Watkins has hired one of Freshfields Bruckhaus Deringer’s brightest young partners, Sam Newhouse.

The US giant confirmed today (25 February) its most significant move in the UK public company M&A space since the hire of Allen & Overy’s well-liked M&A partner Ed Barnett in 2017.

One of the Magic Circle firm’s M&A partners hitting their early-40s prime, Newhouse was both popular and much tipped for his work with energy clients including Total and Essar.

In October last year, Newhouse led a Freshfields team advising Neptune Energy on its acquisition of Edison E&P’s UK and Norwegian producing, development and exploration assets from Energean Oil & Gas. The team also advised Neptune Energy on its acquisition of ENGIE E&P in February 2018.

A Freshfields lifer, he joined the City firm in 2003 as a trainee, qualified in 2005 and made partner in 2013.

marco.cillario@legalease.co.uk

Legal Business

Taylor Wessing loses practice head as Latham targets UK mid-market for first City tech laterals

Taylor Wessing loses practice head as Latham targets UK mid-market for first City tech laterals

Latham & Watkins has become the latest US player to expand its City emerging company capabilities by targeting two mid-market UK firms for a double-partner hire.

Taylor Wessing has seen one of its more senior departures in recent years as its head of technology, media and communications Mike Turner decamped to the US firm alongside Bird & Bird’s corporate partner Shing Lo. Both hires, announced today (29 January), were voted in by Latham’s partnership in early January and will join the firm over the next few weeks.

‘We are the first law firm that has a compelling emerging companies and venture capital practice on the West Coast, East Coast, Europe and Asia,’ Latham’s London corporate co-chair Robbie McLaren told Legal Business. ‘On top of this, we have the ability to do M&A and equity capital transactions in these jurisdictions as well, and that’s what clients are looking for.’

Promoted to the partnership in 2016, McLaren was until this move the only City partner covering the tech space at the firm: ‘When we set out to refine our global strategy in this sector we thought: where are we underweight in this space? The answer was London.’

He added: ‘As a West Coast heritage firm we understand how [the emerging companies practice] works and the opportunities it offers. There is such a great opportunity in this space with the amount of money being raised by private companies that we thought it would make sense to hire two outstanding practitioners.’

He added that when the firm started scouting partners last summer, Turner and Lo were the two names at the top of the list.

The loss of Turner is particularly ominous for Taylor Wessing, coming a few months after the firm lost a four-partner life sciences and tech team to another US player expanding its City capabilities in the area, Goodwin Procter.

Turner had joined Taylor Wessing from fellow UK tech-focused firm Osborne Clarke in 2013 and forged relationships with a number of tech companies both sides of the Atlantic, such as Farfetch.

Indeed, the entrance of a group of US firms into the City tech space brings a new competitive threat to a number of mid-market UK firms that had so far been largely spared by the Americans’ expansion this side of the pond.

Over the last few years US giants have usually targeted the UK Magic Circle, with Latham last year hiring Clifford Chance’s real estate veteran Stephen Curtis and Linklaters’ insurance partner Victoria Sander.

However, McLaren signalled Latham had no immediate appetite for further City laterals in the tech space: ‘With the connections these two hires bring we’ll have greater opportunity to grow. At the moment this will be sufficient and I suspect we’ll be more likely to promote our own lawyers.’

marco.cillario@legalease.co.uk