Legal Business

And the most upwardly mobile law firm is? Client feedback pushes Latham to the top of Legal 500’s US edition

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Often hailed as one of the greatest US success stories of the last 25 years, new research underlines the elevated position Latham & Watkins has attained in the world’s largest legal market.

The Legal 500 United States 2013 edition shows Latham as the highest ranked law firm judged by the total number of recommendations, putting the Los Angeles-bred giant ahead of a string of top Wall Street firms.

The 600-partner firm received recommendations in 55 practice areas. Recommendations are calculated by the research team of The Legal 500 based on client and peer feedback and the submissions of the firms themselves, and take into account multiple factors including track record in winning cases, the complexity of deals and innovation. Latham received 20 top-tier recommendations, including listings in areas such as capital markets (equity offerings and high-yield debt offerings), project finance (lenders and sponsors), energy (renewable and transactions) and telecoms and broadcast (regulatory and transactional).

Sidley Austin came out in second place for total recommendations, with 52 listings. Only shortly behind in third place with 51 total recommendations was New York’s Skadden, Arps, Slate, Meagher & Flom, followed by Morrison & Foerster with 49. Fifth-ranked Covington & Burling had 44 recommendations, with the latter benefiting from the sharp increase in regulatory work in its Washington DC heartland.

The picture is different when it comes to top-tier recommendations, with Latham leading the pack just ahead of a group of elite New York law firms. Simpson Thacher & Bartlett came out in second place with 17 top-tier recommendations, Skadden in third place with 16, and Davis Polk & Wardwell and Sullivan & Cromwell followed with an equal 14.

Notably, Hogan Lovells, which as pre-merger Hogan & Hartson had 14 recommendations in 2009, now occupies 13th position in the total recommendations table with 36 listings and joint tenth for top-tier recommendations with seven listings.

The recently published findings also underline the continued relative lack of penetration by London’s top firms in the US. In 37th place, Clifford Chance, with established offices in New York and Washington DC, is the highest-ranking Magic Circle firm for total recommendations. Allen & Overy ranks 68th, Freshfields Bruckhaus Deringer in 71st place and Linklaters in 84th place.

The Legal 500 currently ranks just over 300 leading law firms in the US. The Legal 500 publishing director David Burgess commented: ‘If you think how long it’s taken for the Magic Circle firms to get a foothold in the US, it doesn’t bode well for Herbert Smith Freehills in New York. Considering their size, quality and global footprint, it’s clear that the Magic Circle firms are not resonating as well with clients as they would expect, or like to.’

 

francesca.fanshawe@legalease.co.uk

Legal Business

Global 100: Latham & Watkins

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Despite facing considerable reverses in the wake of the 2008 banking crisis – which saw a sharp fall in revenues and profits in its 2009 financial year – the US-based Latham & Watkins looks to have settled back into a solid upward track.

The Los Angeles-bred firm had another robust year in 2012, reinforcing its position among the global elite with a 6% growth in net profits to over $1bn. After achieving top quartile growth for the 2011 financial year, revenue growth was this time more subdued, rising 3% to $2.22bn while profit per equity partner (PEP) rose by 8% to $2.4m. In the last full boom year of 2007, Latham posted revenues of $2bn, against PEP of $2.27m.

Legal Business

Comment: A star signing is one thing but who needs a lateral?

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The worlds of business, politics and sport have since the 1970s fallen increasingly under the spell of the star individual and law has been anything but an exception. As partnership mitigates the heaviest excesses of the winner-takes-all compensation cultures seen in banking, sports and plc management, in law the star culture has manifested to a considerable extent via the partner recruitment market.

The emergence and massive expansion of this international bazaar for senior legal talent over the last 25 years has had a profound impact on the profession – often unhappily so.

This has happened despite widespread acknowledgement that the returns on partner recruitment are patchy – a finding backed by a significant and growing body of research. Compared to internal candidates, external recruits are more expensive even without counting direct recruitment costs, prone to fail in the first two years and more likely to leave. Added to which is the fundamental difficulty of accurately identifying and then persuading key business influencers to move.

Sound familiar?

Yet if such problems are rife in the legal profession, the impact of the sustained downturn in Western economies has done little to deflate the partner bubble. If anything, the upwardly mobile US law firms that have increasingly defined the partner recruitment market at home and abroad have pushed this merry-go-round towards even more aggressive levels.

And this has happened during a period in which the record of partner recruitment has arguably become worse not better. When partners first began moving in the late 1980s, a path was provided for ambitious and driven individuals to find better platforms or just check out of firms going nowhere. Those hires generally did well because there was a clear economic rationale for the move on both sides. The last decade has seen the emergence of a genuinely sideways market for partners who are just moving, well, laterally.

That’s not to suggest that all of this recruitment is irrational. Some firms have used partner recruitment to effectively super-charge their growth, with Latham & Watkins, Kirkland & Ellis and DLA Piper being among the most striking examples in recent years. The poor overall performance of lateral recruitment has always masked the vast discrepancies in individual performance.

Here is our assessment of the track record of partner recruitment: a small group of firms use it very effectively to deliver great results. A much larger group gets returns barely worth the effort once you account for the time and costs of recruitment. What’s left is another minority that performs so badly that firms in the club actually damage their business. But law – like many fields – remains poor at identifying the formula for success.

We consider the experience of a handful of the transferring partners that have excelled in this month’s edition and there are common factors in what makes a star signing an actual success, but it’s never easy. In essence, firms should be strongly biased towards organic progression unless there is a compelling, clear strategic reason to go to market. Then you must have a senior candidate that actually fits the bill and is energised about the opportunity of your team. The best lawyers don’t do it for the money or a home. They do it for the game. They play to win.

alex.novarese@legalease.co.uk

Legal Business

Latham picks up three-partner Shearman team for Düsseldorf launch

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Latham & Watkins is to further expand its German corporate capability with the launch of a Düsseldorf office after hiring a three-partner team from US rival Shearman & Sterling.

Corporate and M&A partners Harald Selzner, Rainer Wilke and Martin Neuhaus will spearhead the new office, while Latham has also hired Shearman corporate litigator Markus Rieder to join its Munich office.

The hires – which come following Shearman’s announcement that it is to close its Düsseldorf and Munich offices  – are in line with Latham’s strategy to extend its corporate reach.

According to Munich managing partner (MP) Thomas Fox – who will also serve as the new MP of Düsseldorf – the firm is looking for German partners with German connections that can raise the firm’s client base with the likes of DAX 30 companies. Those include Eon, holding company Tengelmann Group, car manufacturer Daimler and Allianz, as well as large family-owned German mid-sized companies.

The new corporate team, which will be boosted by the transfer to Düsseldorf of Frankfurt litigation partner Christine Gartner, will advise on domestic and cross-border M&A and high end public company representation and complex disputes matters. The new office is expected to open at the end of May. Latham also has a presence in Hamburg and Frankfurt.

Latham’s chair and managing partner Robert Dell said: ‘We are focused on growing our business with blue chip industrials and other multinational companies, and this team fits our strategy perfectly. Our newest office in Düsseldorf, one of the world’s major industrial centers and a hub for manufacturing excellence and innovation, will be a key gateway for the strategic growth of our corporate capability.’

Joerg Kirchner, vice chair of Latham & Watkins’ global corporate department added: ‘The anticipated arrival of this team follows several significant lateral partner additions in London, continental Europe and the US; all of whom bring profound talents and will contribute significantly to the growth of our corporate and litigation capability.’

Allen & Overy recently hired Shearman Düsseldorf corporate partner Hans Diekmann for its local office.

jaishree.kalia@legalease.co.uk 

Legal Business

Global London advances – Latham secures third senior City recruit of the year

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Latham & Watkins has recruited high-profile Norton Rose derivatives and structured finance partner Dean Naumowicz as the US giant makes its third senior City hire of the year.

Naumowicz was part of the Norton Rose team that in March advised Società di Progetto Brebemi on the financing for a €2.338bn toll motorway project. Other recent deals in which he has advised include acting for lenders UK Green Investment Bank, Lloyds, Royal Bank of Scotland, Santander and Siemens Bank on a £225m financing in the renewables sector.

The news comes only a month after Latham’s 52-partner City arm recruited Clifford Chance head of private equity David Walker.The 600-partner firm earlier this year also recruited Herbert Smith Freehills (HSF) litigation partner Simon Bushell. Bushell co-chaired HSF’s London corporate fraud and asset tracing practice and was head of the firm’s crisis management practice.

Commenting on the appointment, London managing partner Nick Cline said: ‘Dean is an outstanding lawyer and we are very pleased that he will be joining our derivatives and financial institutions team. His move is another marker of Latham’s continued growth and development in London.’

Norton Rose told Legal Business that partner Laurence Garside will lead the firm’s derivatives team in London in Naumowicz’s place.

Norton Rose head of banking Jeremy Edwards stressed the firm’s recent growth in finance commenting: ‘We have continued to grow our debt capital markets team with the addition of David Shearer from Allen & Overy, Peter Young from Vinson & Elkins and structured finance specialist Simon Lew from Clifford Chance in London. We have also grown our debt capital markets team internationally, for example, Scott Millar and Tessa Hoser have joined us in Australia, Ji Liu in Hong Kong, and Andrew Bleau recently relocated from Canada to our Hong Kong debt capital markets team.’

A group of leading US law firms have made strategic inroads in the City in recent years with Latham, Quinn Emanuel Urquhart & Sullivan and Dechert displaying particularly expansive form of late. The trend looks set to continue throughout 2013.

caroline.hill@legalease.co.uk

Legal Business

A star signing is one thing but who needs a lateral?

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The worlds of business, politics and sport have since the 1970s fallen increasingly under the spell of the star individual and law has been anything but an exception. As partnership mitigates the heaviest excesses of the winner-takes-all compensation cultures seen in banking, sports and plc management, in law the star culture has manifested to a considerable extent via the partner recruitment market.

Legal Business

White & Case launches in Madrid with Latham hire

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White & Case has launched its first office in Spain, recruiting Latham & Watkins’ Spanish corporate head Juan Manuel de Remedios to joint lead its new Madrid office as an executive partner.

The Spanish launch comes as the firm concentrates on strengthening its global footprint to take advantage of Spain’s strong links to Latin America.

White & Case Spanish practice head Michael Doran, who is based in London, said the Madrid launch ‘provides our clients with local knowledge coupled with access to our global network’.

Legal Business

Latest US profits show positive early signs

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The initial numbers to emerge from the US reporting season indicate a relatively resilient performance in 2012 for the world’s largest legal market.

A series of firms have so far posted headline financial results, including Latham & Watkins, Quinn Emanuel Urquhart & Sullivan and White & Case, with the majority achieving growth in profits and fee income.

Latham reported growth of 3.4% with the top five US firm’s revenue hitting $2.23bn, up from $2.15bn for the 2011 year. PEP also grew 7.4% to $2.44m and the firm reported an increase of 2.4% in revenue per lawyer, which hit $1.1m in 2012.

Legal Business

Firms set sights on Asia investment into Middle East

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Squire Sanders expanded both its Middle East and South Korea operations in October, as Latham & Watkins reported a surge in investment activity between Asia, most notably China, and the Gulf states.

Cleary Gottlieb Steen & Hamilton also announced in October that it will open an office in Seoul, following approval from the Korean regulatory authorities. This follows the opening of the firm’s office in Abu Dhabi in September. Squire Sanders expanded its Middle East practice through the acquisition of El-Khoury & Partners’ Middle East and North Africa (MENA) business, which formerly operated in Saudi Arabia as EK Partners & Al-Enezee.