Legal Business

New year hiring spree continues as Weil Gotshal and Norton Rose recruit from rivals

New year hiring spree continues as Weil Gotshal and Norton Rose recruit from rivals

Top-20 Global 100 firms Norton Rose Fulbright and Weil, Gotshal & Manges have made significant and experienced additions to their London offices today (15 January), from Freshfields Bruckhaus Deringer and Hogan Lovells respectively.

Weil Gotshal has taken on Hogan Lovells partner Chris McLaughlin to join its banking and finance practice in London.

McLaughlin has extensive experience acting for banks and borrowers on the financing of cross-border private equity buyouts as well as European real estate acquisitions and restructurings.

Weil Gotshal has made great strides in its London banking practice in recent times, taking high-yield specialist Gil Strauss from Freshfields Bruckhaus Deringer just over a year ago as well as leveraged finance partner Stephen Lucas from Linklaters in 2011.

However, McLaughlin’s arrival and the growing strength of its banking practice contrasts with the London office’s fortunes in its signature area of private equity. Mark Soundy and Simon Burrows left to join Shearman & Sterling in 2013, while funds partner Nick Benson left for Latham & Watkins this month.

‘We are delighted that Chris is joining Weil to further enhance the growing European finance practice. In a short space of time, Stephen Lucas and the London team, working with our teams in Paris, the rest of Europe and the US, have established a leading reputation for sophisticated leveraged finance work,’ said Barry Wolf, the firm’s executive partner.

Meanwhile Norton Rose Fulbright has hired counsel Geoff Peters from Freshfields to be a partner in its energy M&A practice in London. He has more than 15 years’ experience of the upstream, midstream and downstream sectors and has worked with multinational oil and gas majors as well as national oil companies. He has completed M&A transactions around the world including in Russia, Canada, Africa, the Middle East and South East Asia.

‘We are delighted that Geoff will be joining us. Geoff’s impressive international experience complements our global presence. He will add further depth to our busy corporate oil and gas practice, and work with colleagues not only in the UK, but around the world,’ said Martin Scott, global head of corporate, M&A and securities.

david.stevenson@legalease.co.uk

Legal Business

Life During Law: Marco Compagnoni

Life During Law: Marco Compagnoni

I’m a forward-looking type of guy. Looking back on your career is something you do when you’re retiring. At the bright chickeny age of 50 it’s not the right time to be looking back. In a traditional English law firm, when you come to 50 there’s this unspoken thing of ‘when are you going to go?’ It’s sort of like granny sitting in the corner. In a US firm nobody thinks you know anything until you’re at least 50.

Management is not my thing. I’m more interested in the clients and doing the work. Triangulating complicated personalities and mucking about in committees is not my thing.

Legal Business

Wall Street in London: Weil Gotshal and Davis Polk lead on $1.6bn takeover of UK’s Edwards Group

Wall Street in London: Weil Gotshal and Davis Polk lead on $1.6bn takeover of UK’s Edwards Group

As British industrial technology firm Edwards Group is today (19 August) bought out for $1.6bn by Swedish engineering group Atlas Copco, it is notably being advised by the London office of Wall Street firms Weil, Gotshal & Manges and Davis Polk & Wardwell.

The Weil Gotshal team, which represented Edwards Group on its initial public offering on the New York Stock Exchange last May, is being led by London-based corporate partner Peter King, assisted by New York corporate partners David Blittner and Jackie Cohen.The firm has a longstanding relationship with the major shareholders of the company, private equity firms CCMP Capital and Unitas. Peter King told Legal Business: ‘We’re very happy to be acting for Edwards on a deal of this size and importance.’

The Davis Polk team is being led by London-based heavyweight corporate partner Simon Witty, who joined from Freshfields Bruckhaus Deringer in 2012 to launch the firm’s English law capability in London, alongside fellow corporate partner John Banes. Davis Polk represented the underwriters in Edwards’ initial public offering.

Pillsbury Winthrop Shaw Pittman are leading for Atlas Copco with a team led by New York-based corporate partner Stephen Rusmisel.

The deal follows last month’s £3.3bn takeover bid by France’s Schneider Electric for UK engineering firm Invensys, in which Magic Circle firms Linklaters and Freshfields Bruckhaus Deringer advised the respective companies.

david.stevenson@legalease.co.uk

 

 

 

 

Legal Business

Guest post: You could up-skill them, instead you simply canned them – the secretarial canary in the law firm coal mine

Guest post: You could up-skill them, instead you simply canned them – the secretarial canary in the law firm coal mine

‘A really far-sighted law firm would give its secretaries the chance to ‘skill up’ and take on more responsibility, accomplishing more advanced tasks. … Change ‘secretary’ to ‘workflow manager’ or ‘logistics director,’ and you’ve accomplished three great things at once: increased the role of software in handling clerical and financial duties, reassigned your valuable secretarial help up the productivity chain, and attended to an area in which you can find real efficiencies and carve out a true competitive advantage over other firms.’

– Jordan Furlong, ‘Legal secretaries 2.0‘ 24 January 2008
 

‘In recent months, a number of major law firms have offered buyouts to legal secretaries, accelerating a trend that began before the downturn. This week New York law firm Weil, Gotshal & Manges cut about 110 staff positions, including about 60 legal secretaries. “I would imagine that the remaining secretaries are going to take on a heavier workload,” said Lee Glick, a legal secretary with Weil who has worked there more than 25 years and still has a job.’

– The Wall Street Journal, ‘Legal Secretary, a Dying Job‘ 27 June 2013
 

Contrasts like this one guarantee that I’m at no risk of overestimating my impact on the business of law.

I had fond hopes, five or so years ago, that law firms might take advantage of a dynamic environment and re-engineer their organisational workflow. Recognising that secretaries’ purely clerical tasks could be done more efficiently elsewhere, for example, they would outsource or automate those tasks and liberate secretaries to take on more challenging, valuable and productive work.

As it turned out, however, firms only got as far as the first step: they sent the work to lower-cost providers. Then, instead of upgrading the qualifications of their loyal and experienced secretaries, they simply canned them. Surviving secretaries at a growing number of law firms are now expected to serve four lawyers at once – at some firms, that number is going as high as six or seven. Hands up if you think either the secretary or the lawyers are going to be better off as a result.

Five years ago, in an atmosphere of financial and social crisis, law firms threw numerous staff and associates overboard, in an effort to keep profitability levels from plummeting and sparking a rainmaker exodus. Not the best tactic in the world, but understandable at the time. Today, though, it’s as if those sacrifices were never made – the purges have intensified (staff, associates, and now other partners) as firms target for elimination any perceived drain on profits.

Based on all these cuts, I’m left to conclude that law firms apparently wish to be populated exclusively by extremely high-earning equity partners. In a magical land where complex legal businesses were run by invisible fairies, that would be a pretty nice outcome. In our world, however, where those partners need actual people to make their profits possible, the latest round of bloodletting bears a closer resemblance to profit-preserving cannibalisation – a tactic that has its short-term merits, I suppose, but few long-term strategic advantages.

I want to take a look at what’s happening with law firm secretaries, and then I want to use that to illustrate what I feel is a growing, and serious, issue at the heart of law firm management.

First, why has it come to this: the evisceration of the legal secretary role? I can see three factors intersecting at the same time:

 

1. Many lawyers seem determined to view secretaries in their stereotypical role of clerical helpers, and as clerical tasks inevitably migrate to machines, secretaries themselves are perceived as serving no further purpose. I see secretaries differently: as lawyers’ ‘managers’, the people who quietly organise lawyers’ lives and enable them to practise law productively. The emergence of new technologies does not remove the need for lawyer management; if anything, it intensifies it. But if you really believe that a legal secretary performs low-value and easily replaceable functions, you will treat that position accordingly.

2. Many law firms seem equally incapable, even with countless high-tech tools and processes now at their disposal, of reconfiguring their workflow to be more sophisticated and cost-effective. The smart way to improve profitability is to outsource truly fungible tasks and up-skill your existing resources (including, but not limited to, secretaries) to take on more complex tasks that can deliver more value and/or reduce internal inefficiency. The stupid way to improve profitability is to fire people and give their work to their frightened surviving colleagues, thereby reducing personnel costs. Many law firms, near as I can tell, are choosing stupid.

3. Profitability pressures in law firms (more about that in a moment) have short-circuited any creative impulses that might have led firms to different outcomes for their secretaries. For instance: many lawyers still struggle with practice basics like client communication, marketing, and professional development. They would benefit tremendously from a dedicated resource whose job is to manage and organise all these aspects of their career – someone who has worked with them for years and knows them very well. If firms are going to reassign traditional secretarial duties elsewhere (and there’s good reason for them to do so), why not divert secretaries into these high-value and highly necessary roles, rather than just cutting them loose altogether? It’s not just a lost job, but also a lost opportunity.

 

It’s on that last point that we approach the heart of the problem. Law firms could help secretaries reimagine their roles, add more value to the firm, improve morale, and save jobs – they could do all these things, if they wanted to. But they don’t. They don’t care about these things nearly as much as they care about maintaining or growing profitability. And the intensity with which law firms have come to care about profitability is starting to look a little sociopathic.

Something has gone seriously wrong at the core of a number of law firms. I don’t how else to describe it except as a mean streak – a level of selfishness and ruthlessness among decision-makers that we’ve not seen before. The triggering event was probably the massive change in client behaviour and the deeply unnerving drop in business that followed, combined with lawyers’ utter inability to adjust their own practices in response. But it seems to me that many lawyers aren’t just troubled or worried by what’s happening – they’re angry. Their income has fallen, and they’ve taken it personally, because that was income to which they were entitled. They’re feeling victimised, hard done-by – and they’re lashing out, seeking instant remedies for themselves regardless of the long-term costs to others.

I’m not sure what it is about this latest round of cuts that feels wrong to me. Maybe it’s that it just seems so petty. You need to fire a secretary who earns a fraction of your annual billings in order to save your firm? That’s unlikely. You need to fire her in order to maintain the profitability to which you’ve become accustomed? That’s unseemly. They say you can judge a society based on how it treats its most vulnerable members, and I think the same applies to law firms. And I wouldn’t feel very proud to be a member of some of these law firms right now.

 

Jordan Furlong is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises. You can read his blog here.

Legal Business

Comment: Weil Gotshal and the narrative of the New Normal

Comment: Weil Gotshal and the narrative of the New Normal

Whatever the business case for announcing significant down-sizing, there is no doubt that in the field of modern communications Weil Gotshal & Manges scored a significant victory last week in its handling of job cuts.

Confirming its move to cut around 170 staff on 24 June and lower the compensation of 30 partners, Weil was joined up, transparent and eloquent, with executive partner Barry Wolf (pictured) on hand to put a jargon-lite case for its actions. The expected loss of 60 associates is equivalent to roughly 7% of Weil’s associate base.

Most importantly, Weil made available a memo from Wolf stressing its move in the context of structural changes in the market – a ‘New Normal’ that regretfully required substantive action.

While news that a profitable law firm is to become the only major New York player to this year make large scale job cuts is not an easy sell, in PR terms Weil’s candour was an immediate success. Notably the New York Times reported the move largely in the context of the forces that Wolf articulated, as did the Wall Street Journal, though with more scepticism regarding the firm’s attempts to break into Houston’s much touted energy market.

The immediate reaction in the US was to applaud Weil’s realism and agree with Wolf that the 307-partner firm was acting from a position of strength. The implication was clear – and explicitly voiced in some cases – this is just the legal profession catching up with the realities faced by other industries and that other peers would soon follow Weil. The firm was clearly attempting to cast its actions in the narrative of the New Normal – and it succeeded.

So complete was this victory that a US PR site lauded Weil’s communications strategy, citing a ‘lesson in managing bad news’.

Others were even impressed by the firm’s openness in conceding it has made cuts rather than opting for the ‘stealth’ layoffs that are forever supposedly stalking the New York legal community, though cutting that deep would be almost impossible under the table. Weil did offer generous severance terms to its associates.

All this leads to one obvious question: as strong a case as Wolf made for a structural shift in the market, is it correct to assert that Weil was merely reacting to economic fundamentals rather than its own specific situation?

It’s a more debatable point than the initial coverage allowed. For all the gloomy claims routinely made about the pressure on BigLaw, the 2012 financial year saw the majority of US advisers return to boom-time levels of income and profitability. It is unquestionably harder to make money, there is considerably more fee pressure from clients but effectively diversified law firms have so far largely proved more than able to adapt.

The market remains a long, long way from the first quarter of 2009, when demand fell off a cliff and major law firms were daily announcing deep job cuts (Weil was one of the few to buck that trend).

Turning to Weil’s individual performance – it’s not been a knockout run for what is generally regarded as the premier bankruptcy shop in by the far the most lucrative bankruptcy market in the world. The firm’s 2012 revenues at $1.22bn are up 5% over the last five years – a worse showing than most Wall Street peers, some of whom had to get by without huge banking crisis gigs like the bankruptcy of Lehman Brothers. (Weil has earned more than $400m in fees advising on the insolvency of Lehman alone and cited the wind-down of several such assignments as one reason for its cuts).

But while the end of large, work-intensive insolvency mandates are notoriously problematic for law firm work-flows, that is a foreseeable challenge. Cynics will ask if these cuts say something about lack of diversification in Weil’s wider practice, though around 40% of its income comes from litigation. In short, the post-Lehman environment should have been a time for Weil to shine and make strategic ground at the upper echelons of the global legal market. It’s not apparent that this has occurred.

Attention will now focus on its London and foreign offices, though the message is that the job losses are primarily focused on its US heartland.

Weil has undoubtedly been an interesting performer in London, repositioning after a false start focused on banking to build a widely admired private equity and corporate team under head Mike Francies, the deal lawyers’ deal lawyer.

Weil watchers claim its 31-partner City practice is currently facing a quiet period, though Francies and fellow partners insist it remains in growth mode in the UK (a claim backed up by its performance in 2012 when the practice grew an impressive 22% to bill around $110m against a flat firm-wide showing).

The firm has also invested in City litigation and insolvency in recent years, helping it land major advisory roles such as the UK administration of MF Global and advising the Barclay brothers on their long-running dispute with property developer Patrick McKillen over the control of three iconic London hotels.Weil’s London arm demonstrated its corporate heft outside private equity with Marco Compagnoni leading a team on the sale of a multi-billion dollar stake in the Russian oil joint venture TNK-BP to Rosneft at the back end of 2012. The hope must be that Weil’s hard-won reputation in the Square Mile won’t be damaged by recent events.

As to its home turf – at certain elevated levels of the US market, particularly in Wall Street, memories are very, very long regarding axing associates. Mid-market cuts are one thing – for the $2m-plus PEP crowd, it’s still not the done thing. If Weil is ultimately proven to have called the market right, it will deserve all the credit it’s already got. But if the New Normal pitch turns out to be Weil’s narrative rather than a wider story of BigLaw 2013, those initial plaudits will return to haunt it.

david.stevenson@legalease.co.uk and alex.novarese@legalease.co.uk

Legal Business

Litigation watch: Weil and Quinn Emanuel successful in high profile Barclay brothers Court of Appeal case

Litigation watch: Weil and Quinn Emanuel successful in high profile Barclay brothers Court of Appeal case

A high profile Court of Appeal decision has today (3 July) seen Weil Gotshal & Manges and Quinn Emanuel Urquhart & Sullivan see off a challenge against the Barclay brothers and their associated companies over the ownership of three iconic London hotels.

Sir Frederick and Sir David Barclay, represented by Weil Gotshal’s head of litigation Matthew Shankland, successfully defended an appeal by Irish developer Patrick McKillen in a long running dispute over the ownership and control of Claridges, the Berkeley and the Connaught.

McKillen, advised by Herbert Smith Freehills litigation partner John Whiteoak, had alleged that the Barclay brothers used unfair means to bypass his shareholder pre-emption rights to buy more shares in the hotels’ holding company, Coroin, after they took control of shares in the name of Irish financer Derek Quinlan. Quinlan was defended by Quinn Emanuel London managing partner Richard East and Matthew Bunting and represented in court by Stephen Auld QC, Michael Fealy and Michael d’Arcy.

However, the Court of Appeal led by Lord Justices Arden, Moore-Bick and Rimer found unanimously in favour of the defendants, concluding that the High Court was right to find that the arrangement between the Barclay brothers and Quinlan ‘did not breach’ rules in the shareholders agreement, did not trigger McKillen’s pre-emption rights, that they had not caused McKillen unfair prejudice and that they did not act in bad faith.

In a case notable for its heavyweight line up of legal advisers, the Barclay brothers were represented in court by Ken MacLean QC, Lord Grabiner QC, Jeffery Onions QC, Sa’ad Hossain and Edmund Nourse, all of One Essex Court.

At the Court of Appeal stage HSF instructed Lord Goldsmith QC, Philip Marshall QC, Richard Hill QC and Gregory Denton-Cox. The case was originally led by HSF litigation partner Kevin Lloyd, who left for Debevoise & Plimpton this year.

Bunting said: ‘This case has always been utterly misconceived, as should have been apparent to Mr McKillen and his advisors from the outset. We are pleased that both the High Court and Court of Appeal have agreed with us about this.’

Shankland added: “Mr McKillen has lost every major point in this appeal. His entire case has now been emphatically rejected in a series of judgments. The Barclay interests have been shown, beyond doubt, to have acted lawfully and fairly at all times in their dealings over Coroin. This has been one of the most significant and complex company cases in the High Court during recent years and certainly one of the most high profile.’

McKillen now faces legal costs approaching £20m.

caroline.hill@legalease.co.uk

Legal Business

Coming on like 2009 – Weil Gotshal becomes the first major NY firm to announce job cuts this year

Coming on like 2009 – Weil Gotshal becomes the first major NY firm to announce job cuts this year

So far the wave of redundancies that have rippled through the UK legal profession has not been replicated across the Atlantic but that may be about to change with news on Monday (24 June) that Weil Gotshal & Manges is to cut around 170 staff.

The New York-based law firm announced the move internally in a package of cuts expected to impact on 60 associates, around 7% of its non-partner lawyer ranks, and 110 support staff, citing what it described as the ‘new normal’ of low growth.

In addition, Weil is to cut the compensation for some partners and the firm said it would be ‘de-emphasising’ its complex commercial litigation practice in Houston and Boston.

The cuts are expected to primarily impact on Weil’s US practice rather than its network of foreign offices, which include London, Hong Kong, Frankfurt and Paris.

The package of measures was announced to staff in an email from executive partner Barry Wolf (pictured), who said the tailing off of work related to the 2008 banking crisis combined with low levels of transactional activity had forced the 1,200-lawyer firm’s hand. Weil, traditionally regarded as New York’s top bankruptcy practice, previously avoided making substantive job cuts in 2009 when many peers cut staffing in the wake of the collapse of Lehman Brothers.

The firm will also look at partner remuneration. Wolf stated: ‘There will have to be meaningful compensation adjustments for certain partners in light of the economic realities of the new normal. It may well be that some of these partners will decide to pursue other opportunities.’

Wolf was at pains to emphasise the firm’s solid financial position, with zero debt and a fully funded partner pension plan with over $500m of assets in it. The firm does not have any compensation guarantees with partners other than for the first year a lateral partner joins the firm.

In the email, which has been seen by Legal Business, Wolf states: ‘We are taking these actions from a position of strength. At the same time, from a revenue perspective we will continue to take significant steps to further increase our market share. However, it appears that the market for premium legal services is continuing to shrink. Therefore, actions to enhance revenue alone will not be sufficient to position the firm as necessary for these new market conditions.

‘While we have been able to avoid these actions in the past, and it is very painful from a human perspective, the management committee believes these actions are essential now to enable our firm to continue to excel and retain its historic profitability in the new normal.’

It remains to be seen whether key Manhattan peers will follow Weil’s lead. Powered by the relative strength of the domestic economy and a revival in contentious work, leading US law firms have generally performed better over the last two years than rivals in Europe, despite a handful of high profile collapses like Dewey & LeBoeuf and Howrey. Weil saw flat revenues in 2012, posting income of $1.29bn, while profits per equity partner edged down to $2.22m.

By caroline.hill@legalease.co.uk