David Stevenson reports on Reed Smith’s evolution into credible global contender
For a 1,500-lawyer, top-30 Global 100 firm, Reed Smith has a habit of quietly getting on with its business. This is despite having conducted three mergers since 2001; grown by around one jurisdiction a year; and made a series of high-profile City hires as it builds out from its core shipping and litigation foundations in the UK – in so doing significantly boosting its 2013 London revenues.
The resignation in October of global managing partner Greg Jordan was a rare senior departure for the nearly 700-partner law firm, which in London this year hired Clifford Chance (CC) structured finance and derivatives partner Claude Brown (after hiring his former colleague Peter Zaman in 2012); McDermott Will & Emery City energy partner Rashpaul Bahia; and DLA Piper media partner Askandar Samad.
After 13 years in office, Jordan was Reed Smith’s longest-serving managing partner and his successor, global chair of litigation Alexander Thomas, inherits a firm that is much-changed from the Reed Smith that up until 2001 had no offices outside the US.
Following the Pittsburgh firm’s 2001 merger with Warner Cranston, which landed it on UK shores, and its 2007 merger with Richards Butler (giving it a presence in London, Paris, Abu Dhabi, Dubai and Piraeus), it has merged with Chicago’s Sachnoff & Weaver (2007) and opened in Beijing and Silicon Valley (2008), Shanghai (2011), Singapore (2012), Astana, Kazakhstan (2012) and Houston (2013).
In London, the firm is pushing full-steam ahead, with 350 lawyers (40 more than last year), and is on track for a record year for revenues, with Roger Parker, managing partner for EMEA, predicting a significantly increased figure of around $200m for 2013, up from $180m last year.
Parker attributes the London office’s success to its ‘very stable sector position’. It is a recognised leader in shipping, arbitration, financial services and commodities, both derivatives and physical.
However, in the last few years the City office has been pushing its energy capability – a department in which in 2006 there were only five partners, but which has now reached 150 lawyers globally, of which 60 are based in London.
Energy now makes up 5% of the firm’s revenues, with 47% from disputes, 20% in corporate, 11% from finance and 6% in real estate.
In structured finance, the firm has made serious investment, including in 2011 hiring Berwin Leighton Paisner’s practice head Tamara Box, who has subsequently assumed the same position at Reed Smith and has latterly been joined by Zaman and Brown. Box says: ‘Our biggest advantage is that we are really joined up in industry sectors. The only way to grow the business is to be joined up.’
According to Box, an unusually cohesive cross-departmental approach to growth is presenting opportunities, as clients such as Bank of America are won over by ‘the relationships across the board’.
Recently, the London structured finance team advised Wilmington Trust and Mortgage Funding 2008-1 plc in the extensive restructuring of a £1.1bn residential mortgage-backed securitisation, originally arranged by Lehman Brothers, which was primarily led out of London by Box, but with support from partners across the global network, including New York.
It was this global co-operation that Reed Smith attributed as key to recent solid financial performance when its revenues grew by 2% to $1.01bn and its profits per equity partner (PEP) by 6% to $1.08m in the tough year of 2012.
The growth of the London office has been more striking, but energy and natural resources co-chair Kyri Evagora says: ‘We won’t compromise on maintaining a collegiate culture’: a culture that partners maintain is the key to attracting and retaining good people.
In terms of competing for the best talent, at just over $1m, its PEP figure is one of the lowest in its peer group. However, partner performance is assessed over a five-year period, which, Evagora says, means ‘it is performance-related, but not volatile’.
With very substantial resource backing it, one of the largest foreign-owned City practices in its network and a well-diversified practice, Reed Smith’s evolution from regional US player into global contender looks far from finished.