Crossing the pond

After the American Bar Association conference proved the vitality of US lawyers, we look at the 100 US firms in London - and, as Linda Tsang reports, there are as many strategies for success

The days when a US firm would send one of its more senior partners to run the London office as a sinecure, to wine and dine clients and do no fee-earning work, are long gone.

Since the mid-1990s, when Chadbourne & Parke signalled how serious it was in getting a slice of the London market by advertising for a 1 million rainmaker for its London office, US firms have recruited aggressively in the City.

That strategy was executed with a new twist by New York-based Weil Gotshal & Manges, which set up its London office in 1996.

It recruited both partners and assistants in double figures from firms such as Clifford Chance, Freshfields, Allen & Overy and Linklaters, when it launched with a fanfare under Maurice Allen, who has now moved to another US firm, White & Case.

Mike Francies, who joined later and is now managing partner in the London office, which has 125 lawyers, acknowledges that like other firms, there have been ups and downs.

He says: 'We are definitely looking to be bigger, but only with the right people and the right business.

I hope that this has been a successful business model, but we won't rest on our laurels.'

Another firm which has had a clear strategy about being a predominantly UK practice is Chicago-based McDermott Will & Emery, which started in 1998 with three lawyers formerly from Simmons & Simmons and now has 70 lawyers.

Senior partner William Charnley explains that the firm could be seen as a conglomeration of niche practices put together to make a full service firm, built on being a leader in a number of sectors in the US, such as tax and healthcare.

He says: 'It was a different model, and it was a great opportunity for us to create something from scratch with our corporate, banking and tax practices.

Inevitably, there is a mixture of cultures, and different clients have different perspectives, but like any firm, it is a matter of building up relationships, and now the London office has built up 70% of the practice.

We are also looking to expand into Europe, with an office opening up in Munich in January next year, and we are also looking at France and Italy.'

Even the more established firms have been expanding their English law capability.

Shearman & Sterling, a white shoe New York firm (the equivalent of the City's magic circle), has been established in London since 1972.

London managing partner Kenneth MacRitchie says: 'The original strategy was to service the US clients.

In the early 1990s, when the rules allowed US firms to combine with UK lawyers, the firm started looking for the right fit for an English law capability.

It already had French and German law capability, so it was logical to expand in London.

The strategy is to have the same reputation and capability in English law as it has in New York law.' The London office now has more than 120 lawyers, with a 60/40 UK/US split.

The change to the rules in the 1990s saw more firms come into London.

A more unusual set-up is Brobeck Hale & Dorr - a joint venture set up in 1990 between Brobeck Phleger & Harrison and Hale & Dorr - which since 1998 has been a multinational partnership.

It also became the first to expand out of London when it opened an office in Oxford last year.But other firms continue to stick to their known strengths - and relationships.

Washington DC-based Fulbright & Jaworski has been in London since 1972 and to date the strategy has been to be a US practice which works regularly with leading firms in the City and in Europe.

Stephen Pfeiffer, the London managing partner, says: 'Those leading firms know who they are and by sticking to that strategy we don't compete with them, and that strategy has worked so far.' He will take over as head of international in January next year and adds: 'As with any firm, we are always reviewing our operations, and we are looking to expand in London, and also reviewing the current strategy of being a US-only practice.'

For the US firms, which currently number around 100 in London, there are as many strategies as there are practices.

One partner said he recently spotted a plaque with the name of a New York firm he did not know was even here.

He commented that he did not know then what the firm was doing here, and still does not.

The most recent entrant is set to be New York firm Schulte Roth & Zabel, a specialist hedge fund and investment management practice, which is opening in London next month after recruiting two City specialists in the field.

Inevitably, the partners interviewed object to being lumped together as 'yet another US firm in London', and see their main competitors as the other major players both geographically and by sector, not just by where their head office may be.

They keep an eye on the other US firms and on the City players.

Maury Shenk, managing partner at Steptoe & Johnson Rakisons, says: 'Everyone believes that they have a good strategic reason for being here - but strategic judgement gets clouded by the market.

Quite apart from the globalisation of legal practice, the fallout from Enron and how that affects multi-disciplinary partnerships is a big opportunity for the global law firms.'

Some firms have opted for association to break into the London and European markets, such as Fried Frank Harris Shriver & Jacobson with its association with top 15 City firm Ashurst Morris Crisp, and others have gone for merger: witness Steptoe & Jackson linking up with the much smaller City firm Rakisons.

There are also the departures of firms such as Sonnenschein Nath & Rosenthal, which pulled the plug on its London office two years ago, but was said to be plotting a return.

As for the best method of starting from scratch, one view is that the quickest way to build an office is to grab a rainmaker, but that is a high-risk strategy.

Wielding wallet power to get a hired gun does not always get the firm a team player.

One managing partner also criticises the practice of US firms giving guarantees to major players to get them to switch firms.

He says: 'As far as this firm is concerned, that person has to come because they want to, not just because of a guarantee that they will be paid X over Y years, no matter what their performance or portable business.'

The model of having a predominance of UK lawyers gives some comfort in that they already know the market - and the players.

Mr Francies from Weil Gotshal considers that the cultural differences are less noticeable in practice.

He says: 'The aim for this office is to stop being seen as the US upstart and be seen as only part of the furniture.'

And Shearman & Sterling's Mr MacRitchie is bullish about the position of offices like his.

He says: 'The novelty value has probably worn off by now.

The market is settling down.

The firm is still expanding, and the London offices are competing to recruit people like Chris Bright, who was head of competition at Clifford Chance [and is now at Shearmans].

There are different cultures, but the best partners in the UK and the US tend to operate in similar ways.'

The consensus is that the US firms are making further inroads into the City than the London-based firms are making into the US.

Just as the major City firms cannot ignore New York, it works both ways.

One London managing partner advises that: 'You have to keep an eye on everyone.

Only the paranoid survive.'

Linda Tsang is a freelance journalist