It's Not the Beatles, But the Brits are Invading Again
from
July/August 2006
by Charlie Deitch
When the London-based firm Clifford Chance decided to move into the U.S. legal market in 1987, the principle was simple: Become an American-style practice, not a European firm with an office in New York City. The motivation was simple too: The firm had grown globally in almost every other major market; the main opportunity left was to build a lucrative U.S. practice.
“It took a while when we started on our global journey to convince clients of what we were doing,” says Peter Cornell, who stepped down as Clifford Chance’s global managing partner in May. He recalls efforts to recruit clients in foreign countries, including the U.S. “When we talked to multinational clients in the U.S., Germany, or wherever, they’d say, ‘We know you have offices in Milan or Barcelona, but can you do the local stuff?’ In our mind, we thought, ‘Of course. What do you think we’re here for?’ But the clients were thinking we must just be a few expats and a dog, and we’re not. We had to show that we’re here primarily to do the local stuff at a top level with the best people.”
After absorbing the prestigious U.S. firm Rogers & Wells in 1999, Clifford Chance continued to grow globally and in America. Other European-owned firms also began to operate in the U.S. during the mid- to late 1990s, some of them at first opening small satellite offices and later expanding with top American lawyers.
Bruce MacEwen, a Stanford-trained attorney, professor, legal consultant, and author of Adamsmithesq.com, part of American Lawyer Media’s legal-blog network, says this is mainly a British invasion. And the U.S. presence of the U.K. firms is pretty much limited to New York, Washington, D.C., and Silicon Valley. But their American clients now include such powerful players as Bank of America, Citigroup, Kohlberg Kravis Roberts, McGraw-Hill, Merrill Lynch, Pfizer, Shell Chemicals, and Siemens. These clients are represented on legal matters that range from mergers and acquisitions to litigation, real estate, and tax work.
The top players are the four firms that, along with Slaughter May, make up the U.K.’s so-called Magic Circle: Allen & Overy, with more than 100 lawyers in New York; Clifford Chance, with more than 300 in New York, Washington, D.C., and Palo Alto, California; Freshfields Bruckhaus Deringer, with more than 70 in New York and D.C.; and Linklaters, with more than 100 in New York. They bring to the American table their offices and contacts throughout the world and their wide-ranging expertise in multiple aspects of law. They now have some of the best and brightest homegrown talent as well—not transplanted U.K. lawyers who’ve had to learn local law on the fly. They are particularly attractive choices for companies in need of a firm to assist in a cross-border deal.
Nevertheless, Marina Sirras, president of the National Association of Legal Search Consultants, says she isn’t really sure why a company would choose one of the Magic Circle firms over a top U.S. outfit. Sirras acknowledges that firms like Clifford Chance and Linklaters have been recruiting well in the U.S. but says, “American firms have been overseas a lot longer than European firms have been here.” Not only may U.S. global firms be better equipped to do domestic work, she says, but they also have a strong enough overseas presence to handle their international work.
MacEwen says, “The Fortune 1,000 have their preferred firms and tend not to think outside their comfort zone.” Even if they did broaden their thinking, he asks, “would they really want to send a large portion of their legal work going forward to a U.K. firm? If a U.S. company doesn’t have, or doesn’t anticipate having, a fair amount of legal work to be done in the U.K. or Europe, what’s the point?”
Peter Cornell contends that it’s not a matter of being a U.S. firm or a U.K. firm, but of being one of the best firms. “When Lenovo wanted representation on their $1.75 billion deal to purchase IBM’s personal-computing division, they got fantastic lawyers from our New York office,” he says. “We didn’t get the work because we were a U.S. firm or a U.K. firm. We were in on that deal because we were Clifford Chance and they knew our reputation.”
Robert Lupone, senior vice president and general counsel of Siemens, whose parent company is German, says his company has had a “key” relationship with Clifford Chance for about 10 years, a holdover from Siemens’ connection to Rogers & Wells before the merger. “On a cross-border mergers-and-acquisitions deal, our in-house team of lawyers can work with CC lawyers in various locations to handle local aspects of M&A work, such as local asset-transfer requirements, antitrust filings, labor and employment matters, and due diligence,” he explains. “This is enormously more efficient than using a firm that does not have this global reach and capability.”
Lupone says that during Siemens Medical’s $700 million takeover of ultrasound-equipment manufacturer Acuson Corp. at the end of 2000, Clifford Chance handled the corporate- and securities-law aspects of the transactions in the U.S. The firm also took care of various global matters, including due diligence on Acuson’s U.S. and global subsidiaries, with particular emphasis on pension and benefits issues and licensing matters, as well as antitrust filings in various jurisdictions.
Marina Sirras points out that the U.K. firms are competitive with U.S. firms in salaries and says they are well ahead of most in the quality of training they provide to attorneys from the time they’re associates. That makes them attractive to bright young people. And beyond bringing in young talent, the British firms have made some high-profile hires—notably Paul Wickes, who left one of the top U.S. firms, Shearman & Sterling, to become head of Linklaters’s New York office and national managing partner.
“I think American firms are surprised at the quality of the attorneys we are able to hire away,” says Wickes. “I don’t necessarily think the leaders of the nation’s largest firms are primarily worried about us. However, I do think they get a little complacent about firms like ours. They get a wake-up call from time to time when they look up and see us handling a transaction they thought was exclusively theirs.”
