Partner hiring at US law firms in London – 2016 overview
As 2016 draws to a close, and with the dust of the Brexit referendum vote settling only to be replaced by the fog of political and economic uncertainty in the wider European region and beyond, crunching the partner recruitment numbers indicates that London remains the single most important foreign location for United States law firms. In this article Dustin Foo, SSQ’s head of research, highlights some of the hiring figures we have seen this year.
Since the credit crunch over 1000 partner hires have been made by US firms (not including firms badging themselves as “transatlantic” or “global” – Hogan Lovells, Norton Rose Fulbright, DLA Piper, Dentons etc.) in London, with lateral hires exceeding 130 in five of the six years between 2011 and 2016.
As of 2016 to date, close to a third of the nearly 460 partner hires at London commercial law firms have been made by US firms, ranging from the nation’s elite to mid-market outfits and niche firms such as litigation specialist Quinn Emanuel and new entry to the London market Foran Glennon – significantly exceeding partner hires in other non-US markets. Of these the number hired following the Brexit result has been roughly the same as prior to June 28, with the uncertainty generated by the referendum result apparently being counterbalanced by opportunities presented by the fall in the pound and London’s strategic importance.
Lateral partner hiring processes can take up to a year (and occasionally considerably longer). Therefore it is likely that the vast majority of hires announced following the Brexit referendum were put in train much earlier in 2016 or even in 2015. That said, to our knowledge very few lateral partner recruitment processes have been (genuinely) derailed by the Brexit referendum result despite firms having the opportunity to call a halt to discussions with partners up to and including the eleventh hour.
Will US firms’ voracious appetite for hiring lateral partners in London continue? We strongly believe that it will: in the majority of likely political and economic scenarios over the short to medium term, London is expected to remain a strong business proposition for these most dynamic and closely watched participants in the City legal market.
Partner hires by US firms in London, 2008-2016
2016 (to date)
Partner hires by US firms in various international markets, 2016 (year to date)
London France Germany Italy ChinaHong Kong
Breaking down the numbers …by practice area
A recent piece by a journalist covering armed conflict observed that whatever the rhetoric adopted by a country’s politicians may be, the true measure of its hopes and aspirations can be seen by the military equipment it procures – a statement that can be applied to the City legal market.
Breaking down 2016’s partner hires at US firms by practice area shows that the big bets are being made in corporate, with around 37 partner hires, with the majority, including the six-partner team joining Sidley Austin from Kirkland & Ellis, having at least some private equity expertise; banking/finance (30 hires) and litigation/dispute resolution (18 hires). Regulatory (including competition/antitrust) and corporate crime, with around 20 hires in total, now conclusively overshadows the energy and projects (12 hires), real estate and IP/TMT (5 hires apiece) practice areas in importance.
Which firms are doing the hiring and which are losing partners are of just as much interest to legal recruiters as which areas are being recruited in. Approximately 110 hires were made by US firms that would class themselves in the elite/major international firm category (a broad but nonetheless recognisable category encompassing top national practices such as Latham, Kirkland, Gibson Dunn, Sidley Austin and Morgan Lewis as well as the Wall Street firms traditionally at the top of the US legal market). The most acquisitive firms by numbers were Latham & Watkins (13 lateral hires), White & Case (12 laterals), Kirkland & Ellis and Mayer Brown (8 laterals apiece). Other significant hirers were Paul Hastings, Sidley Austin, which made arguably the biggest move in the market with a six-partner private equity team from Kirkland, and Quinn Emanuel which to date has brought in six laterals.
Mid-market US firms (K&L Gates, Reed Smith, Dorsey & Whitney, Duane Morris, Squire Patton Boggs, etc.) made most of the other lateral hires (approximately 25), with the remainder being made by more niche firms such as Vinson & Elkins and Baker Botts which have a heavy focus on energy in London, and newcomer Foran Glennon, which focuses on insurance.
UK firms remain the most vulnerable to losing partners, with around two thirds of partners joining US firms coming from UK firms - including over 20 departures to US firms alone from the two most troubled UK firms of 2016 - Ashurst (14) and King & Wood Mallesons (8) (described here as a UK firm given London’s SJ Berwin legacy). The magic circle lost 19 partners. Just over 50 moves, however, took place within the US contingent, which given the smaller number of lawyers at US firms in London represents a significant amount of churn between US firms.
Looking forward and back
The strength of the US elite and other major firms in the London market on those counts may best be underlined by their accounting for more than two thirds of the partners hired by US firms as a whole. Additionally, of the around 110 departures from UK elite firms in 2016 to date, just over half (56), including most of the top names – Slaughter and May’s Sanjev Warna-kula-suriya, Allen & Overy’s Stephen Kensell and Ed Barnett, Clifford Chance’s Patrick Sarch and Linklaters private equity partner Stuart Boyd - were to US firms. The migration of top legal talent from firms with weaker profitability and/or offering weaker strategic propositions in its operative market towards better led and more profitable firms has become increasingly pronounced since the economic crisis of 2008. Over the same time frame the elite and other major US firms have been increasingly successful in drawing away from their UK rivals with highly remunerative partner compensation packages . By mirroring their domestic US practices in London in competing for top tier, non-commoditised legal work, they now sit in pole position to dominate the market in elite partner hiring, not only in London but globally. The economic uncertainty unleashed by the Brexit vote and political developments in the US and elsewhere looks likely to only see these trends continue.
For more information on how SSQ can assist law firms to hire at the partner level please contact Nick Shilton in the first instance.