US Top 50 SAMPLE 2020
US firms in the UK simply keep on growing. It is hard to ignore the most glaringly obvious feature of what, over the past five to 10 years or so, has...
US Top 50 Firms in London 2020 SAMPLE
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US Top 50 Firms in London
US firms in the UK simply keep on growing. It is hard to ignore the most glaringly obvious feature of what, over the past five to 10 years or so, has been the most dynamic segment of the legal market in the UK.
New Law offerings have emerged and some have thrived, but most remain fledgling businesses. The accountants have ramped up but are still far from the top table in the highest-margin areas of legal work. And the domestic players have done what they can in a generally sluggish market. Some have even grown a little.
All the while, the leading US-headquartered firms, with a handful of exceptions, have prospered. A few have boomed. And, of course, they have largely done it at a cost to the UK domestic players, which in most cases have merely served as a training ground for ambitious lawyers who then jump ship.
The hard yards the top US firms have made over the past few years is more than apparent in the wealth of data included in this edition of The Lawyer’s US Top 50 firms in London report. Last year, this group added a combined total of $345.8m revenue to the $5.678bn turnover they generated in 2018, a rise of 6.1 per cent.
While impressive, this growth rate is, in fact, less than half of the 13 per cent the Top 50 achieved in 2018, when the total revenue rose from $5.04bn in 2017 to $5.68bn.
Nevertheless, the 2019 total was achieved despite total lawyer headcount across the group having risen by just 4.6 per cent to 6,384 and total partner headcount increasing by only 1.7 per cent to 1,928.
The compound annual growth rate (CAGR) data shown by some of this year’s top 50 firms both over the past few years and since the days of the global financial crisis is particularly illuminating (in the latter case The Lawyer has only tracked those firms for which it has data stretching back to 2009). This reveals which firms have capitalised most on the opportunities every US Top 50 firm has been hunting for in the UK since the last major market meltdown.
Since 2016, the CAGR across the entire Top 50 is 9.4 per cent, with the total revenue this group has generated rising by 31 per cent from $4.618bn to $6.044bn.
Unlike our primary ranking, which is based on the sheer revenue size of the 50 firms, this ranking is particularly helpful in that it shows how successful firms have been in finding growth in what, for many domestic firms, has been sluggish times at best.
Heading the list is Kirkland & Ellis, which has achieved a CAGR of 18.6 per cent since 2009, the highest of any firm. This level of growth has seen its London office revenue mushroom by 451 per cent since 2009, from $80.8m to an estimated $445m.
But the top 10 ranked by CAGR throws out some surprising names. For starters, thanks to its acquisition of Bingham’s London office and a stream of laterals, plus of course its success in winning roles on some chunky matters, Akin Gump has the second-highest CAGR at 16.6 per cent and has a similarly impressive growth story since 2009, when its London office turned over $26.9m. Last year it generated $125.1m.
Akin is followed in third place by Simpson Thacher & Bartlett, a firm that for years operated under the radar in the City but has now broken through the $200m revenue mark and has grown year-on-year at a rate of 14.3 per cent.
In contrast, the firm that is second in this year’s main ranking and is the closest competitor to Kirkland in terms of sheer scale, Latham & Watkins, has a CAGR of 11 per cent, just marginally lower than Milbank in fourth place on this ranking at 11.8 per cent.And the only other firm to register double digits on this metric is Covington & Burling, which since 2009 has grown its London office from a barely-there $39m to $101.2m.
All of the other firms for which The Lawyer has data have failed to achieve a CAGR since 2009 of more than 8.1 per cent, the figure achieved by Weil Gotshal & Manges.
US Top 50 Firms in London
2019 laterals overview
In total, this year’s US Top 50 firms made 126 new partner hires in 2019 in the UK out of the 720 partner hires this group made globally, according to The Lawyer’s research, or 18 per cent of the total. Dentons made the highest number of hires in London last year. Globally it recruited 83 partners, 12 of them in London or 14 per cent of the total.
Akin Gump, Baker McKenzie and Goodwin were joint second in terms of the number of hires in the City they made, all with nine new partners. Proportionally, Akin Gump made the most hires, with 50 per cent of its total 2019 hires based in London.
In terms of proportion, London dominated the pool of 2019 hires for Proskauer with five new partners, accounting for 71 per cent of its hires last year. Akin Gump and Brown Rudnick follow closely, with nine and four hires respectively or 50 per cent of their totals for 2019.
Banking and finance, corporate and private equity were the three areas that saw the highest numbers of lateral hires in the UK and the City last year. Banking and finance saw 33 new partners, accounting for 26 per cent of the total. Corporate follows at 14 per cent with 18 new partners and private equity at 10 per cent with 12 new partners.
Banking and finance was a key practice area for Dentons last year, recruiting four banking and finance partners or 33 per cent of the firm’s total London hires. Towards the end of last year, the firm brought in two finance partners, Simon Middleton and Richard Pallot-Cook, both previously at Simmons & Simmons.
The practice area also proved popular with Dechert, which also brought in four new finance partners to its London office last year, making up 67 per cent of its 2019 total. Earlier in the year, the firm brought in finance and funds partners Thiha Tun and Sarah Smith.
The firm expanded its finance capability again in June, with the hire of three Sidley Austin partners: real estate finance partner Aparna Sehgal and structured finance duo John McGrath and Simon Fawell.
Of the 126 new partner recruits made by the US Top 50 last year, 34 were women, or 27 per cent of the London hires
Of the 126 new partner recruits made by the US Top 50 last year, 34 were women, or 27 per cent of the London hires. Dentons and Mayer Brown made up 18 per cent of this, each with three new female partners. The proportion of female partner hires remained steady for Dechert, with a similar 33 per cent of new partners being women in 2018.
Brown Rudnick experienced a growth in diversity with its portion of female partner hires increasing from 33 per cent in 2018 to 50 per cent in 2019.
Covid-19: what we know so far
Thanks to the pandemic, many firms have frozen or at least de-emphasised lateral recruitment for the time being while London remains on lockdown, with many moving to remote working and some furloughing their staff.
Data was also collected for the US Top 50’s lateral partner hires in 2020 so far, revealing which firms have been most active in bolstering their partner pool in March and April 2020, when the pandemic was at its peak.
Of the top 50 firms, Orrick was the most active in partner recruitment in London at that time. With four new partners that came in between March and April, this accounted for 80 per cent of its total five hires in 2020 so far. The firm hired a four-partner projects team from Watson Farley & Williams in March, consisting of partners Evan Stergoulis, Simon Alsey, Ravinder Sandhu and Simon Folley.
Goodwin, Morrison & Foerster and Brown Rudnick follow closely, all with two partner hires each, making up 67 per cent, 50 per cent and 33 per cent of their total 2020 London hires so far
The Lawyer’s research also revealed that corporate was a key practice area for hires for the US Top 50 in 2020 so far, with 17 new partners or 30 per cent of this year’s total. This is followed by finance with 10 new partners accounting for 18 per cent and litigation with 11 per cent of the 2020 total, which equates to six new partners in US Top 50 firms’ litigation practices.
Private equity, competition, projects proved less popular with only two new hires each, which altogether account for 12 per cent of the overall 2020 total.
Legacy UK 2020
Five year peer group trends
LEGACY UK 2020
Combined revenue for the Legacy UK peer group has grown for the second consecutive year. Revenues for the group had dropped below $1bn in 2017 following two years of decline but have since grown to a five-year high at a combined $1.14bn. Growth across the group can be attributed to stellar years for Dentons, Mayer Brown and Dechert.
Revenue at Dentons has grown for the fourth consecutive year, up from $227.2m in 2018 to $249.1m in 2019. The Lawyer spoke to the firm’s UK CEO Jeremy Cohen last year about the firm’s growth. Cohen said: “Within the UK, our ‘one national team’ approach particularly resonates with larger clients. The integration of a fantastic team in Scotland following the Maclay Murray & Spens merger has led to a step-change in the effectiveness of our London-regional delivery model.”
Double digit (12 per cent) growth at Mayer Brown has seen the firm’s UK revenue rise above its 2015 level. The firm’s City revenue had dipped to $150m in 2017, down from $169.4m two years’ prior. A good 2019 saw the firm’s revenues climb to $184.8m, and up to 10th in the main US Top 50 ranking. The firm has enjoyed a successful year worldwide, which it attributes to a rise in client demand, and a collective 5.3 per cent rise in revenue throughout its European outposts.
Dechert attributes a strong year, in which the firm’s UK revenue grew by 21.5 per cent, to its performance in litigation. A second consecutive year of growth has seen the firm’s revenue climb to $149.5m, its highest level since 2016.
There was also growth at Reed Smith, up by 3 per cent from $208m to $215m.
The Lawyer spoke to Reed Smith’s managing partner Sandy Thomas in February, where she attributed the firm’s growth to an uptick in international work. Thomas said: “Work in London sits within the framework of a single global partnership. The nature of the work beginning in London is often exported to other regions and fees need to be shared accordingly.”
Revenues are thought to have declined at both Squire Patton Boggs (SPB) and K&L Gates, with K&L Gates’ 2019 revenue falling below the figure reported in 2015. SPB’s estimated revenue fell 10.2 per cent last year, down to $163.5m from $182m in 2018. Revenue at K&L Gates is thought to have fallen for the second consecutive year, down to $62.6m from $68.5m. There has been no change in London office revenue at Jones Day over the past year.
Combined lawyer headcount across the peer group increased again last year, continuing a trend of consistent growth over the past five years. This combined growth comes despite three of the group’s constituents – SPB, Jones Day and K&L Gates – reporting a decline in lawyer headcount over the past year.
SPB’s estimated lawyer headcount is down to 352 from 392 a year prior, while headcount at K&L Gates is down to 105 from 131. Lawyer headcount at Jones Day is down from 155 in 2018 to 146, marking a period of consistent decline which has seen headcount at the firm fall from 224 in 2015.
The peer group’s collective lawyer headcount growth can largely be attributed to the addition of 67 lawyers at Dentons. More modest headcount growth was seen at Reed Smith, Mayer Brown and Dechert over the past year. Reed Smith and Dechert each added 10 lawyers, while Mayer Brown expanded its team by three.
While lawyer headcount fell at SPB, its significant drop in revenue means that RPL at the firm fell over the past year to $443,000
Strong revenue growth at Dechert and more modest lawyer headcount growth gives the firm the highest average revenue per lawyer (RPL) within the Legacy UK peer group at $1.06m. Jones Day, K&L Gates and Mayer Brown also saw RPL growth over the past year.
While lawyer headcount fell at SPB, its drop in revenue was not enough to have much impact on RPL, which is estimated to have increased only slightly to $464,500, up from $464,300 in 2018. This is the second-lowest figure within the Legacy UK peer group, Dentons reporting the lowest figure within the peer group at $451,000, down from $467,000 a year prior.
SPB’s estimated partner headcount also shrank significantly, down to 107 from 146 a year prior. The firm lost seven of its London partners to Washington DC-headquartered Crowell & Moring alone in 2019. This included international disputes partner Nicola Phillips, debt finance partner Robin Baillie, corporate partners Andrew Knight and Cathryn Williams, restructuring partner Paul Muscutt and disputes partner Laurence Winston. 2020 has also seen the firm lose real estate partner Rachel Orton to Addleshaw Goddard, as well as litigation partner James Barrett to Fried Frank.
Dentons, meanwhile, expanded its partnership by 22 in 2019. The firm started the year with the lateral hire of Luke Whitmore, formerly partner at Linklaters, and the hire of former Allen & Overy counsel Yusuf Battiwala. The firm also expanded its people, reward and mobility team throughout the year with the lateral hires of Purvis Ghani and Eleanor Hart, who joined from Stephenson Harwood and Deloitte respectively. Employment law specialist Alison Weatherhead was also promoted to partner at the firm’s London office.
K&L Gates parted company with six partners over the past year, with the firm’s headcount falling from 50 to 44
Elsewhere, Jones Day’s partner headcount continued to decline as part of a trend which has seen the partnership fall from 67 to 48 since 2015. One notable departure over the past year was Raymond McKeeve, who left the firm after being accused of ordering the destruction of documents in a high-profile case related to Ocado.
K&L Gates parted company with six partners over the past year, with the firm’s headcount falling from 50 to 44 – a five-year low. The firm lost finance partners Andrew Petersen and James Spencer to Atlanta-headquartered Alston & Bird, who recently launched in the City. Meanwhile corporate partner Stuart Borrie left to join Canadian investment management company AIMCo as counsel.
The decline in partner headcount sees K&L Gates’ average revenue per partner (RPP) hold steady at $1.4m, the same figure as Dentons and the lowest within the Legacy UK peer group.
SPB’s RPP increased from $1.3m to $1.5m over the past year, with Jones Day’s up from $2m to $2.5m in the same period. RPP also increased at Mayer Brown, up from $2.1m in 2018 to $2.3m last year, and at Dechert where RPP grew from $3.1m to $3.4m. Reed Smith saw its RPP dip for the first time since 2016, down from $1.9m in 2018 to $1.8m last year.
1. Kirkland & Ellis
KIRKLAND & ELLIS
Kirkland & Ellis’s relentless City growth continued throughout 2019, adding 21 per cent to total lawyer headcount and 20 per cent to partner numbers, with these now totalling 309 and 118 respectively.
Revenue growth also showed little sign of slowing down following the previous year’s 27 per cent rise from $300m to $380m. In 2019, Kirkland’s City office is thought to have added another $65m to this total, taking the world’s largest law firm’s London revenue up by 17 per cent to an estimated $445m. In other words, 2019 was Kirkland’s strongest year ever in London.
As ever, the office played a key role on some of the biggest deals of the year, most notably in private equity. These included advising GLP on the $18.7bn sale of its US logistics platform to Blackstone; a consortium led by EQT on the CHF10.2bn acquisition of Galderma; a Blackstone consortium on the £4.77bn take-private of Merlin Entertainments; Apax, Warburg Pincus, CPPIB and OTPP on the £3.4bn take-private of Inmarsat; Bain Capital and Carlyle on the voluntary public takeover offer for OSRAM; Thoma Bravo on the £3.1bn take-private of Sophos; Lone Star Funds on the £2.69bn financing for the acquisition of BASF SE – Construction Chemicals; and BC Partners on the £2bn investment into Advanced Computer Software Group.
Kirkland’s restructuring group, which features several well-known names including partners Kon Asimacopoulos, Sean Lacey and Elaine Nolan, has also now been firing on all cylinders for several months, notably in the retail sector, with all the signs suggesting that work levels are likely to mushroom over the coming months. Recent matters include advising the lead investors in Debenhams on its restructuring, picking up the lead mandate on the restructuring of Pizza Express and a role for PwC on the administration of children’s goods retailer Mothercare, as well as leading for Paperchase on its CVA.
In contrast to the record levels of deals activity, it was a relatively quiet year on the lateral hiring front with just four new partner arrivals including two tax specialists, David Irvine from Weil Gotshal & Manges in April 2019 and Mavnick Nerwal from Linklaters in January 2020. Irvine had previously worked with Kirkland tax partner Jonathan Kandel when both were at Weil, while Nerwal was also well known to his new firm, and in particular fellow tax partner Tim Lowe and private equity partner Matthew Elliott, from the trio’s days at Linklaters. The pair’s arrival means that Kirkland now has one of the biggest tax practices in the City in terms of partner headcount.
Kirkland has been lucky, capitalising on a wave of debt-fuelled deals activity and a long bull market
Investment funds partner Andrew Shore joined over the summer from Proskauer, while the year’s big name in private equity was Adrian Maguire from Freshfields Bruckhaus Deringer, a lawyer with relationships with the likes of Warburg Pincus, Advent, CVC and Cinven, and who has now reunited with former colleague David Higgins.
The impact over the past few years of Kirkland’s lateral-powered approach to growing London can be seen in its increasingly diversified client base and, indeed, on its position in the deals tables. The firm is now more a fixture on European buyouts and the kind of public market M&A that was previously the domain of the magic circle, the former home to many of its lawyers, than a firm still seen by some as a PE shop.
Kirkland has also been lucky, capitalising on a wave of debt-fuelled deals activity and a long bull market by using its deep pockets to hire lawyers in an extraordinarily competitive landscape who, according to one insider, “have come in and executed way beyond our best-case outcome”. The question for Kirkland is whether its booming restructuring practice will be enough to compensate for the inevitable slowdown in its lynchpin M&A and private equity group. All firms, including Kirkland, are currently facing an unprecedented period of adjustment. It will be those at the top of the Rolodex when clients are in trouble that come through this crisis strongest.
31. K&L Gates
The past 12 months was another challenging year for K&L Gates, with UK revenue thought to have fallen by some per cent to $62.6m. The previous year the firm’s revenue is also thought to have dropped, by 2 per cent, which ended three years of slow growth. K&L Gates is now some considerable distance off the high of 2014 when City turnover reached $74.1m.
K&L Gates’ London office has shrunk over the past year, both in terms of people and physical space. Finance partners Andrew Petersen and James Spencer broke away in the summer 2019 to launch Alston & Bird’s London outpost at St Paul’s Octagon Point, 5 Cheapside. In March 2019, the firm lost its London antitrust and regulation group head Neil Baylis to Mishcon de Reya, leaving just one competition partner in London; Jennifer Marsh.
Simmons & Simmons picked up energy and infrastructure partner Alex Blomfield in October, while corporate partner Stuart Borrie joined a client, Canadian investment management company Alberta Investment Management Corporation (AIMCo) as associate general counsel at the end of 2019. Other lawyers to have left in 2019 include real estate partner Rajeev Joshi, who joined Boodle Hatfield in May and Paul Alger, who had been at K&L Gates for 17 years and joined Shoosmiths as a partner last month.
While partner hires were sparse, the firm did recruit two real estate partners from US firm Greenberg Traurig; partner Tim Webb and colleague Emma Maher.
K&L Gates’ London office has shrunk over the past year, both in terms of people and physical space.
Over the year, the firm sub-let its fourth floor to cigarette company Philip Morris, decreasing its office space by around 40 per cent and leaving it with only the fifth floor of its One New Change London headquarters. The fourth floor was formerly the firm's main client-facing area and included a reception area covering several hundred square feet, the canteen and library and a spacious staircase leading down to conference rooms and the ‘Wren Room’, where the firm held its annual general meetings. The Wren Room in particular was one of the offices' grandest spaces, two storeys high and overlooking the dome of St Paul's Cathedral opposite.
Elsewhere in Europe, at the beginning of October K&L Gates lost a dozen lawyers to Winston & Strawn in Paris. In May, the shutters were pulled down in Warsaw when its office was acquired by DWF. The acquisition, valued at £3m, saw the CEE outpost of K&L Gates absorbed by the UK firm, which opened a new office housing 11 partners, 45 lawyers and a support staff of 31.