Legal industry news, trends and reflections (Q4 2024)

As well as our monthly LinkedIn newsletter dedicated to summarising a few topical legal current affairs each month, we're now also publishing regular reflections on legal industry news and developments (via this same newsletter, as well as our free blog).

These reflections are offered by Luke Mitchinson, who worked for years as a transactional lawyer at both a Magic Circle and an elite US law firm, before leaving to work as a headhunter. He now helps lawyers from NQs through to partners secure roles at a broad range of commercial law firms, via ARMA Search. Luke recently hosted a hugely popular webinar for us on his thoughts regarding the legal industry (it's available on demand here).

To hear more from Luke, subscribe to Luke's excellent free LinkedIn newsletter and follow the LinkedIn page for Luke's recruitment firm.

Today's newsletter covers law firm culture, big partner moves, HSF's merger, when to quit your job, Freshfields' hiring activity, the shifting "Magic Circle", and A&O Shearman's switch to all-equity.

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Legal industry news, trends and reflections from October - December 2024

Please note that these articles do not constitute legal advice and should not be relied upon. They simply reflect the author's research and opinion.

Over to you Luke...

Is a law firm's culture important?

December 2024

💭 What is a 'good' culture and what's it worth to you? 💭

A debate as old as time, but given the huge (and vastly different) sums of money lawyers earn today, this debate has become very relevant again.

Given lawyers at the top paying (US) firms in London can earn over $1,000,000 in their first four years post-qualification (and these numbers only get bigger and bigger), are we now having to put a real world value on culture?

Is there more to culture than just hours?

Is a good culture worth £10k? Is a good culture worth £150k?

Are the Golden Handcuffs more golden than ever?

Luke's analysis of this was too long for this newsletter, but you can check out the full article here.

What do big partner moves indicate about law firms?

November 2024

🚨 Here are my thoughts on a lot of the big partner moves we've been seeing recently 🚨

Just like Match of the Day, I have to start with the biggest game; Sidley

• It's now been confirmed that 10 Latham finance associates have decided to follow the five LevFin partners who left Latham in the summer to Sidley Austin. As I previously wrote on the partner side, the concern won't just be the millions and millions of revenue and key clients walking out the door, but it's also the reunion of Latham's former joint LevFin & DCM & HY finance offering with Colwell and Kwak reunited with, in particular, Jayanthi Sadanandan (the former head of Latham’s London office) and Sam Hamilton on the LevFin side of things - offering a joint offering to their (and now Sidley's) clients.
• And now these partners have their 'preferred' associates joining the fold over at Sidley, meaning that (in theory) the deal team(s) that these partners' clients were used to seeing on their deals and knowing how 'they like things done', will now continue to be the same over at Sidley!

Skadden add to Latham's woes with the hire of its head of Tech M&A

• As 50 Cent used to say (and probably still does, though not necessarily about Latham), when it rains it pours for Latham & Watkins, as Skadden has hired Deborah Kirk, Latham's head of Technology Transactions.
• It's almost as if other law firms can smell blood in the water over at Latham's offices, and it's close to becoming a bit of a free for all at a firm where a year or two ago was the one taking partners for left right and centre.
• A few weeks ago I wrote an article discussing if Latham are OK? - and I won't look to repeat this all here, but as time has moved on and they've lost yet more key partners and a huge number of associates, I think they are becoming 'less-OK' and really need to cauterise the bleeding and get on the offensive, ASAP.

It's now all take take take for Sidley though, as it loses its R&I co-heads to Davis Polk

• Davis Polk has (finally) launched an R&I team with the double hire of Mark Knight and Jifree Cader, who were co-heads of Sidley’s Restructuring practice in London.
• In a similar vein to Cravath, Davis Polk have slowly but surely started to seriously build out it's Finance and M&A offerings in London recently, including a PE hire from A&OS and a LevFin partner from Paul Hastings (Luke McDougall).
• I think what Paul Weiss have done in London has woken up some of the more 'conservative' US firms in London when it comes to growth - as in the case with Davis Polk, but also Cravath with the additional double hire of a Linklaters' LevFin duo, adding to the LevFin duo from Shearman two years ago.

Linklaters loses another LevFin partner, while A&O Shearman take from Travers

• Simpson Thacher has hired Links' newly promoted LevFin partner Dan Peach, and A&OS have hired Travers' head of incentives and renumeration (Mahesh Varia) - both of which are adding to the pain of both of Links' and Travers' partner retention issues as both firms have been seriously pillaged recently. Links have now lost three LevFin partners in as many weeks.
• Much like Latham, both of these firms need to stop the bleeding and get on the offensive, but unlike Latham (and in particular Travers here), do these firms have the financial firepower to fight back? I think Links certainly have the capability here, but whether they're able to is another question...

Why did HSF merge with Kramer Levin?

November 2024

Take a gander at my thoughts on the new kid on the block, HSF Kramer.

Why? How? Are there more Transatlantic Mergers on the horizon? Is it right to even call this a Merger? Spoiler alert, not in my mind...

First and foremost, why?!

I'm trying to figure out how to elongate this paragraph to say more than just 'global domination of course' (must be said in a Dr Evil style voice). But, that really is the long and short of Why. HSF, like most big international law firms see the US market as a gold mine, but a gold mine with a very high barrier to entry. The Magic Circle firms have tried their hardest to break into this market with varying degrees of [limited..?] success, attempts that have come at very high premiums.

Kramer Levin on the other hand are a well known name in the US but don't really do much outside of the US (bar their small-ish Paris office - which I now understand won't actually form part of this merger). HSF on the other hand have a very strong presence in Europe and APAC of course following the Herbert Smith and Freehills merger in 2012.

So a win-win for HSF Kramer? Time will be the only judge here, but I think it's a clever move.

How will it work on a numbers basis?

• Both firms have agreed to one, global profit pool. So it's in for a penny; in for a pound / dollar. The complication comes from the vastly different core revenue metrics between the two firms - PEP and RPL.
• Kramer's PEP is $2.4 million, way ahead of HSF's $1.6 million. The RPL numbers are also substantially different. Kramer's is $1.28 million, close to double that of HSF, which is just under $700,000.

So, what's the plan? From what I can gather, figuring this out is something to be done post signing and possibly even post closing - as was the case with A&OS who recently announced its new triple tier all equity model, months after the merger closed.

Do we have a trend forming?

Maybe. Just maybe...

A transatlantic 'merger'* is an overnight way to gain global scale and entry into new markets. We saw it with A&O Shearman, and now we're seeing it with HSF Kramer. Will we see it happen with other firms? I don't think this will be the last 'merger'* we see in the next year. I think a lot of exec committees of law firms on this side of the Atlantic and the other will be keeping an extremely close eye on how these two 'mergers'* play out over the next 6-12 months, and beyond and teething issues, if these two new mega-firms come up trumps, I think more will be on the horizon.

'Merger'?

As an ex-M&A lawyer, I like to think I know what a merger is, and what an acquisition is. And here people, we have an acquisition. Don't get me wrong, both sides are agreeing to join forces, but in the corporate world few would describe a $1.6 billion revenue business combining with a sub-$500 million business as a genuine merger. This is an acquisition all-day long.

But hey, who am I to go after HSF Kramer's PR team. Merger sounds nicer, it's softer, and I'm sure for those being acquired it's an easier pill to swallow if they weren't overly keen on the idea - and that's if they even know about it, which by all accounts, the overwhelming majority of partners at both firms WERE NOT...

Should you quit your job before or after Christmas?

November 2024

🤔 To partially quote The Clash: "Should I Stay or Should I Go [pre-Christmas?]" - is a big question at this time of year for a lot of lawyers. 🤔

And I get it, this is already a busy time of year with a lot of deals looking to sign/close pre 31 December, it's Christmas and calendars are getting full, and for a lot of you, you're about to get that end of year bonus you've been grinding away for all year and you're not about to walk away from that!

However, here are three points to consider when making this decision:

1. You're not the only lawyer who thinks like this. Unsurprisingly, this makes January one of the busiest months for lateral moves - meaning competition will be much fiercer.

2. Bonuses. Some firms will match your end of year bonus as a sign-on. Some firms will let you officially resign once you receive your bonus. Either way, you're not going to be down. Plus, if this is the perfect fit for you in terms of firm, role and promotion prospects, then perhaps it might even be worth forgoing your EOY bonus (bearing in mind the overwhelming majority of firms will fall into either of the two categories above).

3. Available positions. Positions are available now, and these are top firms who typically fill their vacancies very quickly (and competition will be high - even higher in January - see point 1), and once the spot is gone, it's gone. Now that's not to say that they wouldn't look at you if there's not necessarily a role available anymore and a similar role may come up in the future, but it's much cleaner going after a role that's available and has already been cleared by the powers that be - especially from a team budget perspective.

So, if you're thinking you might just wait a couple of months until the New Year, it might not necessarily be the most pragmatic move...

Freshfields turn the tables and take a 3-man team from Weil...

November 2024

Yep, the Magic Circle firm are hitting back at one of the elite US players in the market, moving a trio of private credit lawyers into its all-equity partnership.

Paul Stewart leads the 3-man Weil team to 100 Bishopsgate and is set to become the Global Co-Head of private credit and private capital solutions alongside his New York based counterpart, Damian Ridealgh.

Freshfields mean business in the lateral market

This latest triple-hire is just the latest example of the oldest Magic Circle firm poaching big hitters from a variety of its big US competitors over the past year or so - on both sides of the pond.

In the past 12 months Freshfields have hired:

• Mary Lavelle and Tim Clark as its new Global Co-Heads of private funds and secondaries in London and NYC from Akin and Goodwin respectively;
• PE double-act Neal Reenan and Ian Bushner from Latham in New York;
• Private capital partner Eva Mak from Kirkland in Silicon Valley; and
• Private capital partner Ivet Bell from Sidley in New York.

Not bad going for a firm that was historically (and may still be) a poaching ground for the biggest US firms.

Connected hires? Obviously...

Even from a cursory glance at the above hires, it's clear that these moves signal where Freshfields is committing itself to in terms of future markets and profitability. There's a pretty easily made argument that Private Credit, PE, and Funds & Secondaries are all fairly well connected, and to a large extent have a shared client pool. So the interconnectedness of these hires, both in London and the US, speak for themselves.

The other fairly obvious point I'll happily make is that these are both highly profitable and in 'vogue' at the moment. I'd wager a lot that the management committees of the majority of leading global law firms have been speaking A LOT about the private capital / credit boom and the increased deal flow firms are seeing from funds & secondaries, and - perhaps more eloquently than this - said: "we need to get in on this, quick". Well mission accomplished for Freshfields, and it really is a win-win-win for the firm!

And hey, if they can boost their own profiles and market share in these key battlegrounds while also telling the world that they've got the brand and financial firepower to hire almost anyone from any firm around the world, then what a lovely additional benefit for the Magic Circle stalwart.

Are we nearing the end of the OG Magic Circle? 🪄

October 2024

Well The Lawyer is certainly predicting so with Kirkland & Ellis and Latham & Watkins set to enter the top four of the UK's largest revenue generating firms by 2025 and 2027 respectively ⭕️

The sn**s out there will be saying they will NEVER be considered Magic Circle.

It's not all about money! Where is the history?! Where is the prestige?! Americans in the Magic circle, not on my watch!

Have a read and see what you think, and don't forget it was The Lawyer who originally coined the phrase Magic Circle, so surely they can amend it...

Luke's analysis of this was too long for this newsletter, but you can check out the full article here.

A&O Shearman Goes All-Equity!

October 2024

In a move that bucks the trends of what most Big Law firms are currently doing, A&O Shearman have opted to go the opposite way and have removed the salaried tier of its Partnership, making it all equity.

Clearly this was one of the discussion points both legacy firms will have spoken about pre-merger in order to be able to bring this in so quickly, along with announcing A&O Shearman will cut 10% of its global partnership by the end of the financial year (still unclear exactly which practice areas will be affected by the cull - though it has just been confirmed that its South Africa office will be shut down).

Why The Push to All-Equity?

With around 800 partners worldwide, A&O Shearman is now categorising them into three tiers: ‘entry,’ ‘core,’ and ‘super.’ Unsurprisingly, ‘super’ tier will be reserved for the firm’s highest achievers - which apparently according to those who came up with this idea will sets a clear pathway for ambition and performance within the partnership... perhaps this is fair on many levels, but what is really does is ensure that A&OS have the internal firepower (i.e. cash) to hold onto its biggest billers aka its rainmakers.

Additionally, it's a very clever move from the inner circle at A&OS as its move to an all-equity model contrasts sharply with the trends seen across its Big Law competitors who are increasingly moving towards salaried partnerships in their efforts to attract and retain top legal talent - Cleary and Paul Weiss being the two most recent to introduce a salaried level.

The Prestige...

As many of us don't like / want to admit or even think it, in today's world where the norm for the overwhelming majority of Partnerships in Big Law involves an 'entry' salaried level, there's a (rightly or wrongly?) serious amount of prestige and kudos that is associated with being a hallowed equity partner these days - and if you can achieve this as a Day 1 Partner then even bloody better right?! And to be honest why shouldn't there be a level of prestige that comes with being an equity partner? Equity means you have genuine skin in the game, you're an owner of the firm, and unless things go horribly wrong for you, the year on year progression you're likely to have means you and your family are set for life!

Keep your eyes peeled on A&OS

It's very much watch this space time at A&OS as this shift to all-equity in the aftermath of the news of a 10% global partner reduction will inevitably impact the firm's culture, profitability, and ability to attract and retain top talent.

At this point though, it's a move that's making all the right noises for the firm, but time will tell how impactful this will truly be...

To hear more from Luke, subscribe to Luke's excellent free LinkedIn newsletter and follow the LinkedIn page for Luke's recruitment firm.

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