Originally published on September 20, 2011 in our free BigLaw newsletter. Instead of reading BigLaw here after the fact, sign up now to receive future issues in realtime.
August is usually a quiet month for large firm laterals, but this year it was hot, hot, hot. We'll highlight two trends — law firms entering new markets overseas and beefing up their talent in hot practice areas.
Kirkland's Hong Kong Coup and More International Expansions
The four big UK Magic Circle firms (e.g., Slaughter & May) and American firms like Baker & McKenzie and White & Case have long believed in having local presences around the world. We may be seeing a renaissance in that mindset as firms look at opportunities. And they're not necessarily playing nice about it.
The headline move for August was certainly Kirkland's grand entry into Hong Kong. In one fell swoop, Kirkland rounded up three corporate partners from Skadden (leaving eight), three from Latham, and one from Allen & Overy (along with a senior associate who is joining as a partner). Kirkland's bold move instantly gives the firm a significant presence in the market.
Kirkland immediately caused ripples as Skadden turned around and lured banking lawyer Clive Rough out of his recent retirement from Freshfields and moved in M&A partner John Adebiyi from London. Skadden has stated that it remains committed to the Hong Kong market, so additional moves should not surprise anyone. But as we noted last month, associates who aren't taken along with their departing partners need to be on layoff alert.
Other firms targeting international expansion include:
• Locke Lord and Troutman Sanders in London.
• Dewey & LeBoeuf in Kuwait (the firm already has four offices in the Middle East).
• Sheppard Mullin in Beijing by hiring a Squire Sanders partner.
Bird & Bird may or may not have been actively looking to expand in Germany, but the opportunity to pick up the Hogan Lovells Hamburg media team couldn't be passed up. That firm has been hemorrhaging lawyers in certain markets since last year's merger.
Another firm that saw an opportunity it couldn't resist was Linklaters, which made its first Paris lateral hire in four years, picking up a capital markets partner from Gide Loyrette Nouel. As we saw last month with Cravath's hire of Christine Varney, even the firms that have traditionally avoided lateral hires have reconsidered that strategy.
Serendipitously, LegalWeek just published a retrospective on Proskauer's foray into the London market, which highlights just how difficult it can be to break into a developed market (subscription required).
The Patent War Results in a Talent War
The HogLove merger was more opportunistic than anything, but Google's $12.5 billion acquisition of Motorola Mobility in August demonstrates why firms constantly seek partners in big-ticket practice areas.
Only Google knows all the reasons for its acquisition, but patents certainly played a role. As Bloomberg noted, when companies spend that much money on patents, smart law firms spend big bucks on patent lawyers.
Unfortunately, these firms must also compete with the technology giants' inhouse legal departments, which can offer options, better working conditions, and the opportunity to boss around former colleagues. Apple recently created a position for a head of IP litigation, which it filled with a former Sun lawyer. Apple also hired a new chief patent counsel from HP.
The Ghost of Ma Bell
Getting closed out of deals has always been a compelling reason to change firms — or, as David Boies most notably did, start your own. Rather than share fat telecom-deal fees, Carl Northrop decided to hang his own shingle, along with some of his former Paul Hastings partners, creating Telecommunications Law Professionals.
Much like Boies' frustration with Time Warner keeping him out of doing a deal for the Yankees, Northrop and company were none too happy about not being able to go up against the $39 billion AT&T/T-Mobile merger, which is spewing off tons of antitrust work now that it's been opposed (the FCC hired Renata Hesse from Wilson Sonsini in May to oversee the matter).
Low Margin Practice Areas and the Super-Boutique
On the flip side, once in a while a firm decides that it has a practice area it no longer wants to support. Not surprisingly, it's never M&A, IP, regulatory, or the like. It's always something far more plebeian and lower margin. CMS Cameron McKenna is exiting the immigration business, jettisoning 15 lawyers to Fragomen "an international firm specializing in immigration law." If you missed the link in BlawgWorld, read Jordan Furlong's take on this move, which he dubs the "rise of the super-boutique."
We've always felt that large firms only maintained immigration and similar practices as favors for high-net-worth individuals and major international corporate clients. These folks have finally realized that the help they need shouldn't be at the rates they're forced to pay.
Conclusion
Large firm moves aren't always about interpersonal relationships. They're often about the same economic drivers that motivate the business world — seeking out untapped markets, be it geographic or new services. This profit-driven model of law firms is also driving similar attitudes in partners, as they're constantly on the prowl for the BBD (Bigger, Better, Deal). This business first mindset results in a lot of churn as firms and partners try to maximize their profits with little long-term commitment.
Written by Law Shucks, which curates and analyzes data on large law firm lateral hiring.
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