Different routes – the non-magic circle way to fly American
The magic circle may have yet to find their dream partners in New York, but the more flexible model used by some London rivals - notably Hogan Lovells and DLA Piper - has allowed them to make considerable progress in the US...
March 02, 2012 at 05:46 AM
5 minute read
The magic circle may have yet to find their dream partners in New York, but the more flexible model used by some London rivals – notably Hogan Lovells and DLA Piper – has allowed them to make considerable progress in the US.
For Hogan Lovells joint chief executive David Harris, formerly managing partner at legacy UK firm Lovells, it has been nearly six years since he realised that a US merger was vital to the firm's future success not just across the Atlantic but globally.
Legacy Lovells had been operating in the US since 1977 and started practising US law in 1995, when it opened an office in Chicago to sit alongside its New York branch. Prior to the Hogan & Hartson merger in May 2010 Lovells had grown its US presence to around 100 lawyers, between them generating 4%-5% of the firm's then £542m revenues.
"Our US strategy had always been to stick to our knitting," recalls Harris (pictured above right). "Build up litigation, insurance, reinsurance, restructuring and intellectual property (IP) but not attempt to build a full service offering. Growing a corporate practice in New York had always seemed to me to be a good way to lose a shed load of money.
"Throughout 2006-07, it became increasingly evident to me that our US strategy had serious limitations both in terms of winning new work opportunities and further expansion. We were seeing a greater demand for a broader range of services than we could do ourselves or would ever be able to build. This tipped the balance to the need to have a full service presence and we realised the only credible way to do this and build a high quality team was a merger," says Harris.
It was a realisation that paved the way for protracted research of the US market and months of discussions with Hogan & Hartson before a vote on the merger in December 2009. The rest is history, with the union creating a top 10 global practice, with around 2,500 lawyers operating across two partnerships under a Swiss Verein structure. The combined firm posted revenues of $1.66bn (£1.05bn) for 2011, of which the US contributed 44%, London 26%, Asia and the Middle East 6%, with the remainder coming from continental Europe.
Since the merger went live the firm has made some 46 lateral hires globally, and drawn up an ambitious international strategy that will see it open in Rio de Janeiro in Brazil in the coming months, with launches in Qatar and Indonesia also planned during the next three years, as well as possible openings in Australia and South Korea.
Meanwhile, in addition to providing greater investment power the union has also improved access to global clients, winning panel appointments including Societe Generale, BNP Paribas, Vodafone and China Development Bank. High profile mandates have included advising ExxonMobil on its US$1.75bn (£1.1bn) sale of North Sea assets to Apache North Sea and on the sale of its Japanese subsidiary to TonenGeneral Sekiyu, a major refinery operator in Japan, for approximately $3.9bn (£2.46bn) and advising SABMiller on deals including its multi-billion dollar takeover bid for Foster's.
Not that the merger has been without its challenges. Partners within the firm suggest there have been considerable cultural tensions – with Hogan's thrusting style at times conflicting with the traditional Lovells' understatement. Both sides have seen senior departures, primarily in Continental Europe. The union will see a major test of the level of partner support later this year, when it moves to fully reflect Hogan's compensation structure.
And the merger has yet to create the large corporate finance practice in the UK and New York that both parties hope to achieve.
Despite the difficulties, to say Harris remains excited about the union would put it mildly. And his reason for the enthusiasm goes beyond the US legal market. He comments: "We wanted to be among a small group of truly global firms and felt that in order to do that you couldn't ignore the biggest legal market in the world. It wasn't just about accessing the US market but about repositioning ourselves as a global player targeting high quality work and our experience since the merger has proved us right."
A key question is whether firms like Hogan Lovells and DLA Piper that have used more flexible dual profit centre deals to secure major US/UK unions have the opportunity to leapfrog magic circle rivals, which are committed to expansion either to lateral recruitment or a top-tier merger. And while questions remain over the integration challenges facing DLA Piper – the firm's large US practice is regarded as having been a robust performer in recent years, making ground in key markets like New York and being ready to bid for star partner recruits.
It is also apparent that other major City firms like Norton Rose and Ashurst are increasingly focusing on securing a major US union and see their current run of global expansion as a means to help ultimately deliver a credible deal in the US. In Ashurst's case the firm is hoping its high-stakes tie-up with top-tier Australian firm Blake Dawson, which went live this week, will help the firm build a commanding Asian presence that will be attractive to quality US partners.
Ashurst senior partner Charlie Geffen (pictured) comments: "We see a merger as the only real way to crack the US and think that at some point consolidation will happen as it's the only way to build the mainstream corporate/capital markets practice needed to properly service global clients across London, Hong Kong and the US."
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllAs the Rules of the Game Change, Is the EU Taking a New Approach to Competition?
5 minute readSome Elite Law Firms Are Growing Equity Partner Ranks Faster Than Others
4 minute readTrending Stories
- 1Thursday Newspaper
- 2Public Notices/Calendars
- 3Judicial Ethics Opinion 24-117
- 4Rejuvenation of a Sharp Employer Non-Compete Tool: Delaware Supreme Court Reinvigorates the Employee Choice Doctrine
- 5Mastering Litigation in New York’s Commercial Division Part V, Leave It to the Experts: Expert Discovery in the New York Commercial Division
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250