Revolving doors - London partner churn at US firms reaches new heights
As Cobbetts this week looked to be taking its final steps towards obsolescence and a pre-pack deal with DWF, new research from Legal Week has found US firms' activities on this side of the pond moving in an entirely more positive direction. Casting aside the seemingly perpetual economic gloom, firms have turned their attention to London expansion, with our latest survey into the hiring trends of US players in the City demonstrating record levels of partner recruitment.
February 07, 2013 at 07:03 PM
3 minute read
As Cobbetts this week took its final steps towards obsolescence and a pre-pack deal with DWF, new research from Legal Week has found US firms' activities on this side of the pond moving in an entirely more positive direction.
Casting aside the seemingly perpetual economic gloom, firms have turned their attention to London expansion, with our latest survey into the hiring trends of US players in the City demonstrating record levels of partner recruitment.
Of course, with some 35 partners joining the lateral market as a result of Dewey's collapse, a year-on-year rise in partner moves was inevitable.
But Dewey accounts for only part of the story, with recruitment well up on what was already a record high in 2011, even without those fleeing the failed firm.
In fact, so steady has US firms' expansion been over here, that they made almost twice as many partner hires in London in 2012 as in 2007, with recruitment increasing every year with the exception of 2009.
But closer inspection of the moves reveals that, while hiring may be up, the threat this is posing to major UK firms is not rising at the same pace.
Overall, 37% of last year's hires moved from rival US firms rather than UK players.
And only 71% of them joined direct from partnerships at other firms–with the rest either coming from in-house positions or more junior roles at rivals.
It means that, with the odd exception, a relatively small percentage of the moves are Wall Street leaders poaching the magic circle's star dealmakers.
Instead, as growing numbers of US firms of all shapes and sizes bulk up their UK presence and become more established in their own right, there is increasingly a revolving door operating between them, with partners carrying out multiple moves between US firms rather than staying put.
The trend is evidenced by the fact that around 11% of all those who were partners on 1 January this year had only joined their current firms within the last 12 months.
While the statistic itself is neither good nor bad, some of the implications are distinctly negative.
How do firms go about building up a practice with both established names and client bases against the backdrop of so much movement? Especially as those who have already been willing to make the jump to a US firm once are more likely to do it again.
The answer appears to be with difficulty. A quick comparison of shifts in partner headcount and hiring over the last few years shows many of the most prolific law firm recruiters have struggled to maintain their partner numbers in the face of multiple departures, commonly to US rivals.
While using the opportunities presented by a downturn to grow your business is to be applauded, simply making the hires is not enough.
Firms need to start paying as much attention to how they retain partners as to bringing them in: they are now an established hunting ground for US rivals.
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