As the number of London partner promotions at leading US firms soars, Frances Ivens asks why American outfits are eager to bulk up in the City, and whether it's a trend that's set to continue

The number of new partners made up at the City arms of the largest US law firms by revenue increased by nearly four times more than the rise in their worldwide partner promotions during the last year.

Research by Legal Week found that, across 23 of the 25 largest US and transatlantic firms by revenue, London promotions climbed by 48.9% year-on-year, compared with a 13.3% rise in total promotions globally across the same group of firms.

The figures, which include US-UK merger partners such as DLA Piper, Hogan Lovells and Norton Rose Fulbright, reflect the economic recovery on both sides of the Atlantic as well as the continued development of US firms in the City. In addition to carrying out significant numbers of high-profile lateral partner hires in their bid to crack the UK market, the firms are also looking to nurture and promote their home-grown talent.

In total London accounted for 8.4% of firmwide promotions across the group in 2013-14, with this figure rising to 11.1% for 2014-15. Asia-Pacific also accounted for 11.1% of the most recent round as firms increase investment in the region, with the US making up 56.6% of total promotions.

"In the last couple of years US firms have propped up the lateral legal market at partner level as they have continued to invest heavily into growing their London and European networks," says Stephen Bell legal managing director Syed Nasser.

 "This growth at partner level naturally means these firms have hired more lawyers below partner level and it is therefore inevitable that there is increased organic growth. These firms will be keen to have organic growth and cultivating talent is always more profitable than buying it."

Two of the 23 firms included – Davis Polk & Wardwell and Weil Gotshal & Manges – made up around one third of their new partners in London, with Reed Smith not far behind. Other performers with a relatively heavy London bent unsurprisingly  include Norton Rose and Hogan Lovells, as well as Ropes & Gray.

In its most recent round, Davis Polk promoted its first London partner in five years, as one of only three elevated. The appointment of corporate partner Reuven Young came after the traditionally cautious firm launched its English law practice in 2013 under the leadership of former Freshfields Bruckhaus Deringer partner Simon Witty.

With far higher numbers involved, Weil also made up a third of its new partners in London. The decision to add four partners in the City out of a 12-strong round followed a string of exits in the capital in recent years, including the departure of star banking partner Stephen Lucas to Kirkland & Ellis in May last year.

"We made a strategic decision a number of years ago to grow and invest in London given the importance of that market," explains executive partner Barry Wolf. "Our results, recent lateral additions and promotions in London reflect this strategy."

Elsewhere, Reed Smith saw its City haul move from making up 12% of the 2013-14 total to 29% during the most recent year, while Baker & McKenzie saw its City arm jumping from 1% to 6% as a percentage of total promotions worldwide year-on-year.

Simpson Thacher & Bartlett promoted one lawyer in London out of six (17%) in its most recent round, up from none the previous year. Similarly Sidley Austin, which promoted no partners in London in its 2013-14 round, made up two in the capital this year – one in its banking practice and the other in competition.

"I think it is the case that we will make up partners when we are ready and when the time comes," says Sidley's London partner-in-charge, Matthew Dening. "Obviously in an office of this size it means we will not make a partner up every year; it is dependent on individual cases.

sunset-city-web

"One of the things I want to achieve as London managing partner is bringing through as many of our associates to partnership as we can. As an office we have traditionally grown through lateral hires and I think it is important that we bring through our current associates as well. So I want it to be one of the things we see more of throughout my time."

Norton Rose, in its debut round as a merged firm, also gave a significant nod to London, with 10 of its 46 new partners based in the capital. In the year before the transatlantic tie-up, legacy Norton Rose and legacy Fulbright & Jaworski made up five partners in London between them.

The overall increase in the number of partners made up is good news for aspiring associates in US firms, which are, with a handful of exceptions, demonstrably offering an attractive and attainable route to partnership.

To put the US numbers into perspective, Legal Week research last May into the 2014 partner promotion rounds at 27 of the 30 largest UK law firms (also including Hogan Lovells, DLA Piper and Norton Rose) found that there were 432 globally, compared with 370 in 2013.

London promotions made up nearly a third of new partners (31%) at UK firms last year, with the total number standing at 135, compared with the 70 (up from 47) across the US firms looked at here.

 "The route to partnership could not be more important to associates – particularly associates who want to make partner in London," comments Fox Rodney recruiter Freddie Lawson. "The genie is out of the bottle. The idea that to operate at an elite London firm and make it into the partnership you have to be at an English firm has been demolished. For associates, moving to a US firm will often mean they are going to have a greater chance of making partner and, once they make partner, earn more than their magic circle contemporaries."

Bucking the trend
For some US firms, however, the numbers are not quite so positive, with several London offices seeing a noticeable drop in the number of new partners. Despite an increased round globally, Cleary Gottlieb Steen & Hamilton did not promote any London lawyers to the partnership this year. This compares to last year when one City lawyer made the cut out of six promoted globally.

Meanwhile, for the last two years neither Morrison & Foerster (MoFo), which has recently lost a five-partner London team to West Coast rival Cooley, nor Wilmer Cutler Pickering Hale and Dorr have included any London partners within their global tally. "MoFo promotes in all positions when appropriate," a spokesperson for the firm tells Legal Week. "For promotions to partner, we have no fixed quota or target to hit in any one year. We do not set fixed targets by office as we operate on a worldwide basis."

Equally, Gibson Dunn & Crutcher has not made up any partners in London over the last couple of years, despite making a string of high-profile lateral hires including ex-Ashurst head Charlie Geffen.

Globally US law firms increased their partner promotions by 13.3% on last year's figures, with partners citing strong US and UK economies leading to more opportunities for firms with the right capabilities. "I think we can see US companies and institutions taking advantage of the relative strength of the US economy and pushing out overseas where the asset prices are low," says White & Case's London head, Oliver Brettle. "That activity services law firms that have a strong US and international presence.

"So if that is being reflected in the promotions statistics then I would not be surprised. I think the story is an extremely strong one for London and it will continue to be so."

Bakers' London managing partner, Paul Rawlinson, adds: "London is a global hub for legal services. Arguably, the more globalised the world economy becomes, the more important it is to have a strong presence in the City, especially for a firm like ours that is focused on cross-border work."

In testament to its City aspirations, relative newcomer Ropes & Gray's London office, which launched in 2010, received 20% of the firm's new partners in its most recent haul after none of its associates were made up the year before.

Similarly, though London's percentage of total global partner promotions has fallen year-on-year, White & Case made up six in London this year compared to five in 2014. Furthermore, the total number awarded by the firm has grown 106% on last year to 37.

"We do not have a quota or target for any year," explains Brettle. "We promote on a combination of very strong candidates and a very strong business case. Growing in London has been a strategic goal of the firm and it continues to be so. The London office continued to expand throughout 2014; we want to continue organic growth in terms of trainees becoming associates and those associates becoming partners."

Stephen Bell's Nasser concludes: "Factor in the desire of US firms to increase partner numbers and grow generally in the City against the backdrop of strong financial performance at these firms and the rise in promotions to the partnerships seems inevitable.

"Whether it is sustainable will, to a degree, depend on the successes of the higher-profile lateral hires, who of course are very much considered to be the rainmakers. If the firms continue to do well and win work in the City the trend of US firms promoting partners in London will continue."

• Sullivan & Cromwell is not included as the firm is not confirming new partner promotion details this year. Greenberg Traurig has yet to announce 2015 promotions.