PE star Higgins' $10m Kirkland switch leaves 'bad taste' after Freshfields lockstep reform
Buyout star's big-money move highlights scale of lockstep challenge for UK firms
December 19, 2017 at 10:23 AM
5 minute read
No lockstep reform was ever going to let Freshfields Bruckhaus Deringer match Kirkland's $10m (£7.5m) a year offer for City buyout star David Higgins.
Even so, confirmation of his exit to the US firm is a blow to Freshfields, coming so soon after it revamped its remuneration model to enable it to better reward top performers.
While a handful of Freshfields' stars – and Higgins would have been among them – will now be able to make six times more than those at the bottom, this will put them on around £3m.
It's a figure which, while good even by the standards of most City law firms, is a long way off the guaranteed package on offer at Kirkland – particularly when considering Higgins is not joining as the US firm's highest earner, and that sources suggest Kirkland's profit per equity partner is likely to increase significantly next year.
Though the magic circle firm did not change its lockstep simply to keep Higgins, it's fair to say he was a driving force in the overhaul, pushing for change that would effectively bump up pay for a small number of stars, while lowering pay for others.
"Freshfields will be very disappointed because he drove a huge amount of change and division internally," says one City private equity partner of the timing of Higgins' move. "The firm has flexed its lockstep massively more than any other magic circle firm, and he has turned around and said it is not enough.
"I think it leaves a bad taste after all the tension and pushiness. Junior partners have seen a senior partner go round and tell them that the firm needs fixing and needs to change its lockstep. He's been incredibly vocal about it and now he is leaving."
A former Freshfields partner adds: "He was on the more aggressive end of the spectrum of lockstep change. It is not the first time we thought he might go, but Freshfields is never going to give anyone a deal that is $10m guaranteed. If you're going to lose someone like that anyway, maybe you shouldn't compromise the system for it."
The money may well have been the biggest attraction of Kirkland, but sources both inside and outside the firm suggest Higgins was also frustrated because he wanted a management position that was not on offer at present at Freshfields, and, according to some, would have been unlikely to happen.
"He always had management aspirations, but was a bit like Marmite at Freshfields," says one buyout partner. "He's a divisive character," says another source.
On top of the shadow Higgins' exit casts over Freshfields' lockstep reform, it also raises questions about the firm's private equity practice, which will be left in the hands of co-head Adrian Maguire.
Higgins has at least two key PE clients in common with Kirkland – Cinven and Blackstone – as well as a wider client list that includes Canada Pension Plan Investment Board, Hellman & Friedman, The Carlyle Group and GIC.
Many of these relationships are more closely aligned with the firm than Higgins, however, prompting some to predict that while some work may move with Higgins, the bulk will not.
As one partner comments: "Freshfields is good at sharing clients around so I don't think they will lose anyone overnight. They have some really good people other than David, so I suspect they won't lose too many clients. I don't think Kirkland is hiring him for his book of business – he has a stellar personal reputation, but medium to low portable clients."
However, given Higgins is the first really big-name partner to be prised out of the team for a rival firm, Freshfields' ability to retain these clients in the longer term will depend on its ability to prevent others – such as Maguire – from heading towards the door now the seal has been broken.
While few firms could match the package on offer at Kirkland beating Freshfields' £3m figure would be less challenging, particularly after a bruising period both financially and culturally at the UK firm.
Despite Higgins' departure, Freshfields' private equity practice still has a lot going for it. For Kirkland, however, he offers the top name UK partner the PE practice it lacked in London.
One buyout partner says: "It's a good move for Kirkland and signals a change in pace for the firm, which will gain a more English-facing PE practice. It will reawaken the market."
Another adds: "It's a great move. For Higgins to bring in the $30m needed to justify a $10m package is more than possible at Kirkland."
One Kirkland partner agrees, describing the hire as "a monumental coup". He adds: "Higgins was Freshfields' main private equity guy. He was very senior – one of the key people at the senior end of private equity in Europe."
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
© 2024 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 AllHong Kong IPO Market Shows Signs of Slow but Steady Recovery
Can AI Beat the Billable Hour? Legal Tech Firms Say Selling AI Products to Law Firms Still a Challenge
More Young Lawyers Are Entering Big Law With Mental Health Issues. Are Firms Ready to Accommodate Them?
Trending Stories
- 1Infant Formula Judge Sanctions Kirkland's Jim Hurst: 'Overtly Crossed the Lines'
- 2Abbott, Mead Johnson Win Defense Verdict Over Preemie Infant Formula
- 3Guarantees Are Back, Whether Law Firms Want to Talk About Them or Not
- 4Trump Files $10B Suit Against CBS in Amarillo Federal Court
- 5Preparing Your Law Firm for 2025: Smart Ways to Embrace AI & Other Technologies
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
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