McDermott Will & Emery has followed Davis Polk’s lead, raising its London trainee pay to match the highest market rates.
Effective from 1 January, the Chicago-headquartered firm will offer a salary of £65,000 in year one, rising to £70,000 in year two. The rates previously sat at £53,000 and £58,300 respectively.
Just last month, Davis Polk announced its updated pay scale for trainees, with recruiters at the time forecasting that other US firms would follow suit, establishing a new benchmark for entry-level salaries.
London managing partner Aymen Mahmoud (pictured) told LB: ‘It’s no secret that our focus has been on growth but that means lateral and organic growth.’
‘We are really setting ourselves up for the future here by ensuring that our existing offering of top tier culture and focus on our clients is also matched by our ability to attract the very best legal talent at all levels to ensure that long-term organic growth.’
Back in July, LB revealed that McDermott had increased pay for its newly-qualified (NQ) to $225,000 (a little over £170,000 at current exchange rates), matching the Cravath scale for associate compensation all the way to eight years PQE.
Cravath Swaine & Moore’s latest rates, announced in November 2023, set NQ pay at $225,000, with $235,000 for second-year associates and $260,000 for third years, rising to $420,000 and $435,000 for seventh and eighth years respectively.
McDermott will also match Cravath’s bonuses, but with adjustments that give associates the potential to earn even more.
The intense competition for top talent has driven ongoing pay increases for trainees and newly qualified lawyers, raising eyebrows across the broader market.
David von Dadelszen, director at Jameson Legal comments: ‘There must be a hint of an incoming upturn in work to spark a war for talent but doesn’t sound as imminent if firms are competing for trainees.’
McDermott’s London office has experienced a wave of change in recent months, prompting some market peers to question if the firm is moving too rapidly. Alongside Mahmoud’s promotion to managing partner, private equity veteran Graham White has assumed the role of London senior partner.
In the last eight months, on top of White, the firm has made nine partner hires, including debt finance heavyweight Chris Kandel from Morrison Foerster in May and private equity partner Fatema Orjela from Sidley in April. Earlier this week, LB revealed that the firm had hired CMS international private equity co-head Jason Zemmel – its third hire this autumn following Sebastien Bonneau from Eversheds and Candice Nichol from KPMG.
With work including the proposed merger of Vodafone and Three’s UK businesses – a deal that would create the largest mobile operator in the UK; the successful defence of the £1bn Phones 4u litigation – the culmination of a decade’s worth of work for Vodafone’s legal team; and the launch of a major in-house transformation project, it’s fair to say that Vodafone’s lawyers have been keeping themselves busy.
Legal Business caught up with Vodafone UK’s head of legal, Karen Thorpe (pictured, sixth from left), to discuss an award-winning year.
Congratulations on winning Legal Business In-House Team of the Year! Has it been an exceptional year?
Well, we’ve been working on the proposed merger with Three which is a once in a lifetime opportunity for a legal team, we’ve also had the Phones 4u case which is a significant piece of litigation, we’ve supported contracts, propositions and new product development as well as Vodafone’s wider purpose initiatives (such as everyone.connected), and we’ve been really driving change across the team through innovation and efficiency initiatives. It has been a really big year in terms of work that we’ve been involved in. And if we receive approval for the merger, we’ll have another significant year coming up.
What’s the best thing about being an in-house lawyer?
Firstly, the team that we��ve got at Vodafone. It really is such a supportive environment with a great team culture. Besides that, the best thing is the challenging nature of the work and the fact that you are part of the business. You’re not just a lawyer advising on a transaction – you are at the heart of it from the start.
If there is such a thing as a typical day for you, what does it look like?
A typical day is basically I never get anything done on my to-do list! Joking aside, a large part of my time is working with my broader team and making sure that we’ve got the right resources and support for projects, and that we are managing and evaluating risk appropriately. Also really driving the team in terms of efficiency and transformation to ensure we can support the business as effectively as possible.
A decade’s work went into the Phones 4u litigation, did you enjoy working on the case?
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Being part of such a case is fascinating for everyone involved, including the lawyers from both the UK and Group teams who have worked on this long-running matter. Yes, it’s challenging for the business, but it’s very interesting as a lawyer to see how these things work. Now that the decision has been appealed, we will be continuing to work on this one.
An 11-week trial involving over 40 witnesses must have taken some coordination. Talk me through the build-up to the trial.
I think it’s all the preparation in terms of making sure that we had the right people, that we had all their evidence and that the witnesses were as prepared and comfortable as possible. Even for senior executives, going into a courtroom is not a particularly pleasant experience.
At its busiest, how many in-house lawyers were working on the proposed merger with Three?
I would say between 15 and 20 in-house lawyers across different disciplines have been involved so far at various points and to various degrees. This is across both my UK team and lawyers within the Group team as well. Obviously, as well as doing that, we still have to do the day job and deliver on everything else that Vodafone wants to do. So, yes, it’s a challenge, but a good one.
What are the main challenges in a transaction like this?
I would say managing the volume of work and the number of stakeholders that need to be involved. From an in-house perspective, it’s just bringing that all together with excellent communication and teamwork.
Assuming the merger is approved in December, what would the in-house team look like for the newly combined company?
We haven’t got that far yet. But I’m excited about the possibility of a team that will be able to deliver on an even bigger basis than we do today. We will be evolving and working on new ideas and new strategies. That’s partly why I’ve stayed in technology and telecoms for so long – it always changes; there’s always something new.
‘There’s lawyers all over the world. The question isn’t whether or not Black people can be lawyers. The question is, what is it about England and Wales that means that Black lawyers don’t get the same opportunities as their white counterparts? And there’s no way to explain that other than racism.’
This comment from one City associate frankly states the issue. ‘When we talk about DEI’, they continue, ‘it’s often a very polite, corporate way of saying “Don’t be racist.”’ Law firms are, perhaps understandably, reluctant to use words like racism in their communications. But failure to acknowledge the problem makes it all the harder to resolve.
Again and again, young Black lawyers interviewed for this article expressed frustration at the way their concerns had been brushed aside or steamrolled beneath a veneer of corporate respectability.
Still, ‘The firm is getting more progressive’, in the words of a third-seat trainee at an international firm. ‘And with firms doing more, it should continue to.’ According to the lawyers interviewed, progress will require active support from senior lawyers and leadership, pressure from clients, and a consistent willingness to do the work.
‘We wanted to do something impactful’ Annette Byron, Freshfields
‘You start to feel part of a minority’
It is at the early stages of application and recruitment that the legal profession’s efforts on race have been most successful. Dedicated open days for Black lawyers make the first visit to a firm ‘more comfortable’, in one lawyer’s words, while an ever-growing web of networks within and without firms helps ensure those coming into the profession have access to advice and support.
‘I didn’t think much about DE&I at the application stage’, says one former associate at a magic circle firm, now in-house. ‘But when you start going to open days you start to feel part of a minority.’
Many commented on the disillusionment that this experience can produce. ‘I have a few friends who, when this industry didn’t seem accessible to them, their motivation just slipped away’, says Freshfields associate Blaise Nsenguwera.
Nsenguwera is also a 2018 recipient of the Stephen Lawrence Scholarship – a Freshfields initiative that was singled out by many as one of the strongest law firm efforts for Black lawyers. Launched in 2013 for first-year students at UK universities, the scheme provides a 15-month programme coordinated by Freshfields and a range of partner organisations, including the Bank of England and Goldman Sachs. ‘The scholarship offered a great way to gain some exposure to the City and to career paths that up to that point were pretty opaque’, says Freshfields associate and 2017 scholar Jamaal Jackson. ‘It was the point at which I felt the door start to open for me.’
Nsenguwera concurs: ‘That’s when everything really changed for me. It was the first time that I went to a corporate law firm, and I was surrounded by people who look like me, with similar stories and backgrounds. It gave me the belief that this space is for us.’
Freshfields real estate partner and scholarship founder Annette Byron says the motivation behind the scheme was simple: ‘We wanted to do something impactful on DE&I – something that would have a deeper approach, and something that specifically focuses on underrepresentation of the Black community.’
‘We need commitment to tackle the issue’ Blaise Nsenguwera, Freshfields
‘In two years you’re back to square one’
‘We get a lot of minority lawyers at the junior end’, says one associate. ‘The issue now is what’s happening at the middle to partnership promotion level. That’s where you get the tailoff.’ SRA data bears this out: a 2023 survey found that 2% of solicitors in firms with 50 partners or more were Black, compared to 1% of salaried or partial equity partners and 0% of full equity partners.
A former associate comments: ‘It’s quite painful. It kind of shows you your future. The attrition rate is incredible. Before I started training at my former firm, I got told that the most senior Black person, who wasn’t as experienced as you might expect, maybe two years PQE, was leaving before I joined. When you see that, for whatever reason it’s happening, you can’t really see a path for you.’
Several lawyers reported not being retained or being turned down for promotions. ‘When I didn’t get retained after training, I found it very difficult to get concrete answers as to why’, says one former lawyer who left the legal profession. ‘What I was getting back was, “You were right in the mix, you just missed out.” I later found out that while they’d said they only had two positions available, they actually offered an additional job.’
Another associate at a different firm recounts a similar experience: ‘I applied for an NQ position at the firm I trained at and didn’t get it. One thing I wasn’t aware of was that colleagues were doing things like getting taken out for coffees when I wasn’t. So maybe I wasn’t glad-handing enough or kissing enough ass. Maybe I was a bad lawyer then – but if I was a bad lawyer then, I wouldn’t be employed now, right? You never get the smoking-gun proof. But I felt it was a case of my face not quite fitting.’
The causes of this tailoff are varied and murky. For one in-house counsel, ‘One issue is certain people not being given certain types of work. The person who’s white, who’s come from Eton and Oxford, whose dad is maybe friends with a partner – they might find it easier to get a certain kind of work, whereas people without that background might struggle.’
These experiences often prove alienating and frustrating – and lead some to question firms’ claims to progress on diversity. ‘Are you really doing anyone a favour if you put them through the system to inflate your diversity numbers, and in two years they’re back to square one?’, asks one former lawyer.
Then-Allen & Overy pushed ahead in this space when it began publishing its ‘stay gap’ statistics in 2020. A&O Shearman UK diversity and inclusion head Jo Dooley explains: ‘One of the pieces of work we did showed that if you were a black lawyer at A&O you would stay with the business for around two years and five months less than your white counterparts. There was a gap for other ethnic minorities, but it was much smaller. We’re really pleased that we’ve started to close that gap.’
In its 2023 report, legacy A&O found that Black lawyers spend on average one year less at the firm than their white counterparts.
Dooley credits A&O Shearman’s achievements to a combination of formal networks and programmes on the one hand, and day-to-day work to undo systemic biases on the other. The firm deserves credit for taking the initial step to publish this information. Many lawyers interviewed argued that greater transparency around this issue is key to beginning to solve it.
‘People’s mindsets need to change’ Asha Owen-Adams, Ashurst
‘We need to stop putting the burden on all the ethnic minorities to solve the problem’
Young Black lawyers argue that the key factor that determines how well firms perform is the extent of senior support – crucially, financial support. This is all the more important when participation in mentoring and networks adds to Black lawyers’ already high workloads.
An in-house counsel explains: ‘Diversity initiatives are run by people who care – and that’s almost always Black people. So there’s more pressure on Black people to support the firm by doing more work. It’s less of an issue at firms that put real budget behind diversity initiatives. Yes, the lawyers have more work, but they’ve also got more resources to do it. It’s about having a PA who can go out and get in the right cultural food for an event, say, rather than making the lawyer do it.’
An associate concurs: ‘Lawyers, particularly young lawyers, may fall into this trap of, “I’m going to go ham on DE&I, I’m going to do all these roundtables and post on LinkedIn about it.” But honestly, firms should just hire PR professionals and pay them to do this. Don’t add to the burden for young lawyers. And meanwhile there are white lawyers who don’t have to do this and can spend their time on their careers.’
Ashurst associate Asha Owen-Adams and chair of the firm’s Black Network says: ‘We need to stop putting the burden on all the ethnic minorities to solve the problem, because, at least at this point in time, there aren’t enough of us to make the change. We really need people’s mindsets to change, because it’s hard to confront these issues if the majority of people think, “This isn’t my problem, this isn’t for me.” It’s not enough for just Black or ethnic minorities to be helping each other, because we are the minority. We need allies, advocates and sponsors.’
While ‘representation matters’, in the words of one associate, firms that don’t provide sufficient support can go from representation to tokenism. A former associate recalls: ‘Every year at the firm that I trained at there were two Black trainees in the graduate recruitment intake, and at least one of them would always be on the website. It’s a fine line – you want to attract more Black talent to apply, but you don’t want to use people as mascots.’
Too often, says one former lawyer, ‘Law firms rely on your goodwill to promote the brand as something that it isn’t.’
At worst, firms can be actively dismissive. A former lawyer recalls dealing with an HR worker at his old firm: ‘He was very combative as I shared my experience as a Black man in a firm that at the time had only five other Black men. He kept saying, “That’s not our culture, that’s not what we do.” And I said, “With all due respect, it’s my experience, and I’m trying to tell you about it.”’
More often, though, lack of interest is subtler. A third-seat trainee comments: ‘Sometimes people with traditional views aren’t as outspoken because they know they won’t be popular. But that means they go unnoticed. There are people that never attend these events, never interact with these networks. They kind of operate in the shadows, but they’re still there, and they still have influence within the firm.’
A former lawyer is more forthright: ‘All the leadership people say the right things, but it’s often just smoke and mirrors. A lot of these people believe their own bullshit.’
‘I felt the door start to open for me’ Jamaal Jackson, Freshfields
‘Are we going to go back 20 years?’
What can encourage law firms to provide support? For many, the key lies in making sure that even those that don’t care about diversity have clear reasons to move forwards on it.
Here the role of clients is crucial. ‘In-house counsel can do a lot to help’, says one associate. ‘They can go to their firms and say, “Where’s the diversity? Come on, you’re based in London – we can’t believe that Black lawyers aren’t able to do the work.” If clients put pressure on them, the firms will change.’
Owen-Adams agrees: ‘Clients increasingly ask about diversity stats. There are lot of good firms that are good in their practice areas, now you need to differentiate yourself beyond financials. It’s not enough nowadays to just earn a lot of money. There are requirements on issues like ESG and diversity. In same way clients look at their own businesses, they look at that from their lawyers as well.’
Of course, some firms still try to game the system. They use what one former lawyer refers to as ‘bait and switch visibility: they have you in the room for the meeting, but they don’t give you the work.’
However, clients are increasingly aware of such tactics. One in-house counsel recalls a situation in which her mentor included questions on diversity in a panel review for the first time: ‘The firm she’d been working with for years didn’t fill that section out, so she didn’t hire them. They were really shocked.’
The same lawyer also recounts a time that her team questioned their law firm in a more direct manner: ‘We went to our firm and met a bunch of all white male partners. My boss asked, “What’s going on here?” The relationship partner recognised that it wasn’t ideal and answered the question really well.’
This is encouraging. But interviewees stressed that progress is not automatic. There is a real risk of slipping backwards. A former lawyer comments: ‘If it’s disregarded, if it’s viewed as “not really our problem”, what happens? Are we going to go back 20 years? Because if we do we’re just going to get the same results: more racism, more Islamophobia, more homophobia.’
Another former lawyer highlights that law firms aren’t entitled to Black talent. ‘A training contract is your ticket in. But once you get that ticket and you’ve seen how things operate, you don’t need to stay. The fact that you got that training contract makes you appealing to any number of other employers. Go where the water’s warm. I’m quite happy to have taken that investment in me and walked out of the door. If that’s not a loss for the firm, that says more about them than anything else.’
‘Things have improved’, says one associate, ‘but it didn’t happen naturally. It happened because people kept pushing the needle, saying discrimination isn’t okay.’ Law firms must ensure they remain mindful of problems around race discrimination – and take active steps to address them. ‘It’s important to speed it up’, says Nsenguwera. ‘The notion of waiting ten years for people to make it to the right level of seniority is a bit problematic. People leave, people change careers. We need commitment to tackle the issue – and that has to come from the entire legal sector, not just from Black lawyers.’
Merely being seen to do the right thing is not enough. In the words of one associate: ‘It’s a question of what kind of profession we want to have. I could never respect racism. But I’d almost respect it more if firms just said, “We have a certain image, a certain kind of person we want to hire.” For those firms, the DE&I stuff is just PR. It’s window dressing.’
Still, many law firms have a genuine commitment to diversity. They encourage and promote action, run schemes and initiatives, and put their money where their mouth is. And while they disagreed on its extent, none of the lawyers interviewed for this piece denied that progress has been made.
Nominations for the Legal 500 UK ESG Awards are now open. Submit your entry by Friday 15 November via our awards platform.
As firms grapple with what it means to be global, while also managing intense pressure on costs, the question of whether less profitable international offices are still a justifiable expense is rising up the agenda for many.
This issue has been underlined by the recent news that both A&O Shearman and Hogan Lovells are making cuts to their international presence, with Johannesburg identified by both as a location which is no longer a necessity.
News broke at the start of September that A&O Shearman would be closing its 32-lawyer Johannesburg office, as part of a broader post-merger play that will include a 10% reduction in its global partnership, and the wind-down of its consulting business.
This was followed swiftly by the announcement that Hogan Lovells was to close three offices in Johannesburg, Warsaw and Sydney, marking a complete withdrawal from the Australian market, where it launched in 2015.
‘It’s very competitive at the top end of the top 20 law firms, and the pressure from US firms is getting increasingly intense. Many of the markets these firms traditionally operated in are no longer a priority.’
Duncan Weston, CMS
Hogan Lovells chief executive Miguel Zaldivar said the decision to close the offices had been driven by ‘a strategic review of our geographic footprint to focus on markets with the strongest client demand’, while emphasising key markets like London, New York, California and Texas. He also pointed to a move by the firm to focus on ‘the most complex, high-value work in major markets’, a strategy which helped drive a record-setting 20% hike in profits per equity partner in 2023.
A&O Shearman managing partner Hervé Ekué’s statement struck similar notes, describing the firm’s exit from Johannesburg, where it opened in late 2014, as ‘a difficult but necessary step’.
While the 2010s saw a stream of international firms move into South Africa, including Herbert Smith Freehills, Clyde & Co and Pinsent Masons, firms on the ground now acknowledge that competition for work is tough in what is a ‘saturated’ market.
Sally Hutton, managing partner at leading South African firm Webber Wentzel, which since 2013 has had an alliance with Linklaters, summed up the challenges firms face. ‘The South African legal market is a fairly saturated domestic environment dominated by well-established, full-service corporate law firms, making it challenging for smaller offices of international firms to compete here without a full suite of specialist services.’
The challenge is exacerbated by the pan-African service offered by many local firms, either via alliances or local offices, which enables them to handle work at much lower rates than international entrants – something which ‘further increases the difficulty for firms to compete’, as Hutton explained.
Reflecting on the historical strategies employed by international firms, Hutton noted that many entered the South African market by offering above-market salaries and undercutting prices to capture market share – tactics that have adversely affected profitability: ‘In 2015-16, many international firms entered the South African market with local offices. Now, nearly a decade later, it seems that the inherent challenges they faced are now being highlighted.’
‘There are two possibilities for such firms: either an office, albeit unprofitable, is so small by global standards that it flies under the radar; or alternatively, even a small office that is not sufficiently profitable is regarded as a diversion of management’s attention,’ she explained.
At CMS, which has had a presence in South Africa since 2019, executive partner Duncan Weston placed the withdrawals by A&O and Hogan Lovells in the context of the war for talent. ‘These cutbacks are driven by intense high-level competition. Firms are up against very tough competitors.
‘South Africa is a fairly saturated legal market dominated by well-established, full-service firms, making it challenging for smaller offices of international firms to compete.’
Sally Hutton, Webber Wentzel
‘It’s very competitive at the top end of the top 20 law firms, and the pressure from US firms is getting increasingly intense. Many of the markets these firms traditionally operated in are no longer a priority. Instead, they’re focusing on regions where they can maintain higher profitability,’ he expanded. ‘In markets like Johannesburg, there are strong local law firms, and the global firms likely feel they can rely on these local players when the occasional deal arises, allowing them to narrow their focus.’
While firms like A&O Shearman and Hogan Lovells are pulling back, other international entrants – including Norton Rose Fulbright, DLA Piper, Clydes, and White & Case – remain committed to South Africa. Peter Scott, co-global managing partner at Norton Rose Fulbright, points to the flexibility of their global structure compared to the more rigid models of firms like A&O and Hogan Lovells, which ‘puts certain parts of the business under stress to meet global metrics – one size essentially has to fit all’.
Similarly, Weston described CMS’s approach as more adaptable, allowing the firm to avoid profitability dilution. ‘Our structure allows us to operate in multiple jurisdictions across Latin America and Africa without impacting profitability in places like London.’
While the future for Hogan Lovells’ lawyers in South Africa is still uncertain, A&O’s Johannesburg team has quickly found a new home, with leading African firm Bowmans confirming that the entire group will be joining them in early January 2025, including eight partners and a further six lawyers who are set to join as partners.
In a statement welcoming the hires, Bowmans chair and senior partner Ezra Davids said that the move ‘aligns with our strategic objective of being the go-to African law firm for advising clients on their most complex legal challenges and opportunities across the continent’.
The question of how Bowmans will integrate the former A&O team is one that will be closely watched in the market, with pay alignment a key consideration. ‘The key question now is what internal disruption will occur for firms that absorb their salaried employees without adjusting their remuneration,’ said Hutton. ‘We know that some of them are earning above-market salaries, so it will be interesting to see how firms manage that,’ she explained.
While law firms leaving a market rarely looks like a positive development, for the law firms that remain in the South African market, there will now be opportunities to absorb talent and gain market share. As Weston summed up: ‘I believe we’re in a good position. With two of the biggest international law firms now out of the market, we’ve solidified our standing, and that’s a great place to be.’
In Hutton’s view, one closure is clearly more significant than the other. ‘The closure of the Hogan Lovells office will have little impact on our local legal market. However, the A&O Shearman office was larger, and its closure will have a more significant impact as they were a disruptive competitor – particularly in relation to paying above-market salaries to attract talent. This may help stabilise the market to some extent in terms of remuneration levels.’
And as to whether there will be more closures, Weston is circumspect. ‘We’re seeing more and more firms pulling out of certain markets – US firms have withdrawn from China, and now we’re seeing firms exit Africa, Central Europe, and Australia – regions where, frankly, they’re not seeing significant returns. But I don’t foresee a mass exodus from Johannesburg, at least not from the firms that are already established here.’
Ultimately, in an ideal scenario, the closures create a win-win situation for all firms, as the top-of-the-market firms boost profitability and the firms in the tier below pick up market share.
However, as major players narrow their focus, the question is whether they can sustain their success in an increasingly competitive landscape. As DLA Piper’s Simon Levine noted, while streamlining geographic footprints may improve profitability, ‘the narrower you go, the more you’re fighting over the same small piece of pie.’
More than 20 of Latham & Watkins’ equity partners have made it into the elite firm’s ‘super points’ band, which is intended to better reward star performers by allowing them to earn nearly double the profit share of those at the top of the firm’s core lockstep.
Legal Business has learned that 22 Latham partners now sit within the so-called ‘super points’ tier.
Fourteen partners worldwide are understood to sit on the first additional tier at 1,300 points, with a further eight now on the maximum 1,700 points. Two partners in London – including chair Richard Trobman – are understood to be at the top level. All of the remaining super pointers are based in the US.
Latham’s core modified lockstep ladder runs from 350 to 900 points, with 900 points equating to more than $5m last year, meaning that 1,700 points would nearly double this figure.
On top of this, Latham also has a bonus pool of up to 15% of its profits available for discretionary division among partners. Combining this bonus with super points it is understood that total partner comp can now climb above the $15m mark for star performers.
Latham partners approved the new remuneration structure in July, with equity partners taking part in a weighted vote based on points allocation rather than a one-person, one-vote system.
The move came amid intense competition to attract and retain talent at the very top of the US market, where firms like Kirkland and Paul Weiss have been linked with packages above $20m for a handful of partners.
Sources told LB that no partner joining as a lateral will be granted immediate access to the higher remuneration rungs. Instead, they will have to wait at least two years before being eligible for consideration, suggesting that, for Latham, the changes are focused on retaining, rather than attracting star performers.
A spokesperson for Latham said: ‘Changes to the firm’s equity compensation structure were made after an in-depth review and extensive discussions and meetings in each office to ensure a transparent and thorough process. This provided the firm’s leadership with the opportunity to receive direct feedback from the partnership before moving forward. The changes to the firm’s compensation structure allows the firm to reward more partners in its year-end bonus process.’
Earlier this year, litigation and trial partners Oliver Browne and Stuart Alford KC left for Paul Hastings. Browne’s exit from Latham came after 18 years at the firm, having most recently served as the London co-chair of the litigation and trial department. This follows the departure of restructuring and special situations partner Simon Baskerville who moved over to Willkie Farr at the end of last year.
Its partner remuneration overhaul comes amid intense competition at the top of the US market, prompting numerous firms to reconsider how to attract and reward their standout performers.
Latham posted a 6.9% revenue hike to almost $5.7bn for the 2023 calendar year, with profit per equity partner up 7% to $5.52m.
LB has decided not to name the partners on super points.
Speak to almost any major firm active in the finance space and you’ll hear about private credit. The industry matured as banking regulations tightened in the wake of the 2008 crash, and has surged since banks pulled back on lending after the interest rate hikes from early 2022.
According to merchant banking, global advisory, and asset management firm M Capital Group, the overall size of the private credit market has grown from $1trn four years ago to $1.7trn in 2023.
The market is big, and growing – and law firms want a piece of it.
Following the recent hires of Philip Bowden (pictured) – the former co-head of legacy A&O’s global banking practice – former A&O acquisition finance partner Megan Lawrence, Cahill Gordon & Reindell finance duo Jake Keaveny and Warren Newton (both of whom are A&O alumni), and Cahill vertical hire Court Tisdale, Proskauer argues that it is uniquely well placed to capitalise on the boom.
As private credit grows it overlaps ever more with other forms of banking and lending. Where other firms seek to layer private credit expertise on top of existing banking and finance practices, Proskauer is adding banking and finance expertise to complement an established private credit offering.
‘It’s easier to build a practice around private credit if you already have the relationships’, says Bowden. ‘And we already have 20-30 years’ experience doing private credit work, whereas a lot of the other shops, certainly in London, have been doing it for five years or less.’
Global finance practice co-head Justin Breen concurs: ‘Everyone is trying to solve this problem, but they’re trying to solve it from different places. A lot of firms are trying to come into private credit from more of a pure designation bank space, whereas we’re approaching it from the other end.’
For Keaveny, the key distinction is in the nature of the clients. ‘It takes time to build relationships and gain the trust of private credit clients’, he says. ‘To be the first call for them really takes years. There are a lot of fund clients who are active in the LBO market. In the bank space, there’s really only a handful of players that are leading the bigger deals who you need to have credibility with, so it can be more straightforward to get your arms around that part of the market.’
Proskauer’s play is rooted in a belief that the private and public lending markets will become ever more tightly bound. Last month’s announcement that Citigroup and Apollo had partnered to provide a minimum of $25bn in direct loans, with Cravath acting for Citi and Paul Weiss for Apollo, gave strong support to this view.
Breen comments: ‘We believe the recent news relating to the Citi and Apollo joint venture is proof of concept of what we recognised a few years ago, which is that the private credit and syndicated lending markets are completely converging.’
Crucially, private capital is now about far more than private equity buyouts. ‘When most people think of private credit, they typically think of the sponsor LBO space, which is what gets all the headlines’, says Breen. ‘But there’s a lot more to our strategy – it goes beyond bread-and-butter acquisition finance. It’s single asset financings, securitised financing, real estate financing, infrastructure financing – all that stuff our clients are getting heavily involved in. We’re really focused on all things finance.’
In order to do this work, Proskauer realised that it needed broader banking and finance expertise. ‘Philip’s team is critical to my practice and our team is critical to his’, says Keaveny. ‘I certainly couldn’t get the work done I need to do at the firm without a very confident and reputable English law leveraged finance team.’
According to Bowden, the market is already taking notice: ‘What’s struck me since I landed here less than three months ago is the number of structured finance lawyers in the European market who have been reaching out to us. They’ve traditionally been more focused on bank clients, but they’re coming to us and making enquiries. A very senior lawyer from a US firm said to us the other day, “private credit are the new banks”. If your firm isn’t focusing on all things financing around that client base, you’re going to miss out.’
Keaveny echoes this point: ‘We’re starting on a very strong footing, The response from clients has been great, and we were able to get a new high deal into the market on the new platform right away.’
The deal, announced yesterday (10 October), saw the firm advise financing sources on high-yield bond issuances by parking infrastructure provider ABCOA Group totalling €685m, as well as on an amendment to ABCOA’s €110m revolving credit facility. Keaveny and Tisdale led on the high-yield bonds, while Bowden and Lawrence led on the revolving credit facility.
Looking ahead, Proskauer has its eye on further hires. ‘If you want to cover the full range of players in the European market’, says Bowden, ‘you need scale. And there’s only a small handful of players who are really building things at scale. You’ve got some very big players in the US who, when you look at their strategies in Europe, are trying to do something very constrained.
‘You need scale in London. You can’t be too narrow. The asset manager clients have all gone multi-strategy, and they all want the same thing – they want to go to a small number of firms who can do everything for them.
‘That’s one of the big trends I’ve seen in the last few years, and it’s only going to continue. We’ll likely see more change in this market in the next four or five years than in the last 20.’
Achieving this sort of scale will no doubt be costly. But Breen argues the firm is fully committed to its expansion push: ‘I’d love to spin a story that involved me working some magic to get people in the firm on board with the strategy, but the truth is that everyone was already on board. It just makes so much sense to us.
‘We don’t want to be everything to everyone, but we do want to be in the most important geographies and the most important product lines. So for us this was a complete no-brainer.
‘This was something we believe we needed: this wasn’t something that was just nice to do. This convergence and consolidation we’ve talked about is absolutely happening, and building this sort of scale across our practice is absolutely necessary if we want to stay on top of the market.’
While its London transactional credentials are undeniable, it is fair to say that Latham & Watkins has not to date boasted a similarly heavy-duty reputation on the contentious front.
However, the firm is doubling down on its efforts to shift this perception, with a series of recent eye-catching hires pointing to a renewed push in the capital, as the US giant continues its efforts to dig into a market still largely dominated by UK heritage firms.
Earlier this year, the disputes practice saw a significant shift with the departures of Oliver Browne and Stuart Alford KC to Paul Hastings.
Browne had spent 18 years at firm, co-leading the London litigation and trial department for the past six, most recently alongside Oliver Middleton, while fellow former co-head Alford had been at the firm since 2016, after joining from the Serious Fraud Office (SFO).
While the duo had championed ambitious expansion plans for the US firm’s London litigation practice during their time at the helm, those ambitions remain firmly in place.
Now under the leadership of Middleton, the London litigation and trial department is continuing its growth trajectory. The team’s headcount now stands at almost 70, including 19 partners – up from seven partners and 24 associates in 2017.
Speaking to Legal Business, Middleton and white collar specialist Pamela Reddy, who joined from Norton Rose Fulbright at the start of the year, are clear that litigation growth is a strategic priority for the firm, which is targeting a mix of lateral hires and organic growth.
As Middleton (pictured) underlines: ‘We are focused on attracting top talent that enhances our firm’s growth, success, and culture.’
Alongside Reddy, other key appointments in recent years have included former Orrick partner James Lloyd, who joined in October 2021 to focus on litigation and investigations relating to cybersecurity and privacy, and last year’s hire of Linklaters partner Simon Pritchard, who has brought substantial credentials on the competition litigation front.
The firm has significantly bolstered its City white-collar credentials with the hire of Reddy, who Middleton notes has ‘hit the ground running.’ Her recent work has included advising a consortium in a multijurisdictional SFO investigation, as well as securing the dismissal of a criminal probe against a prominent shipping company by the Insolvency Service.
Looking ahead, Reddy anticipates a ‘significant uptick’ in corporate crime investigations driven by forthcoming failure-to-prevent fraud offences under legislation such as the Bribery Act and the Criminal Finances Act, given that ‘the failure-to-prevent fraud offence is incredibly broad, covering anything under the Fraud Act.’
Competition litigation is a key growth area for Latham, building on last year’s addition of Pritchard, who joined after 15 years at Linklaters and Allen & Overy, before which he spent five years as senior director at the Office of Fair Trading.
As Middleton highlights, the growing complexity of competition litigation plays to Latham’s strengths in managing large-scale litigation. ‘Handling large-scale litigation is just as crucial as having specific competition experience,’ he explains. ‘We excel in this area with our extensive team of litigators who are adept at managing enormous class action cases and other large-scale litigations.’
On the defence side, Middleton and London deputy managing partner Andrea Monks are leading teams from the firm representing Barclays in two high-profile cases: one involving allegations of misleading statements about its trading system and another related to foreign exchange market manipulation.
The firm is also aiming to push into other key areas such as shareholder claims, as well as disputes relating to data privacy, AI, ESG, and crypto.
On the data front, Ian Felstead, vice chair of the firm ‘s complex commercial litigation practice, has advised Meta on contentious matters concerning data transfers from the EU, while in the ESG realm, London disputes partner Samuel Pape was recently part of a team which secured victory for the Republic of Colombia at the World Bank’s International Centre for Settlement of Investment Disputes, defending the Colombian government’s ban on mining in the sensitive páramos ecosystem in the Andes.
While expansion of the broader disputes offering is a clear strategic priority for Latham, Middleton argues the firm does not want to ‘pursue growth for growth’s sake’.
‘As the firm continues to expand, we will grow organically, focusing on key areas such as data privacy, ESG, and complex commercial disputes,’ he explains. ‘We want to be thoughtful about where and how we grow.’
Alongside these external hires, the firm’s contentious bench in London has also seen a healthy degree of organic growth, with four partner promotions in the past two years – an increase on previous years, after none from 2016 to 2019, and just one in both 2020 and 2021 – Middleton and litigator and arbitrator Robert Price.
New names joining the partnership since 2021 include Pape, white collar specialist Clare Nida, competition partner Gregory Bonné, and Nell Perks, who focuses on disputes and contentious regulatory investigations.
Looking ahead, Middleton says the growth strategy will have an emphasis on the scale of Latham’s international platform: ‘There is a lot to be gained from having breadth of experience. It’s important for us that our people have specific expertise that we can effectively market. However, our primary strength lies in our flexible litigators who excel at handling large-scale litigation and effectively collaborate across the global platform. Our approach sets Latham apart from competitors.’
The report revealed that a whopping 614 barristers began their pupillage during the reporting period.
This figure is a significant increase on 535 in 2022/23, 539 in 2021/22 and 416 in 2020/21.
Getting a pupillage is notoriously competitive, and in the years post pandemic pupillage numbers had been dropping. So this will be encouraging information for those considering a career at the bar.
African firm Bowmans announced today (3 October) that it has hired all the lawyers from A&O Shearman’s shuttered Johannesburg office, including eight partners and a further six lawyers who are set to join as partners.
The moves include Johannesburg office managing partner Gerhard Rudolph and partners Deborah Carmichael, Ze’ev Blieden, Alexandra Clüver, Ryan Nelson, Callum O’Connor, Alessandra Pardini, and Brian Price.
Also joining Bowmans as partners are Mongezi Dlada, Alexandra Fekis, Kelle Gagné, Amanda Jones, Benjamin Mbana, and Nikita Shaw. All of the new hires will start at the firm in January 2025.
While Shawe left to join White & Case in 2021, the base continued to build, with Clüver, Nelson, and Pardini all joining from Webber Wentzel later that year, followed by Blieden and Price, who came over from Werksmans in 2022, and Carmichael who joined from ENSafrica in March last year.
‘We are excited about this prospect because it aligns with our strategic objective of being the ‘go to’ African law firm in advising clients on their most complex legal challenges and opportunities across the continent’, Bowmans chairman and senior partner Ezra Davids said in a statement. ‘The team’s strengths in the banking, energy, mining and infrastructure sectors together with their expertise in transactional and disputes work across Africa will bolster our offering in these areas.’
Rudolph added: ‘Bowmans has a compelling value proposition. The firm’s comprehensive offering will provide opportunities for our lawyers to expand their practices. Its African footprint will enhance our ability to serve clients and provide access to new mandates.’
The hires for Bowmans come after it deepened its Johannesburg corporate bench in April with the hire of a four-lawyer team from Bakers led by M&A team co-head Angela Simpson.
The news comes less than a month after A&O Shearman revealed its plans to shut in South Africa. The newly merged firm has also said it will cut 10% of its total partnership and shutter the Consulting by A&O Shearman business it first launched in 2018. Other recent partner departures have included London-based private capital sector co-head Philip Bowden, who went to Proskauer in July with acquisition finance partner Megan Lawrence, and City leveraged finance partner Vanessa Xu, who left for Kirkland just before the merger completed in May.
A&O Shearman is not the only major firm pulling out of South Africa; news of its exit was quickly followed by the announcement that Hogan Lovells is also set to pull out of Johannesburg, as well as Sydney and Warsaw.
In their first interview since leaving Latham & Watkins, Jayanthi Sadanandan and Sam Hamilton discuss their new roles as global co-heads of Sidley Austin’s leveraged finance practice
‘Sidley wants to provide a best-in-class financial sponsor legal service – Sam and I have built out a practice before and we know how to do this,’ says Sadanandan as she and Hamilton sit down to talk to LB on their first day at Sidley.
‘This is an exciting opportunity for us – we have a remit to build and Sidley has been very clear in its commitment to this area.’
Legal 500 Hall of Famer Hamilton and leading partner Sadanandan, who have worked together for 20 years, joined Sidley this week (1 October) having quit Latham in August after nearly 15 years at the firm.
The pair have joined alongside fellow Latham alumni Fergus O’Domhnaill, Joseph Kimberling and Ben Wright – with all five partners now sitting within Sidley’s global finance practice, and Sadanandan and Hamilton taking up newly created roles leading the leveraged finance offering worldwide.
The team will focus primarily on building a borrower-side practice for private equity sponsors, corporates and private credit funds, although it may extend to lender work at clients’ request.
‘Our focus is on the private equity finance side to better support the private equity platform,’ confirms Sadanandan. ‘As a transactional lawyer my goal is always just to get the deal done but, particularly in challenging market conditions, I think the interests between borrower side and lender side can diverge so it can be more challenging trying to manage both sides.’
Sadanandan, who featured as a deal star in LB’s ‘Alphas Revisited’ feature last year, has worked with clients including Permira, Blackstone, and CVC, while Hamilton’s key clients include Nordic Capital, Advanz Pharma, and Soho House.
Sidley’s regular PE clients include Apollo Global Management, KKR and Carlyle.
Hamilton says there were two main reasons for choosing to join Sidley. ‘We know everyone in the market who does our type of law and we felt that Sidley was a firm that has a lot of momentum and we liked the management mindset of wanting to grow in London, which we can help with. Secondly, when we began talks with Sidley, we enjoyed meeting the people and there was a cultural match in terms of how we all think about the world.’
‘In terms of size and the number of people, we don’t have a specific target in mind. It’s client-driven – if you do a great job, clients give you more work, and other clients will hear about it, creating a snowball effect. We expect that will happen.’
Sadanandan adds: ‘After we were approached, we realised there were a lot of synergies. Sidley is a longstanding law firm with a heritage that goes back 158 years, and we liked how it is a full-service law firm already in London. It already has the pieces in play and what Sidley is looking to do now is deepen the breadth of the bench and the breadth of the offering for their private equity clients.’
Sidley has been making a concerted push in the lucrative PE space as part of its broader expansion plans, bringing in Ramy Wahbeh as co-leader of the firm’s global private equity practice and co-head of the London corporate group, along with M&A partner Kaisa Kuusk, both of whom joined from Paul Weiss in June of last year.
Commenting on the hires Sidley management committee chair Yvette Ostolaza says: ‘I think if you’ve got the right team, then you will be delivering the type of service clients are expecting. And that’s what we’re going to be focused on, a very team-oriented approach that will deliver results for the client; with clients very much at the front and centre of our practice.’
The latest hires take Sidley to more than 200 lawyers in London, including more than 50 partners – meaning the office has grown by nearly a third over the last seven years.
And the expansion is far from over, with Ostolaza highlighting capital markets, high yield, and disputes and investigations as areas for further expansion in London, as well as additional growth in private equity.
There will also be an emphasis on building cross-border teams that serve clients in APAC, the Middle East, and London. ‘We’re speaking to a number of laterals in these areas,’ she comments.
The plans come after Sidley reported another strong financial performance, with the firm’s total revenues reaching the $3bn mark in 2023, a 6.1% increase from the previous year.
The firm has enjoyed a long streak of revenue increases after making a strategic decision in the mid-2010s, to increase its focus on the private capital sector and Ostolaza says it is on track for another good year.
‘Our first half of 2024 is off to a roaring start. Transactional activity has increased, disputes has also risen, so we’re expecting to have surpassed all metrics. We’re excited about this team because it’s part of our growth strategy,’ she adds.
In the US, the firm is aiming to strengthen its offices in San Diego, which launched in August, and South Florida and Miami offices, which opened in 2022. Alongside its emphasis on private equity, Ostolaza pointed out that there will also be a strong focus on key industry sectors, including life sciences, healthcare, energy, transportation, technology, media, sports, and entertainment.
She concludes: ‘We are still in a growth mindset, although we’re established. There’s disruption going on in the legal industry – we’re seeing more and more mergers, and we want to be one of the beneficiaries of this disruption on behalf of our clients. I think we’re going to have another banner year.’
Sadanandan and Hamilton were part of a four-partner team that moved to Latham from White & Case in 2010 in a move that planted the seeds for the Los Angeles-bred firm’s dominance in Europe’s leveraged finance market.
As Middleton (pictured) underlines: ‘We are focused on attracting top talent that enhances our firm’s growth, success, and culture.’