{"id":6553,"date":"2019-07-08T10:45:06","date_gmt":"2019-07-08T10:45:06","guid":{"rendered":"http:\/\/dev.events.multisite.legal500.com\/?post_type=event_report&p=6553"},"modified":"2020-02-07T15:19:35","modified_gmt":"2020-02-07T15:19:35","slug":"the-legal-business-global-london-roundtable-dinner-2019","status":"publish","type":"event_report","link":"https:\/\/my.legal500.com\/events\/report\/the-legal-business-global-london-roundtable-dinner-2019\/","title":{"rendered":"The Legal Business Global London Roundtable Dinner 2019"},"content":{"rendered":"

Legal Business<\/em>\u00a0teamed up with Major, Lindsey & Africa to assemble leading figures from US firms and explore their progress in the City.<\/strong><\/p>\n

Marco Cillario, Legal Business: Are US firms in London about to reach a maturity that means we will see less growth and movement of partners?<\/strong><\/em><\/p>\n

James Roome, Akin Gump Strauss Hauer & Feld:<\/strong>\u00a0If you look at the underlying business that came here from the States \u2013 for instance, growth of the high-yield bond market, which went from nil to $50bn in the late nineties \u2013 a lot of American firms had very strong business from the US, which gave lots of knock-on opportunities. Do I think the growth of the American finance and corporate base into Europe and the UK will continue? Yes. Most of the bigger US firms will benefit from that.<\/p>\n

Gus Black, Dechert:<\/strong>\u00a0It feels like some of the UK firms have more of an agenda of \u2018How do we preserve what we have?\u2019 rather than \u2018How do we grow?\u2019 There is an apocryphal tale from when I was a junior associate where a Magic Circle firm commissioned a new office and said to the architect: \u2018Count heads and build the office that size.\u2019 Now, when we are commissioning office space it is: \u2018Work out how many floors we are going to be coming up in two, three and four years\u2019 time.\u2019<\/p>\n

Guy Potel, White & Case:<\/strong>\u00a0A number of firms have very clear strategies of growth and those strategies can play out over decades. The tailwind we have had since the global financial crisis \u2013 the growth, the bull run, the strength of the dollar \u2013 has played to the expansion plans of the firms around here, which are mostly global firms.<\/p>\n

Those favourable dynamics are still there. [But] everybody is aware of what could be, six months down the line, a recession. It could be in 12 months; it could be in 18. There is a sense of prudence creeping in.<\/p>\n

Gus Black:<\/strong>\u00a0We had a partner dinner last week and the topic of conversation was \u2018Is growth good?\u2019 and we concluded it was, after a lot of wine and discussion. It is not necessarily the right answer for every objective.<\/p>\n

Mike Francies, Weil, Gotshal & Manges:<\/strong>\u00a0We have had that debate recently. I think growth is good, but not everyone agrees.<\/p>\n

Philip Sanderson, Ropes & Gray:<\/strong>\u00a0It\u2019s not growth for growth\u2019s sake is it? You would like to think you are growing strategically in a way that will, in ten or 20 years\u2019 time, make you one of the winners.
\nMike Francies: Or maybe even three or five years\u2019 time.<\/p>\n

Tihir Sarkar, Cleary Gottlieb Steen & Hamilton:<\/strong>\u00a0The question is, have we reached saturation? Some firms are doubling down and investing very heavily, but we are yet to see whether that is a success.<\/p>\n

Samantha Mobley, Baker McKenzie:<\/strong>\u00a0You need to put the legal industry into context. The big threat going forward is the professional services firms, the accountancy firms and consulting firms coming into our market.<\/p>\n

Nathalie Tidman, Legal Business: Is that a real concern for you?<\/strong><\/em><\/p>\n

Samantha Mobley:<\/strong>\u00a0It is something we have to take into account and firms would be foolish not to.<\/p>\n

Tihir Sarkar:<\/strong>\u00a0Law firms tend to distribute their excess cash to partners and associates at year-end, but what about the reinvestment of cash for future threats? The amount of money accountancy firms are spending on artificial intelligence is astounding. We recently came across a very large global project where the due diligence was outsourced to one of the Big Four, which was quite frankly astonishing. We are talking about Magic Circle and UK firms versus US firms, but I wonder whether the real threat is something else.<\/p>\n

Samantha Mobley:<\/strong>\u00a0Any firm that does not have an innovation agenda is in a very bad place right now and an interesting question would be whether US law firms are more adept at innovation than the Magic Circle.<\/p>\n

Justin Stock, Cooley:<\/strong>\u00a0The bigger UK firms are spending a lot on AI and anecdotally seem to be spending more than US firms. Whether they get it right is a different question. That said, it is an area we are looking at.<\/p>\n

Philip Sanderson:<\/strong>\u00a0The Magic Circle were doing a lot of work, frankly, they should not have been doing and therefore they have to create technology. American firms with clear strategies, the ones succeeding in London, are not doing those things.<\/p>\n

I do not agree with the innovation point and technology for what my firm is trying to do \u2013 to be one of the leaders in private capital. The high-end, sophisticated investor work is going to increase significantly, so we haven\u2019t seen anything yet from the US firms and their domination.<\/p>\n

Justin Stock:<\/strong>\u00a0We have all seen the demand for partner time, and even for senior associates, is higher and clients are more comfortable to pay for that, but where they are struggling is to pay for the junior associates and the leverage model. US firms in London are better placed for that high-end, complex work.<\/p>\n

Fatema Orjela, Sidley Austin:<\/strong>\u00a0Part of that is linked to the practice areas. If you look at the firms in London, a lot of our firms are focused on leaner, more leveraged, higher-performing practice areas.<\/p>\n

Mike Francies:<\/strong>\u00a0We are kidding ourselves if we think we are not going to be affected by technology. You do not have to be a leader in innovation. You just need to be up to date and know what affects your firm. I agree though, the big UK firms do that because they have to.<\/p>\n

James Roome:<\/strong>\u00a0You may have a lot of firms that have reached saturation. I am sure the English firms want to grow, but they may have just got to the point where it becomes very difficult to grow from where they are.<\/p>\n

Mike Francies:<\/strong>\u00a0You used to do a deal with one of the big UK firms and you would have 20 people in the room. Clients just will not accept that now.<\/p>\n

Philip Sanderson:<\/strong>\u00a0There is something basic about what our sorts of firms are giving to the market that is different to a lot of our more London-centric competitors.<\/p>\n

Mike Francies:<\/strong>\u00a0We have looked at that and come to the view it is more the sort of people that are recruited by US firms. They tend to be people who are more entrepreneurial and willing to take a chance, and that has a double effect. It means those people go to US firms and are out trying to develop more business, but also they are not at the firms they left hustling for business.<\/p>\n

Marco Cillario: Is there anything elite UK firms can do to stop the movement of talent to US firms?<\/strong><\/em><\/p>\n

Philip Sanderson:<\/strong>\u00a0No, of course not! What they can do is manage themselves very well to make sure they are bringing up more talent. The top UK firms are still in a very good position to attract talent because a lot of the top lawyers from universities still want to go to those firms.<\/p>\n

Fatema Orjela:<\/strong>\u00a0They are protected on the milkround because they hire a lot of trainees, so the amount of money they have to invest in graduate recruitment is often a lot higher compared to what some of our firms have to do. A generation ago there were a lot of myths about US firms that kept hold of a lot of talent at UK firms.<\/p>\n

Claire McDaid, Willkie Farr & Gallagher:<\/strong>\u00a0The Magic Circle firms are so big it is like turning around an ocean liner. The US firms have the benefit of a blank piece of paper. There is just so much institutional memory in a lot of the older English firms that it is difficult to change the way of delivering that service.<\/p>\n

Arun Birla, Paul Hastings:<\/strong>\u00a0Tinkering with remuneration or retirement ages is not going to make a huge difference. The elephant in the room is having one of these elite UK firms crack the US market. I cannot see it happening, but that is what you have to get.<\/p>\n

Tihir Sarkar:<\/strong>\u00a0We are kidding ourselves that the UK firms cannot retain talent. There have been plenty of examples over the last 20 years where partners have not moved and stayed \u2013 big names and they are still there. Of course, the US firms have made an impact, but there is plenty of brand loyalty.<\/p>\n

Marco Cillario: US firms are increasingly recruiting trainees as well, so there starts to be a competition for junior talent. Then the question is, what do US firms have to offer that UK firms cannot for junior talent, beyond more money?<\/strong><\/em><\/p>\n

Fatema Orjela:<\/strong>\u00a0It is an easier sell than it used to be and I find that some of the most driven graduates are attracted by the idea of international work, global firms, but having a smaller office and having autonomy.<\/p>\n

Mike Francies:<\/strong>\u00a0The question should be why would you not go to a US firm? You get so many advantages. The only advantage you get at the big UK firms is potentially more practice areas you can choose from and potentially more overseas trainee secondments. In terms of work experience, our trainees get a much better experience. They get much more closely involved in deals; they work much more closely with partners.<\/p>\n

Seamus Hoar, Major, Lindsey & Africa:<\/strong>\u00a0Most partners don\u2019t move. What we are seeing is that because there is more critical mass now and because there is a platform, because there is a bigger transaction base with a support around it, it is more enticing and generally more sensible for a partner to consider moving to a US firm.<\/p>\n

Mike Francies: Do you think there will be a generational change? Will the younger partners be as loyal to their firms?<\/strong><\/em><\/p>\n

Seamus Hoar:<\/strong>\u00a0It is a different society; it is a different mindset. If you are an entrepreneurial type, US law firms are self selecting. Mike made the point that you are going to attract people who are driven and they are going to create client relationships. Consequently, a US platform recognises that in almost all cases and that is very satisfying because you can become extremely wealthy through your efforts.<\/p>\n

However, coming out of the Magic Circle, it is unlikely that you are going to be able to pick up a big chunk of business and bring it across.<\/p>\n

Tihir Sarkar:<\/strong>\u00a0A true sign of the maturity of the US firms will be that instead of relying on these recruits from the Magic Circle, should we not be making our own people up?<\/p>\n

Philip Sanderson:<\/strong>\u00a0The huge flood of talent is associates. That is where the challenge is coming from and that is where the generational attitude will change as well.<\/p>\n

Nathalie Tidman: Is top level plc work still the reserve of London firms?<\/strong><\/em><\/p>\n

Arun Birla:<\/strong>\u00a0It is shifting. Personally, I do not think that you are going to find a wholesale plc move to the US firms in the next five years.<\/p>\n

Guy Potel:<\/strong>\u00a0It is going to be a lot slower than the private equity shift, so you have to keep chiselling away. It is going to take a generation to move sizeable chunks of the main board across from their institutional comfort zone.<\/p>\n

Mike Francies:<\/strong>\u00a0I suspect US firms will never dominate. We are not going to want to do every single thing for a plc. However, we will want to do the high-end work, particularly the deal work. It would be foolish for any Magic Circle firm to think that will not change and, frankly, it is foolish for any Magic Circle firm to want to continue to do everything because it is going to affect their business model and profitability.<\/p>\n

Claire McDaid:<\/strong>\u00a0Some of the US firms here, including my own, are very focused on alternative capital providers \u2013 private equity, hedge funds and credit funds. It is a very narrow lens, but in the FTSE 100, the clue is in the name: there are 100. The number of compelling hedge funds, private equity funds, credit funds and sovereign wealth funds worldwide that we can potentially access with the skillset that we have is incredible, and the deal flow is huge. They are happy to have our services; we have to meet a high standard of quality, but we do not have to have full-service teams to do it.<\/p>\n

Philip Sanderson:<\/strong>\u00a0A lot of growth should come out of what your existing client base looks like. If your client base is saying \u2018you, US firm or international firm, must have a market-leading plc practice in London\u2019, then that will happen, but I suspect that is not what many of our clients are saying. They are not saying that to us.<\/p>\n

Guy Potel:<\/strong>\u00a0There is complacency in the Magic Circle firms and City firms and that trips them up. There is going to be a push moment for every plc board where they will say: \u2018Actually, they did not do a great job last time.\u2019<\/p>\n

Gus Black:<\/strong>\u00a0The US share of the private equity deal space is bigger than anywhere else in the world and probably Europe put together.
\nGuy Potel: If you are doing a transaction, the likelihood is, you are getting finance from, you are selling to or you are buying from something US-based. There is a high likelihood of that and to have a firm that has a full footprint in the US is a real asset.<\/p>\n

Nathalie Tidman: US firms tend to have a better track record in diversity. What should people be doing to have more balance?<\/strong><\/em><\/p>\n

Fatema Orjela:<\/strong>\u00a0US firms in London are fantastically placed to attract top talent, especially in females because part of the aspects we are talking about \u2013 the autonomy, the meritocracy, the entrepreneurial spirit, the personal relationships and the way people communicate and build a business \u2013 are well suited to the US model compared to a more conventional, bureaucratic office that will not evolve as quickly.<\/p>\n

Lorenzo Corte, Skadden, Arps, Slate, Meagher & Flom:<\/strong>\u00a0When I look at our firm and the firms that I interact with most often, it seems the issue is not in the associate ranks. The problem is retaining that talent into partnership ranks. We should do better, much better.<\/p>\n

Fatema Orjela:<\/strong>\u00a0In one of my networks, we did a survey to ask why. One that came up as statistically significant is promotion and transparency of track, which is why US firms are so well placed to hit this point. As long as you have some insight into what you are tracking, you are less likely to lose people in that two-to-four-PQE sweet spot.<\/p>\n

Samantha Mobley:<\/strong>\u00a0Targets are a good idea. We have a target for partners, but we also have a target for leadership.<\/p>\n

Claire McDaid:<\/strong>\u00a0You absolutely have to have an engaged and educated senior equity partner involved in partner promotions who understands the data, understands the unconscious bias. Often the way diversity issues are discussed, everything comes down to flexible working. That is not the problem and we will end up fixing flexible working and realise we have still got exactly the same problem. The candidate has done nothing to justify that perception; people just have that perception.<\/p>\n

You will never get the politics and the personal out of partnership promotions, but you can make sure that people are made aware of the potential for bias. That is the issue. We have to stop talking about flexible working.<\/p>\n

Samantha Mobley:<\/strong>\u00a0But if you set targets, you will find all of these issues will be worked through because we are trying to reach a target. In our last partner promotion, 40% were women, and that is because we are continuing to try and reach a target.<\/p>\n

Arun Birla:<\/strong>\u00a0Clients are asking for this now. I was in relationship meetings with a hedge fund client and a bank in the last couple of weeks, and half the meeting was about diversity and wellbeing.<\/p>\n

Justin Stock:<\/strong>\u00a0We\u2019ve had feedback along the lines of: \u2018That is very nice; you came to the pitch and there were diverse people there at different levels. Now we want to see, every month, the hours that have been worked at the different diversity levels, not just on a gender basis.\u2019 That is forcing change!<\/p>\n

Philip Sanderson:<\/strong>\u00a0The thing that always frustrates me about these conversations is the sense some people are being defensive. The fundamental point, surely, is that women so often make better partners. I work with so many women who are in so many ways better than the men that I work with. That is just the reality.<\/p>\n

Claire McDaid:<\/strong>\u00a0There is an interesting Magic Circle UK firm\/US firm comparison. If they are going to keep UK plc, which is probably the biggest force for enforcing diversity, it is ridiculous diversity is not better in the Magic Circle. They have institutional clients that they will keep, who have women GCs. For years now, they should have been making up corporate deal teams, from trainee level up, and assigning 50% women and diverse candidates. I do not understand why they have not been better at this.<\/p>\n

Samantha Mobley:<\/strong>\u00a0How many firms here are looking at what Linklaters have just announced, to publish an ethnicity pay gap, and thinking about whether they might do the same thing?<\/p>\n

Justin Stock:<\/strong>\u00a0Every quarter, we publish, to all the partners, the diversity pay gaps across not just gender but also ethnicity and social mobility. There is a lot of transparency and that helps. I know that there is always a nervousness because statistics can always be manipulated. It is a good step that we are showing that information.<\/p>\n

Mike Francies:<\/strong>\u00a0Does every partner get that?<\/p>\n

Justin Stock:<\/strong>\u00a0Yes.<\/p>\n

Fatema Orjela:<\/strong>\u00a0I would see that as the first step. The first step is you get your information, so you know what the lay of the land is. Then you try to work out what the issue is that you are facing.<\/p>\n

Gus Black:<\/strong>\u00a0Is everyone else here a signatory to the Mansfield Rule, which is the rule requiring a diverse slate to be considered for any senior appointment, including partnerships, but any senior leadership position within the firm? One theory, which I have sympathy for, is that the only way you change a firm and a culture is from the top, making sure when the young associates are coming up, they are seeing diversity at that level.<\/p>\n

Nathalie Tidman: Since mental health is high on the agenda these days, a light has been shone on the effects the stresses of working life have on people. Are your firms handling these issues well or is there more to be done?<\/strong><\/em><\/p>\n

Arun Birla:<\/strong>\u00a0You are always striving to do better, but there were unfortunate incidents last year, which took a heavy toll on the industry. You have the sterling work that the American Bar Association is doing. I do not think our regulator or the authorities in the UK are doing enough. Progress is nowhere near where we need to get to.<\/p>\n

Samantha Mobley:<\/strong>\u00a0I do not know if everybody has seen the Mindful Business Charter Barclays created, which we and a number of other law firms signed up to? It\u2019s a one-page charter that encourages firms to think about mental health among lawyers and change avoidable working practices that might cause wellbeing issues. Barclays asked all its relationship firms, panel firms, to sign up to the charter. It is particularly pertinent for our law firm because our chair stepped away from his role in October last year because of these sorts of issues.<\/p>\n

Mike Francies:<\/strong>\u00a0I would be amazed if it was not at or near the top of any law firm or any business\u2019s agenda. You have a duty to do something about it. We have a discussion group and I participate in it. It is frightening, some of the things that come up and that you have to think about changing.<\/p>\n

\n

The panellists<\/h2>\n
    \n
  • Arun Birla<\/strong>\u00a0Chair of London office, Paul Hastings<\/li>\n
  • Gus Black<\/strong>\u00a0Global co-chair of financial services, Dechert<\/li>\n
  • Lorenzo Corte<\/strong>\u00a0Co-head of London M&A, Skadden, Arps, Slate, Meagher & Flom<\/li>\n
  • Mike Francies<\/strong>\u00a0London managing partner, Weil, Gotshal & Manges<\/li>\n
  • Claire McDaid<\/strong>\u00a0Corporate partner, Willkie Farr & Gallagher<\/li>\n
  • Samantha Mobley<\/strong>\u00a0London management committee member, Baker McKenzie<\/li>\n
  • Fatema Orjela<\/strong>\u00a0Private equity partner, Sidley Austin<\/li>\n
  • Guy Potel<\/strong>\u00a0Corporate partner, White & Case<\/li>\n
  • James Roome<\/strong>\u00a0Restructuring partner, Akin Gump Strauss Hauer & Feld<\/li>\n
  • Philip Sanderson<\/strong>\u00a0Co-head of global private equity, Ropes & Gray<\/li>\n
  • Tihir Sarkar<\/strong>\u00a0M&A partner, Cleary Gottlieb Steen & Hamilton<\/li>\n
  • Justin Stock<\/strong>\u00a0London managing partner, Cooley<\/li>\n<\/ul>\n
      \n
    • Nathalie Tidman<\/strong>\u00a0City editor,\u00a0Legal Business<\/em><\/li>\n
    • Marco Cillario<\/strong>\u00a0Senior reporter,\u00a0Legal Business<\/em><\/li>\n
    • Seamus Hoar<\/strong>\u00a0Partner, Major, Lindsey & Africa<\/li>\n<\/ul>\n<\/div>\n","protected":false},"featured_media":6555,"template":"","class_list":["post-6553","event_report","type-event_report","status-publish","has-post-thumbnail","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/event_report\/6553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/event_report"}],"about":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/types\/event_report"}],"version-history":[{"count":1,"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/event_report\/6553\/revisions"}],"predecessor-version":[{"id":14535,"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/event_report\/6553\/revisions\/14535"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/media\/6555"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/media?parent=6553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}