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CITY OF LONDON SPECIAL | Weil Gotshal

Working with Mike Weil Gotshal’s London managing partner bills £2m a year. No one doubts Mike Francies’ industry, so why have English partners been so reticent in joining the firm? JAMES BAXTER

WHEN FORMER TRAVERS SMITH Braithwaite corporate partner Mark Soundy walked into his new office at Weil, Gotshal & Manges’ City headquarters last month, the collective sigh of relief was almost palpable. Soundy is the firm’s first lateral hire in London since finance partner Chris Harrison joined from Latham & Watkins in October 2001. It is a staggering statistic for a firm that is considered to have one of the most successful London offerings of any Wall Street firm. The landing of Soundy brings to a close a barren spell that has seen the firm – and lead negotiator Mike Francies – snubbed by at least eight household-name City partners. Weil Gotshal won’t comment on its dealings with potential laterals, yet recruitment sources confirm to Legal Business that the following have all spoken to Weil Gotshal before settling on other firms: Norton Rose partner Jonathan Coppin (now at Shearman & Sterling); Freshfields Bruckhaus Deringer partner Tim Emmerson (now at Milbank, Tweed, Hadley & McCloy); Simmons & Simmons partner trio John Houghton, Charles Fuller and Martin Saywell (now all at Latham & Watkins); Lovells partner Allan Murray-Jones (now at Skadden, Arps, Slate, Meagher & Flom); PricewaterhouseCoopers partner Ian Taplin

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> (now at Kirkland & Ellis) and star Clifford Chance partners Matthew Layton and James Baird, who are both still at the English firm, after weeks of prevarication. Legal Business also understands that Linklaters top of equity partner Peter King was another Weil Gotshal target – he’s now at Shearman & Sterling. A source put his unwillingness to talk to Weil Gotshal down to an ‘impression of a sweatshop hours

(l-r) Mike Francies, new recruit Mark Soundy and another corporate partner who rose through the ranks, Will Rosen

culture’. Such a sentiment crystalises the image problem that has dogged Weil Gotshal ever since it began to make ripples as one of the ultimate hard-line New York litigation and bankruptcy practices 30 years ago. It

is a reputation that the firm grudgingly concedes has been replicated in London, not least because of the fearsome propensity for work long associated with managing partner Francies. It still rankles with him. ‘We do not consider ourselves to have an hours culture,’ Francies insists. ‘But because we are so transactionally focused there are times when we are absolutely flat out for days on end. In this sense we sometimes

THE ONES THAT GOT AWAY Partner

Jonathan Coppin

Tim Emmerson

Charles Fuller

John Houghton

Former firm

Norton Rose

Simmons & Simmons

Joined

Shearman & Sterling in November 2002

Freshfields Bruckhaus Deringer Milbank, Tweed, Hadley & McCloy in April 2003

Latham & Watkins in October 2002

Practice area

Corporate finance

Corporate

Restructuring

LB says

Highly respected partner with strong ties to US investment bank Schroder Salomon Smith Barney.

Corporate partner with a huge City profile. Not always considered a team player while at Freshfields, though, and wanted to run his own show at Milbank.

Relatively young partner with a high profile in the City. ‘We would have taken him above all the Simmons partners,’ says one Weil Gotshal partner.

Top-tier partner, who led the mammoth Railtrack administration. Kroll and Singer & Friedlander have since instructed Latham on insolvency transactions.

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Weil Gotshal | CITY OF LONDON SPECIAL

operate more like an investment bank than a traditional City law firm.’ Francies points to July – when the firm advised Premier Foods on its £572m IPO, and the Morgan Stanley/Glick consortium on its public tender offer for Canary Wharf – as the office’s busiest ever month. He further adds that in August, when transactional levels were low, most staff were underutilised. ‘We staff to the baseline, yet have a whole infrastructure of support services for our lawyers,’ he adds. ‘Some of them complain that there is too much training and that they are too nannied.’ It all begs the question: why have so many potential laterals been afraid to commit? Francies hopes that Soundy’s arrival will begin to answer the critics.

Raising finance While the hire of Soundy is undoutedly a boost for the firm, rival finance partners remain unconvinced about the logic of such a move. The firm’s lack of a serious UK debt finance capability will undoubtedly hinder Soundy on the private equity side. Weil Gotshal has long struggled to build a banking practice, in part because of the global dominance of its corporate-led restructuring practice. It also lacks the roster of US private equity clients boasted by the likes of Simpson Thacher & Bartlett. One partner at a rival UK firm says: ‘My impression is that Soundy didn’t have serious talks with any other firm and was swayed mainly

‘Weil Gotshal has never been as well positioned as it is now. Mike has to take a lot of credit for this achievement.’ Nick Holt, Global Legal Search

by Mike and the recent hire of David Aknin from Linklaters in Paris. Both Mike and Aknin are undoubted stars, yet this on its own does not create a top-tier private equity practice.’ Nonetheless, with enemies sniping, you need a friend, and Soundy has been close to Francies since they were introduced four years ago through a mutual contact at private equity house Apax Partners. If you can get on with Mike, you can get on at Weil Gotshal. ‘I’ve got a lot of respect for Mike,’ said one former colleague. ‘But with him it’s

difficult to find any middle ground – you either love him or you hate him.’ Weil Gotshal’s US management is in the former category, and has been since the difficult times back in 1998. At the time of Francies’ very public fall-out with former joint managing partner Maurice Allen six years ago, the firm backed Francies to the hilt. While Allen’s grand plans of building a global banking practice from scratch made less sense, with hindsight, for the corporate and bankruptcy-focused Weil Gotshal, there was more to his shock departure than simple practice fit. According to US partners, the firm believed that Francies, regardless of practice area, was more likely to build a hyper-profitable City office than Allen – this despite the latter’s peerless client contacts. In many ways the divergence of Allen and Francies is symbolic of a problem the firm continues to have in persuading star laterals to join. Francies’ workaholic image has become almost embedded into that of Weil Gotshal, whereas Allen is the charismatic individual who can gain almost immediate buy-in to his vision from potential recruits. Allen built an 80-lawyer office from scratch in 18 months. In the five years since his departure, the firm has climbed more modestly, to 110 lawyers. Moreover, in the same way that Francies had difficulty sharing head-honcho status with Allen as joint managing partner, many potential recruits also want to run their own show.

Allan Murray-Jones

Martin Saywell

Ian Taplin

James Baird

Matthew Layton

Lovells

Simmons & Simmons

PricewaterhouseCoopers

Clifford Chance

Skadden, Arps, Slate, Meagher & Flom, May 2001

Latham & Watkins in October 2003

Kirkland & Ellis in January 2004

Still at… Clifford Chance

Private equity

Corporate

Tax

Private equity

Joined Skadden in 2001 after talking to a number of other US firms in London. His clients include Doughty Hanson and PPM Ventures.

The last of the Simmons trio to join Latham and viewed as having a bright future. Major deals include the merger of HFC Bank and Beneficial Bank.

Family friend of Francies yet didn’t want to mix business with pleasure. An undoubted coup for Kirkland.

CC’s private equity veteran and CVC Capital Partners contact. Works very much as a double act with fellow partner Matthew Layton – would not move anywhere without him.

Universally admired private equity partner and CC’s Permira contact. He agreed to only leave CC only if Baird went too. When Baird pulled out, Layton did the honourable thing.

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increase revenues substantially ‘When Maurice [Allen] recruited Mike year-on-year. The firm counts [Francies from Clifford Chance] in 1998, it corporate partners Will Rosen was tough for either of them to share star and Ian Hamilton as rising stars, billing with the other,’ says one former and claims its lack of success in partner. ‘If the likes of Emmerson or King hiring laterals has allowed it to had been recruited, Mike could have had bring through more of its topthe same problem all over again.’ rated associates as When Allen, Holt and the partners. In securitisaother banking partners tion, the firm has one drifted off to other firms, of the City’s undoubted Francies was left to deal with stars in Jacky Kelly. the political hornets’ nest Kelly is accused by created by the departure of some in the market of the office’s super-popular having control freak founding partners. His tendencies, but all the response was to deliver more top practitioners than 2,000 billable hours a acknowledge her brilyear on top of his duties as liance with clients. The sole managing partner. It likes of Bear Sterns and was a punishing schedule UBS are regular and that engendered unshakeable remunerative clients of loyalty in many, but hers. Former partner sidelined those not considNick Holt, now a ered part of the team. ‘Mike’s Dickens: management involvement allegedly off limits principal at Global heart is in the right place but Legal Search, observes: ‘Weil he definitely finds it hard to let go,’ says one Gotshal has never been as well former colleague. ‘Communications could positioned as it is now. The have been improved.’ New York corporate, litigation and restructuring practices Success story dovetail perfectly with the Whatever your view of Francies on a London and wider European personal level, no one in the London offering. Mike has to take a lot market disputes the phenomenal job he has of credit for this achievement.’ done in building a top-tier UK practice. The firm now intends to add Weil Gotshal’s City office generated £50m a fourth string to its bow, reloin revenue in 2003 and is already on course cating the co-head of its global for a record financial year in 2004. capital markets practice, Jeremy Moreover, the firm’s reputation for being Dickens, from New York to over-reliant on the business of loyal clients London in June to help build a such as private equity houses Hicks, Muse, UK capital markets practice. Tate & Furst, Apax Partners and CSFB Dickens, who is one of the Private Equity can be exposed as a myth. No firm’s relationship partners for one client accounts for more than 5% of overall billing, and in 2003 the office had 25 clients that were billed in excess of $1m. ‘We have ridden the recession extremely well,’ says Francies. ‘We are one of the top three private equity firms globally and are gaining increased market share of business from new and existing corporate clients.’ Top corporate clients include Nycomed, Yell and White & MacKay; Change Capital and Texas Pacific are also now instructing the firm regularly. Apart from a dark period in 2001 when the firm handled 11 private A former colleague of Mike Francies equity auctions in a row advising a losing bidder, Weil Gotshal has managed to

‘I’ve got a lot of respect for Mike, but you either love him or you hate him.’

50 Legal Business October 2004

Lehman Brothers, has been placed in charge of developing new institutional business in London. ‘The strategy is to capitalise on our achievements in Europe and build a finance practice here that complements our New York practice,’ he explains. ‘We’re making sure that key clients such as Citigroup and Lehman are being looked after properly and hope to grow the practice out from there.’ The four-partner group has already had some early successes, advising Lehman on Carlsberg’s $550m rights issue. Lehman’s head of legal for European investment banking, Aaron Johari, says: ‘We are doing a lot more business with Weil Gotshal in Europe. We haven’t used them on a blockbuster deal so far but they are becoming one of the first names on our list.’

American friends The relocation of super-smooth New Yorker Dickens is a logical move, although according to internal sources it is a slightly sensitive subject. They have suggested that Dickens will add a more personal dimension to the management quirks of Francies. LB understands, however, that Dickens has been brought over purely for his client-handling skills, making it clear that management involvement is strictly off limits. According to Francies: ‘Jeremy is a top guy, who is well liked by the banks. It makes sense for him to take on a clientfacing role in London, helping drive the office forward. He is a member of the London executive committee, but has no specific management brief.’ There is, however, a track record for such developments. When the firm was dealing with the PR fall-out of the raft of banking departures in 2000, it sent over its global banking head Ron Daitz to help bolster the firm’s profile. Daitz was swiftly followed by the relocation in 2001 of global corporate head, Stephen Jacobs, who has since returned to New York. While insiders claim that Francies doesn’t always see eye-to-eye with Daitz, he has broadly welcomed the opportunity to share some of the management responsibility around. The firm also now has a four-partner London executive committee and a full-time chief operating officer, Andrew Strivens, all of whom have allowed Francies to dedicate even more time to dealmaking. ‘Mike is a “go-to” lawyer and we are very proud of what he has achieved,’ Dickens comments. ‘However, as the office

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has grown, his time has been eaten away in management, a situation that I’m sure he doesn’t prefer to doing deals.’ Francies, meanwhile, has never seemed more relaxed than he is at present. Partners claim he has been taking a lot of long weekends recently – a situation apparently unheard of a year ago – in addition to summer holidays with family. For someone who is legendary for going to bed at 1am and getting up four hours later, the implications of this should not be under-estimated. ‘I’ve heard it said that I’m a workaholic and a control freak, but I don’t think that’s fair,’ says Francies. ‘I’m not a micromanager but I work hard and I expect others to do the same when the job requires it. I do have high-quality standards, which I expect others to live up to.’ He adds: ‘A lot of people have worked with me for a long time, so presumably they are not too unhappy with my style.’

Working the brand

WEIL GOTSHAL’S LONDON PERFORMANCE Revenue

Lawyer numbers

Partners made up

1997 £10m 36 0 1998 £17m 55 1 1999 £28m 75 2 2000 £35.2m 90 4 2001 £40.9m 98 0 2002 £47.7m 106 3 2003 £49m 108 1

So what next for Weil Gotshal in London? In many ways the recruitment of Soundy, combined with the near-snaring of CC’s Layton and Baird, has taken the firm’s standing to a new level. Soundy is perceived as having the requisite energy and drive to make a real impact at the firm. The aborted recruitment of the Clifford Chance partners, meanwhile, has inadvertently added to the firm’s gravitas in the London market. CC might have retained the services of the pair for now, but you have to remember that no firm other than Weil Gotshal was even in the frame. The fact that partners of this calibre were set to join shows the strides the firm has made in the past five years. ‘The brand is really starting to fly in London again after all the bad PR it got following the banking departures,’ says one City recruiter. ‘Mike’s obvious commitment to the firm also breeds confidence in potential recruits.’ Francies hopes that the firm can now build upon its success with

Source: Legal Business

Soundy so that star recruits put Weil Gotshal as a ‘must-see’ firm when they are considering a move.

Holt: Weil Gotshal has never been so well positioned

‘There are very few people we look at and say “we absolutely have to hire them”,’ says Francies. ‘The problem we have had in the past is that we often don’t know these people are on the market until they are 90% down the line with another firm.’ This is a view borne out by some potential recruits spoken to by LB, who confirmed that they had been impressed by what Francies had to say, but that he had simply got to them too late in the day. For those already at the firm, Weil Gotshal is fast becoming a major European force. Its newly merged Paris office – the firm sealed a deal with French firm Serra Leavy & Cazals last year – buoyed by the recruitment of Linklaters private equity star David Aknin, is firing on all cylinders at present. Weil Gotshal in Frankfurt, meanwhile, is also becoming a ‘go-to’ firm for the large number of US venture capitalists piling into the region. For the top Magic Circle partners, this quality of cross-border coverage is of crucial importance in deciding which US firm to join in London, coupled, of course, with their propensity to work alongside the incumbent rainmakers. So what can the likes of Soundy and other potential recruits expect from their new boss? Francies is reluctant to describe his best qualities, yet when pushed says he believes himself to be a good lawyer who leads from the front. ‘I look at someone like Barry O’Brien at Freshfields and he’s the master of the boardroom, pressing the flesh, and the board listens to him and respects him,’ he says. ‘My forte is being in the thick of a deal, getting a complicated point agreed by 20 different people, and driving a complex transaction to a successful conclusion.’ If Weil Gotshal and Francies want those well-honed negotiating skills to become as adept at recruiting rival rainmakers as they are at closing complex corporate transactions, then it is clear that a more proactive approach to hiring is required. In today’s sophisticated lateral recruiting market, the ‘too late in the day’ excuse won’t really cut it. With Soundy now on board, Weil Gotshal must capitalise on its reinvigorated City profile. More top partners must follow, and soon, if the firm is to avoid getting left behind by the smoother recruitment sell of some seemingly more user-friendly US rivals. LB james.baxter@legalease.co.uk

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