18 Sep - Commercial Awareness - Law firm as a business
Topic: Paul Weiss’s second raid of Kirkland partners
Link: https://www.ft.com/content/09a8a911-e406-441f-85af-25d1539cdc1b
https://www.ft.com/content/5e430125-c107-4cc6-866b-478f7d84b7aa
https://www.ft.com/content/44ae74d1-53c5-4674-b7db-433e1d0a0279
Last week, US firm Paul Weiss raided 12 new partners from KE who specialised in private equity and one partner from Linklaters in M&A.
- PW’s ferocious expansion
This is the second time they raided KE partners. The first time was reported on 14th Aug and the raid included approx 4 partners from the London office as well as a team in LA, all of which are directed at Kirkland, mainly from the private equity team
The raid aligns with PW’s plan to expand in London and set up an office in LA. FT wrote that this is a short-term strategy to attract partners but very expensive in the long run.
In my opinion, Kirkland relied on this strategy to expand to the top in terms of revenue, so PW is simply replicating. Now that we have entered a high-interest rate era, it is doubtful whether it is a risky move for PW to spend this much money to poach expensive partners. Alternatively, the news can be a strong argument that the PE team will be busy again
- US executives bypassed London partners to hire new partners from a rival
- How is the relationship between US HQ executives and MPs from other offices?
- Can they “plant” new partners without consulting them first?
- Impact on the London legal market.
This is apparent in the staggering rise of NQ’s pay. Though in my opinion, the need to escalate in line with inflation plays a role, but a lucrative salary at US firms are major contributor to UK firm's pay rise.
Especially at NQ level, where the gap is stark between Magic Circle (105k in 2022) and US firms (150k in 2022). In 2023, four MC firms (except for Slaughters at 115k) increased to NQ pay to 125k, which is a steep increase from last year, but it’s still substantially lower than the average of US.
Seeing that US firms are increasingly dominant in the City, how will London compete to attract the best talent?
