American law firm plans to put City’s traditional business model on trial
Alex Spence of the Times Online reports that one of America’s biggest law firms is defying the turmoil in the commercial legal market with plans to build a London office of more than 200 lawyers within three years.
Greenberg Traurig, the tenth biggest law firm in the United States, with 1,800 lawyers and revenue of $1.2 billion (£754 million), has hired Paul Maher, a highly regarded deal maker who was formerly vice-chairman of Mayer Brown, another big American firm, to build a City office.
Mr Maher, 50, born into a working-class family in North London, rose to become one of London’s top mergers and acquisitions lawyers and a senior executive at Mayer Brown, where he earnt more than £1 million a year. He left the firm in April after he was passed over for the role of chairman.
He had planned to set up his own firm in London, holding talks with private equity investors about funding his start-up costs, but he decided to join Greenberg Traurig instead after he was persuaded that its senior partners’ global ambitions fitted with his own.
Since July, Mr Maher has hired 30 lawyers, some from Mayer Brown and some from White & Case. He expects to have 50 by the end of the year and said that the London unit would need to recruit 200 lawyers within three years to reach “critical mass”. That would make it one of the five biggest offices for an American law firm in London.
Lawyers at rival firms said that the move was a huge gamble at a time when others were cutting back in London and profits were plummeting.
Mr Maher told The Times that he had been given a broad remit to expand and planned to turn the traditional City law firm model “on its head”.
In a rare move, Greenberg’s American partners allowed Mr Maher to put his name above the door, calling its London office Greenberg Traurig Maher (GTM).
Its lawyers will be paid depending on performance rather than seniority, with a smaller ratio of junior fee earners to partners some City firms employ as many as seven associates for every senior lawyer and increased use of flexible working.
“We’re taking every aspect of a law firm and turning it on its head,” he said. “Do we even need offices in the City? Could we have everyone working from home, or should we put them all in Luton? I don’t just want photocopiers with views of the Thames.”
Mr Maher also hinted that GTM would become one of the first City law firms to float when new rules allowing external investment in law firms come into force in 2012. “A lot of stakeholders will need to be convinced,” he said, but he added that it was inevitable that law firms would seek to raise outside capital when regulations allowed: “The rules of nature don’t do a right turn when they get to legal services.”
He said that the traditional law firm business model had been rendered obsolete by the downturn and the “golden age” of City firms was over.
Mark Briegal, Partner at Ralli comments: “It’s interesting to see a US firm planning to take advantage of the new rules. In any business good players can succeed by adopting a new model or by being better than the competition, even in a recession.
There will be good lawyers looking for jobs or looking to further their careers and joining an aggressive new firm with a different slant on the traditional model will be attractive. Flexible working and home working will appeal to staff and lower cost offices will appeal to investors. Clients need to be convinced that they will get as good or better service for the same or less cost.
Here at Ralli, we have taken work from London firms as clients realise that we don’t need to be geographically close (although we can and do visit them, as Manchester is only 2 hours from London) and they can get a better service for a lower cost. Time will see how GTM gets on.”