business men in London
business men in London ()

Continental Breakfast: your daily update on what’s happening in Europe.

It used to be that law firms seeking to win work from clients simply had to have the best lawyers or the lowest rates. Not anymore.

Clients are increasingly asking law firms to provide information such as diversity statistics and even details of their corporate social responsibility and environmental policies during the pitch process.

So it shouldn’t have come as any surprise to firms to have recently been contacted by the chief legal officer at PayPal and told that they won’t be getting work from the company unless they make meaningful progress on diversity.

Shortly after starting at the company in April 2015, PayPal’s Louise Pentland told The Recorder that she would “not just stand by and let this be another decade of only dealing with white men in law firms.”

Pentland has made good on her promise and recently requested diversity data from all of the company’s external legal advisors, with a particular focus on whether they are supporting young female and minority lawyers. PayPal has worked with a number of law firms in recent years, including Allen & Overy, Hogan Lovells and Sidley Austin.

“There’s a responsibility here to drive change… because that change isn’t going to be homegrown in these big law firms – they’ve been at it, quite pathetically, for years,” she told The American Lawyer’s U.K. sister title Legal Week. “Some are trying, and some are telling me they’re trying. All the big law firms have an incredible way to go.”

It’s true that the legal industry has made limited progress on resolving its long-running issues surrounding gender equality and racial and social diversity. It is to the industry’s discredit that clients feel they need to drive this change, but if failing to act starts costing firms business, it will undoubtedly prove effective.

Google Doubles Down On U.K.

Google has announced that it is to construct a giant new headquarters in London and almost double its headcount in the city over the next three years.

In a major boost to the U.K. technology sector, the California-based company will employ 7,000 staff in a new 1 million square foot building near its existing London base, creating 3,000 new jobs.

Google chief executive Sundar Pichai told the BBC that the company did take Brexit into consideration when deciding whether to proceed with its investment plans—the building and staff costs have been estimated at 1 billion pounds ($1.25 billion)—but said it still considers the U.K. an attractive place in which to do business. “We see big opportunities here,” he said. This is a big commitment from us.”

Pichai said that open borders and free movement for skilled migrants were crucial for the continued success of the U.K. tech industry, however. “We do value how open and connected [the U.K.] is and [that] we can bring in talent from anywhere in the world,” he added. “We are optimistic that will stay true over time.” The U.K. government has made controlling immigration a key priority post-Brexit.

London-based law firm Nabarro advised Google on its acquisition of a site for its London headquarters in 2013, which included a 999-year lease and the right to develop 1 million square foot of office and retail space in the future.

Nabarro recently agreed to a three-way merger with CMS Cameron McKenna and Olswang, which may soon be joined by a U.S. law firm. Olswang represented a group of internet users in a landmark privacy claim against Google in 2013.

Google has a longstanding relationship with Cleary Gottlieb Steen & Hamilton.

Ashurst Restarts Profit Distributions

A timely pre-Christmas boost for equity partners at Ashurst, with the firm set to restart quarterly profit distributions after putting payments on hold earlier this year.

Ashurst equity partners saw profits withheld in August following the firm’s announcement that its revenue had fallen 10 percent and its PPP crashed 19 percent in the previous fiscal year.

A partner at the firm told The American Lawyer’s U.K. sister title Legal Week that a quarterly distribution will be made this month, although they didn’t know whether it would be a full or part-payment, which is something you’d expect partners to have been told.

Ashurst isn’t the only firm to have recently withheld partner profits. King & Wood Mallesons failed to make a payment in July, despite having changed its remuneration system earlier in the year to start distributing profits to partners on a monthly basis following repeated delays to its quarterly setup.

Both Ashurst and KWM have endured difficult periods over the past six months and suffered a stream of senior exits.

The situation at Ashurst appears to have stabilized, however. The departures seem to have stopped—Ashurst even recently managed to convince two senior partners that had agreed to join Paul Hastings and Gibson Dunn & Crutcher to change their minds and stay with the firm. (It was particularly embarrassing for Paul Hastings, as the U.S. firm had already announced the hire.) Perhaps recent changes to Ashurst’s remuneration system—the firm has extend its lockstep and introduced a bonus pool in an attempt to better attract and retain top talent—are starting to have the desired effect.

The same can’t be said for KWM. The Sino-global giant recently had to halt an $18.4 million recapitalization program following the shock resignation of four senior partners in London, including former managing partner Rob Day and U.K. investments funds head Michael Halford. (Day and fellow corporate partner Andrew Wingfield have now joined the London office of Proskauer Rose, which six years ago held merger talks with KWM’s legacy European arm. Halford and the fourth member of the group, private equity partner Jonathan Pittal, are yet to surface.)

The planned capital injection, which also included salaried partners, was put on hold to allow the firm time to assess the impact of the loss of the four partners’ estimated $11.3 million in annual billings.

KWM’s Asian arm has offered to bail out the firm’s struggling European practice—but only if partners in the region agree to stump up 14 million pounds ($17.4 million) of their own cash and commit to not leaving for at least 12 months.

KWM global managing partner Stuart Fuller last week announced that he will stand down by the end of the year. It leaves the firm with yet another leadership position to fill, having only recently ended its six-month search for a new European management team.

It recently emerged that Morgan, Lewis & Bockius had cooled its interest in merging with KWM.

Contact Chris Johnson at cjohnson@alm.com. Follow him on Twitter at twitter.com/chris_t_johnson