The surprising outcome of the recent U.K. general election has done nothing to stem the uncertainty that has plagued the country’s legal market ever since the equally surprising Brexit vote last June. For anyone who is not caught up on U.K. news, the Conservative party called a snap general election to strengthen its majority ahead of the Brexit negotiations, which are scheduled to begin Monday. While the party expected a landslide victory, it actually failed to win a majority. This means no single party has enough seats to form a government and the Conservative party is scrambling to form a coalition.
It’s been interesting to see how law firms have responded to this New World Disorder. With transactional activity down and conditions generally pretty patchy across several key practice areas and sectors, many of the larger U.K.-based outfits have understandably taken a more tentative approach to hiring and investment. That certainly hasn’t been the case for the U.S. firms in London, however. Several of them have plowed on regardless. While the likes of Latham & Watkins and Goodwin Procter have grabbed headlines with a flurry of splashy hires, Gibson, Dunn & Crutcher has continued to steadily build what is becoming a formidable European presence, thanks to some significant moves in London, Paris and Germany.
It’s been a busy few months for the firm. In May, Gibson Dunn bolstered its Frankfurt office with the hire of Latham & Watkins dispute resolution and white-collar defense partner Finn Zeidler. Last year, the firm launched its office in Frankfurt by recruiting two corporate partners from Los Angeles-based Latham.
Earlier this month, the firm ended its five-year search for a Paris litigation practice by capturing a four-partner team from Ashurst and, just last week, bolstered its London office by bringing in Herbert Smith Freehills’ co-head of energy, Anna Howell. Gibson Dunn now has five offices in Europe: in Frankfurt, London, Paris, Munich and Brussels.
Although the firm may have ramped up its investment in Europe recently, it actually has one of the longest-standing Paris offices of any international law firm, having opened in the French capital in 1967. In fact, in a surprising quirk, it was the firm’s first office outside California—established a full 15 years before it even went to New York.
For decades, the firm’s French practice focused almost entirely on transactional work. But as the market emerged from the most recent recession, the firm came up with a new strategy to broaden the Paris office into areas that would complement its practice both locally and in the United States—most notably in litigation. “Our growth [in Europe] is driven by a very simple statement: To offer our clients the same practice strength that we have in the U.S.,” said Paris office head and international management committee chair Bernard Grinspan. “It has taken some time [to establish a litigation practice in France], but we wanted to find the right group that fits with our culture and has a compelling business proposition.”
It’s a similar story in London, albeit in reverse. Unlike many of the elite U.S. firms, which have narrower practices in the U.K. capital that often focus on private equity or finance, Gibson Dunn is seeking to build a broader offering that spans a wide range of transactional and litigation work. London corporate chair Charlie Geffen said the aim is to create a “classic top-end” London corporate finance practice, and the firm has made a number of significant hires over the past three years to that effect.
The strategy appears to be working. Gibson Dunn has in recent years become one of the top-performing U.S. firms for U.K. public M&A—although it is still not quite in the same league as Skadden, Arps, Slate, Meagher & Flom, which remains the American firm to beat in that area. And following its hiring of a two-partner team from Herbert Smith Freehills in 2015, it now also has one of the strongest equity capital markets practices outside the magic circle.
Grinspan said that neither the firm’s recent European activity, nor its longer-term strategy in the region, has come about because of the U.K’s decision to leave the EU. “We are definitely not guided by Brexit,” he said. “There will be some changes and we are looking at it as potentially an opportunity, but London is not suddenly going to collapse or be replaced [as a key hub for business and finance] by Paris overnight.”
Likewise, Geffen said that the firm has not been cashing in on the newfound strength of the U.S. dollar against the British pound, which has significantly weakened since the Brexit referendum last June. He does admit that the increased buying power has been a boon to all American firms operating in London, which generally pay their U.K.-based partners in dollars, however. “Nobody makes big strategic decisions just on the basis of an FX movement, but the stronger dollar clearly has been very helpful to U.S. firms,” he said.
Gibson Dunn’s continued financial performance won’t hurt either. The firm recently announced its 20th consecutive year of increased revenue and its 21st straight year of profit growth, with average profit per equity partner hitting $3.3 million. (The only silver lining for U.K.-based firms with significant international networks is that the currency swing will artificially inflate their financial results, as foreign revenue is favorably converted into sterling for consolidated accounts. That said, the opposite will be true when they are converted to U.S. dollars for The American Lawyer’s Global 100 survey in October.)
Looking ahead, Grinspan said that the firm has no specific targets on head count or revenue growth for Europe. But he is clear that the firm isn’t done hiring just yet.
In addition to continuing its plan to develop existing practices and win greater market share, Geffen said the firm is looking to “fill some gaps.” High on the agenda is adding financial regulatory capability in London—Gibson Dunn has a strong contentious practice in the United States and acted for Swiss bank UBS in the Libor rigging scandal. It also wants to expand its antitrust offering following a double hire in 2013 from the U.K.’s now defunct Office of Fair Trading, led by cartel and criminal enforcement head Ali Nikpay. In France, the firm is on the hunt for more litigation partners and specialist white-collar expertise, and has longer-term plans to expand the antitrust practice to the country.
“We’re not intending to stop here,” Grinspan said. “What we want to achieve is to build the best quality practices we can. That takes time and patience, but if you want high-end practices then you need to find the best quality lawyers.”