Author: Legal Week
15 Dec 2009 | 00:13
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A full-service firm with an unashamed corporate focus, Ashurst still has a reputation for being less of a deal-driven sweatshop than the magic circle rivals it so aspires to join - a reputation that is probably not unfounded. However...
"Private equity can still see some really erratic hours," says one contributor. "[The firmwide] billing target is 1,600 hours - slightly better than in the magic circle but you wouldn't exactly call it a lifestyle firm. Partners are generally pretty nice, at least by the standards of slave-driving City firms." One reader adds: "The London office is strong but the quality of the continental offices is more variable."
With nearly 200 years of history behind it, the 230-partner firm is one of the most established of the City's corporate brands even if the firm has not in recent years really been counted in the first division for plc work. Having struggled to keep up with London's fast-expanding leaders in the late 1990s and early 2000s, Ashurst was for a while defined as much by what it didn't do, after the firm was involved in no less than three potentially transformational but ultimately unsuccessful merger bids. Having emerged from the last of these - with New York's Fried Frank Harris Shriver & Jacobson - the firm's position looked in doubt as it suffered from lagging profits, a divided partnership and a series of top-level departures.
This lean period was odd given that the firm's traditional strength in private equity should have made the firm perfectly placed to take advantage of the rise and rise of buy-out clients in Europe's deal markets. The firm at least had the support of an upwardly-mobile finance team that made great strides in its two key areas of focus: acquisition finance and structured finance. However, a low period in 2004 was the turning point from which the firm has managed a considerable recovery. Many would now place the firm alongside Herbert Smith as the strongest of the band beneath the magic circle.
The scale of the firm's revival was underscored in 2007 by a well-above trend growth in fees of 28.5% to hit £275m, while average equity partner profits rocketed from £701,000 to £956,000. The following year, the firm posted a 17% increase in turnover to smash through the £300m barrier, joining top 10 City rival Simmons & Simmons in announcing a double-digit increase in revenue. The firm raked in fees totalling £323m for 2007-08, during which period the firm made a series of hires in Europe and Asia, overhauled its lockstep and converted to a limited liability partnership.
However, Ashurst's exposure to private equity, structured finance and acquisition finance, three of the areas worst hit by the 2008-09 recession and the prolonged turmoil in credit markets, has had a substantial impact. The firm's profits per partner fell 35% in 2008-09, while revenue dipped 6.8%. Nevertheless the firm has continued to invest, making an audacious move into the US finance market in February when the firm secured a deal to take on a large team in New York and Washington DC from referral partner McKee Nelson. Even as the firm hunkers down for what will be a tougher period, Ashurst looks set to be an ambitious presence in global law.
Founded in 1822, Ashurst Morris Crisp, as it has been known for most of its life, has one of the best pedigrees in the business. Having for years been around the upper echelons of the City's corporate advisers, Ashurst nevertheless struggled to adapt to the rapidly-evolving legal market that was to emerge in the 1990s as London's largest law firms began to break away from the pack. Struggling for a clear response, Ashurst was engaged in three major sets of merger talks between 1998 and 2004. The first came in 1998 when the firm considered tying up with Clifford Chance, though a number of senior Ashurst partners were to torpedo the deal amid fears that the firm would effectively be swallowed by the larger London practice. Similar concerns contributed to the collapse of the firm's 2000 talks with top 10 US practice Latham & Watkins, with Ashurst apparently unwilling to give enough ground to its larger suitor for the US firm to proceed.
In light of its fear of being taken over, its prolonged attempt to secure a merger-of-equals with New York's Fried Frank may have looked just the ticket. However, the talks were to finally collapse after nearly 12 months of serious discussions amid cultural differences and the inability to agree a similar compensation system. In particular, Ashurst was resistant to the concept of paying a handful of high-billing partners 'super-point' deals well above its central lockstep. Emerging bruised from the talks, one of the major supporters of the deal, outgoing managing partner Justin Spendlove, quit the firm for Fried Frank in March 2004 to head up its European operation.
At this point, Ashurst was faced profits lagging its peer group, a string of senior partners having quit for foreign rivals and there continued to be concerns about the quality of the European network the firm had built. One abortive initiative in 2004 that allowed the management to pay high performers additional bonuses was seen as symbolic of the defensiveness of the time. However, the team of veteran senior partner Geoffrey Green and managing partner Simon Bromwich (pictured), appointed to take over from Spendlove in January 2004, were to begin having more success in managing the firm. Partly this involved a more actively-managed partnership and a handful of discreetly-handled exits. The firm was also able to make more progress in building up its core M&A practice, in particular improving its investment banking links, and dealing with quality problems in its foreign network. The firm was also aided by a continued strong performance from its finance practice. With partner profits rocketing in 2007 to take top earners past the £1m mark, the firm is now comfortably in the UK top 10 in profitability.
In 2008, the firm voted in highly-rated corporate partner Charlie Geffen to succeed Green as senior partner after an election against veteran litigator Ed Sparrow.
Click here to read a commentary on Geffen's appointment.
However, the credit turmoil that gripped financial markets in the summer of 2007, which became a full-blown banking crisis and recession the following year, has had a substantial impact on Ashurst's core practice lines. The firm recently announced that profits had fallen by 35% to £673,000 in 2008-09, while revenue dipped back to £301m. Despite responding to the recession by agreeing departure terms with around 10 partners in early 2009, the firm has so far avoided making junior lawyers redundant as many of its peers have done. In February 2009, Ashurst surprised rivals by announcing a targeted US launch after recruiting a large structured finance team from referral partner McKee Nelson.
A definite plus. The firm has traditionally been viewed as retaining more of the collegiality of smaller partnerships. Indeed, the individualism of partners is cited as one reason why the firm has consistently failed to deliver substantial mergers. While recent years have clearly seen the firm toughen up a little on managing the partnership (introducing discretionary gateways to its lockstep that allow it to halt the promotion of equity partners), Ashurst has retained more of the partnership ethos than many of its peers.
In its own words, Ashurst says it is an "open, lively and entrepreneurial environment, in which everyone enjoys what they do. It believes that collaborative teams, with a commercial, flexible and pragmatic approach, get deals done and issues resolved more efficiently." This may be laying it on with a trowel but most neutral observers would say there was some substance to that flannel.
At the moment finance apparently has "the most buzz about it", according to one contributor. There is little question the firm has been very successful with its finance practice, which is built along structured finance and acquisition finance. Ashurst has also recently signalled a fresh push into project and infrastructure work.
"Corporate has always done pretty well for itself from referrals from bigger firms [and the team] act for clients like Smith & Nephew, Chelsfield and National Express." Like everyone else, the firm is having to adapt to a changing marketplace in some core areas. "It is getting harder in private equity because there are so many rivals trying to get into the market," notes one reflective contributor. "But [Ashurst is] still one of the better names."
General corporate remains the engine room for the firm. The firm also has a punch-above-weight practice in property and is well represented in insolvency and competition.
Ashurst remains a partners' firm. As such, it has a string of highly-rated partners, often distinguished with that little extra polish on the client skills. In finance, key names include head of department Nigel Ward, Mark Vickers and Helen Burton. Standout names in structured finance include Erica Handling and Chris Georgiou, whose derivatives practice is highly-rated.
In corporate there is little doubt who casts the longest shadow, with private equity veteran Charlie Geffen widely regarded as one of the City's leading corporate lawyers and one of Europe's very best for buy-out work. Head of corporate Adrian Clark is, as you would expect, another assured performer.
Other notable lawyers at the firm include Mark Elsey (projects/transport), Ed Sparrow (litigation), Gary Watson (property) and competition duo Nigel Parr and Roger Finbow. However, in August 2009, respected restructuring chief Nick Angel quit the firm to join US player Milbank Tweed Hadley & McCloy.
Outside the UK, key lawyers include:
The firm has reasonably broad coverage in continental Europe. Paris and Spain touted as strong performers currently. Germany, which had been a bit of a bug bear, showing signs of coming good. Ashurst also has high hopes of its Dubai office, which was launched in 2005.
Other offices in New York, Singapore, Toyko and a liaison office in New Delhi. In 2006 Ashurst entered the Swedish legal market through a takeover of local corporate boutique AJB Bergh, which handed the firm a 21-lawyer presence in Stockholm.
Unsurprisingly given its ambitions, the firm is promising heavy investment in the future in Asia and the Middle East, where it still has relatively little exposure.
Click here to read a commentary on the US finance launch.
In recent years the firm has focused its practice around FTSE 250 companies, with Hemscott citing Ashurst as having one of the broadest plc client bases in the City. In public M&A the firm can't quite match the punch of a Freshfields or Linklaters, but has acted for major clients including BT, Centrica, Merck, Imperial Tobacco, Reuters and Dubai International Capital.
"The client list is most impressive on the private equity side," notes one observer, "where the firm acts for names like Apax, Blackstone and Cinven."
Ashurst has made much in recent years of its push with banking clients, with Goldman Sachs and Royal Bank of Scotland two of the institutions that the firm has made most ground with. Other clients include Barclays and BNP Paribas.
Ashurst clients can now also join the web 2.0. age with the firm's niftily-named online product myashurst.com, which lets them keep abreast of stuff that's relevant.
Appear to be improving. With the firm in expansive mode, Ashurst made up 20 partners in 2007. Likewise, research by Legal Week found that Ashurst has one of the fastest tracks to partnership among the City's largest law firms, with the average partner securing promotion in 2007 at 7.7 years after qualification. The firm also recently introduced a new role of counsel as part of a bid to modernise its career structure. In 2007, 13 were promoted to the new role, which can act as an alternative to partnership.
However, that does not mean Ashurst has been shy about making up partners in recent years - a bumper 20 were made up in 2007, followed by 17 in 2008, eight of whom were in London.
With the 2008-09 recession taking hold Ashurst is expected to be more cautious about growth for the foreseeable future. In common with many major UK law firms, promotions were sharply down in 2009, with the firm making up 10 partners. Recent Legal Week research also found assistants at the firm pessimistic about partner prospects.
"Salaries are straight City rates," says one contributor. Still, it's not a pace-setter on pay." He adds: "There is a bonus scheme but it is a bit hit-and-miss how it is handed out - this is not the most generous firm." To be fair, Ashurst's 2007 pay round saw the firm effectively go for full-on magic circle circle rates, slightly over CC and slightly under A&O. Newly-qualified lawyers take home £65,000, after the firm's 2008 pay review saw NQ pay rise by 1.5%. The firm is somewhat vague regarding what it pays past NQ, though it clearly does use an annual banding. Legal Week understands that some lawyers with two years' PQE are receiving £82.5k and those with three years' PQE are taking home £89k.
In common with many City firms, Ashurst this year announced it was to freeze salaries at 2008 levels in response to the slump in commercial markets. The firm's bonus scheme is not regarded as being that generous, though this is not an unusual gripe at large law firms.
Typically takes on around 50 trainees a year. Main recruitment contacts are graduate recruitment manager Stephen Trowbridge and HR head Stuart Walker.
As a corporate-driven law firm, Ashurst does have a reputation for being demanding in terms of the hours it expects its assistants to put in.
Pro bono/corporate social responsibility
Viewed as doing its bit for the cause without setting the heather on fire. Ashurst organises its good deeds through a CSR programme that covers community involvement, diversity and environmental initiatives. Declaring war on global warming, the firm also sponsors Green Tomato Cars, which is an environmentally-friendly car service apparently.
Ashurst describes its community involvement as supporting:
Make a Difference Month, Care International, Disability Law Service, Child Health Foundation, Toynbee Hall, London Youth Rowing, Educational initiatives in Tower Hamlets, Privy Council agents representing capital and non-capital prisoners in Jamaica, Trinidad and Tobago, City Gateway, Spitalfields City Farm, Royal Courts of Justice at the Citizens Advice Bureau, member of LawWorks.
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