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Far from the cluster of law firms in the City, some 200 commercial lawyers busily work in Twitter’s former office in Soho, by a branch of Whole Foods Market. Here is the fast-growing London office of Paul, Weiss, Rifkind, Wharton & Garrison, until recently a quintessential New York law firm.
“We practise in New York City,” declared Judge Simon Rifkind, a legendary litigation partner, in 1963 in the firm’s statement of principles. That suddenly changed in late 2023 when Paul Weiss expanded into English law, raiding star partners from other law firms in London, notably its larger US rival Kirkland & Ellis.
They came no starrier than Neel Sachdev, a British debt finance specialist for private equity firms (“My work is the L in LBO”). Sachdev, with his long hair and beaded bracelets, has the air of a legal wolf, albeit an amiable one. He and his co-head Roger Johnson, who also joined from Kirkland, have built a credible business with remarkable speed.
Paul Weiss offered big enticements for recruits who could bring in lucrative business in London. The firm’s profit per equity partner in 2023 was $6.5mn and Sachdev is said by rivals to be on a double-digit million pay package, with others also offered high rewards (he will not comment). “They threw a rock in the pool and the ripples are spreading,” says one UK law firm partner.
But Paul Weiss’s gambit has had a broader impact than inflating legal pay in London. Along with US firms including Latham & Watkins and Kirkland, it has placed a long-term bet on the enduring importance and global financial role of English commercial law. Although Brexit sapped some of the City’s dominance in banking, finance-related law has been thriving.
US firms have invested more heavily in London than in other European cities. “You need to act for public and private capital in both New York and London. Everything else is incremental,” remarks one US lawyer. Paul Weiss has opened a Brussels office and hired Nicole Kar, a Linklaters antitrust partner, but London is its main focus.
The appetite for bigger City hubs than US law offshoots of New York reflects the globalisation of finance. The London office of Apollo Global Management is close to Paul Weiss’s in Soho and is one of the latter’s largest clients. Private equity funds strike many deals under English law as well as the jurisdiction of US states and want New York firms to have similar reach.
“Over time, not being in London means cutting yourself out of a large part of corporate and private capital business,” Sachdev says. Restructurings or bankruptcies can, for example, be done under US Chapter 11 or an English scheme of arrangement and firms need to be what he calls “ambidextrous”. The New York tradition of passing on English law work to a “best friend” UK partnership is fading.
But US expansion raises two questions. One is the effect on pay and the knock-on impact on legal bills. “It looks like the legal industry is creating its own pay bubble . . . I hear a lot of frustration from corporate clients about what’s happening,” says Julian Taylor, senior partner at Simmons & Simmons. Private equity firms may tolerate pay inflation but others resent it.
The second question is whether it will endure. Paul Weiss has expanded in about 15 months in London from a small office to some 40 partners and a total of 210 lawyers covering areas including mergers & acquisitions and intellectual property. Its New York partners have invested heavily to reach beyond their home market and want this expensive hiring spree to pay back.
That turns on whether US firms bring in more legal work to London or just take a bigger slice of the same revenue pie. “These hires do not create a larger market. They just move business around,” says one US lawyer. Sachdev believes the market can expand and says Paul Weiss’s gambit is already working: “This office has been financially accretive to the firm in one year.”
The ultimate test is whether the US firm not only grows quickly but creates a stable culture in London. This requires it to knit together a lot of egos, and to promote from within rather than being an expensive hiring machine. Sachdev says it has now reached critical mass and “my definition of our success is how many partners we can promote organically year on year”.
As yet, it has created more disruption than growth for London’s legal industry as a whole. But even that is welcome, both for the primacy of English law and as a commitment to the City — and Soho.
john.gapper@ft.com
