In connection with this development, Charles River Recruiting principal Adam S. Weiss was quoted in the leading Brazilian legal publication, Consultor Juridico:  http://www.conjur.com.br/2011-jul-13/banca-eua-arrombar-festa-escritorios-brasileiros-fusoes.

Attorney recruitment from competing international firms remains the most common method of establishing new offices in foreign jurisdictions.

A variety of factors motivated recent moves.  For example, seven lawyers left the Geneva office of Hogan & Hartson upon announcement of its merger with UK-based Lovells, and moved as laterals to Akin Gump.  And some firms are making particular investments in particular legal specializations, e.g., Bingham (which picked up Susan Merrill, former head of enforcement for FINRA) and Cadwalader (which picked up Proskauer’s litigation co-Chair Louis Solomon and antitrust co-chair Colin Underwood, DLA’s Beijing private equity head Rocky Lee, and a 9-partner energy and commodities group from McDermott).

One firm that has been particularly active in bringing on laterals is DC-based Covington & Burling.  Among other 2010 acquisitions, Covington brought on board John Dugan (former comptroller of the currency), Edward Yingling (former president and CEO of the American Bankers Association), Gerald Waldron (former staff director and chief counsel of the House Select Committee on Energy Independence and Global Warming), Steven Fagel (former deputy chief of staff to Assistant AG Lanny Breuer), and James Garland, deputy chief of staff to Attorney General Eric Holder).  Outside the US, Covington added such lateral partner-level attorneys as Timothy Stratford (former US Trade Representative for China Affairs—Beijing office), Peter Camesasca (former Howrey antitrust attorney—Brussels office) and Robert Amaee (formerly of the UK’s Serious Fraud Office—London office).

Dewey & LeBoeuf also showed substantial activity, recruiting such big-name partner rainmakers as Henry Bunsow (IP litigation, formerly of Howrey), and James Carter (international arbitration, formerly of Sullivan & Cromwell).

Approximately 2,000 partners switched firms in the NLJ-250 in 2010, a number which may rise in 2011, in light of steady movement and significant developments like the demise of firms like Howrey during this year.  Partners considering a lateral move are encouraged to contact Charles River Recruiting for a confidential consultation.

Legal Week research surveyed 62 Square Mile international firms that have foreign practices operating in London. This accounts for almost all of the foreign firms in the area. Those firms reported 93 lateral partner recruits, an increase of more than 66 hires over the previous year. Lateral partner recruiting in 2008 was also high but decreased in 2009, only to rebound in 2010.

One notable hire was Sullivan & Cromwell’s addition of Presley Warner, formerly of Freshfields Bruckhaus Deringer. The addition of Warner allows S&C to continue expanding its London finance practice. Warner, who worked at Freshfields for 16 years, will join the firm’s leveraged finance and credit practice and advise corporate and private equity funds borrowers on debt restructurings as well as acquisitions and disposals. The addition of Warner significantly strengthens S&C’s financial practice as Warner is qualified to practice in Canada, the UK, New York and Massachussets. Warner also completed a secondment at Goldman Sachs and will reportedly retain the investment firm as a major client.

In addition to Warner, David Ereira, Brian Bray and Chris Howard have also left Freshfields during the past four years. A former partner of Freshfields, Tim Emmerson, welcomes Warner to his Merger and Acquisitions department at S&C, where he now works. In his statement Emmerson notes “London is a primary centre of leveraged finance for a significant number of M&A  transactions, both in the U.K. and also across Europe. In recent years, borrowers have increasingly sought creatively structured and robust leveraged finance arrangements which will withstand the pressures of more volatile markets. Presley is one of a small number of legal advisers in London with the creativity and expertise to deliver solutions of this kind to European borrowers on major deals.”

A second lateral partner changeover that recently rocked the legal world is the four-partner move from Clifford Chance’s American practice to Weil Gotshal and Manges in London.  Nick Benson, Ed Gander, Nigel Clark and tax partner Jonathan Kandel will be joining WGM.  The departure hampers CC’s funds team operations as the move leaves Clifford Chance with only one partner, Nigel Hatfield, tending to its City funds practice. The departing attorneys, led by Ed Gander, have worked with major funds clients including Abraaj Capital, SRM and BC Partners. Their loss will be felt deeply because they played a major role in helping CCs funds practice maintain a top tier ranking even after former funds head Jason Glover announced his departure last July to Simpson Thacher.

WGM has been searching for fund formation partners in the UK for quite some time. They confirmed the hires in early June 2011 when they  completed last year’s hire of  CC partner John Fadely. Fadely will work as the WGM funds partner in Hong Kong. Another successful hire on the part of WGM is Linklaters banking partner Stephen Lucas who will strengthen the WGM finance practice in London.

The lateral partner hires that WGM have now achieved is seen by many to mark a damaging blow, perhaps one of the most serious ever inflicted by a US practice, on a leading City law firm. Insiders remember WGM’s attempt several years ago to hire Matthew Layton and James Baird who managed private equity for CC. That attempt failed after CC prevailed on the duo to remain, but the current WGM success validates the continued attempts at lateral partner hiring.

The legal world has seen U.S. law firms becoming increasingly aggressive in their recruiting practices within the European private equity market. Lawyers who work with private equity funds managements and leveraged finance are a particular target because these firms place a great deal of importance on reaching American investors. Lateral partner hires create a tense situation for the attorneys and their firms as they negotiate about current client matters, exit terms and the possibility of associate transfers.

Further lateral attorney recruiting is likely in the offing:  Legal Week’s survey confirmed that two-thirds of surveyed firms plan London office expansions, including firms that have declared that they intend to boost their City headcount by around 50 percent.  Finally, several US-based firms indicated they would consider a merger with a UK firm in the right circumstances.

The year 2010 furnished more evidence that US-based firms are seeking international legal recruitment, with a continuing trend toward expanding their geographic footprints.  For example, demonstrating that European legal recruitment is quite active, K&L Gates opened two new offices in 2010 (Tokyo and Moscow), with Brussels slated to open in 2011.  These moves follow on the heels of K&L Gates’s expansion to Frankfurt, Singapore and Dubai in 2009.  Other firms opening opportunistically include Kilpatrick Townsend & Stockton, which just announced the establishment of a Tapei, Taiwan office with a team of four from Howrey.  New York-based Curtis Mallet recently opened in Ashgabat, Turkmenistan and indicates it is considering an outpost in Baku.  Bingham opened its second European office (Frankfurt); the firm’s first is in London.  Dechert opened an office in Dublin, Ireland while expanding its presence in Moscow.

UK firms have also expanded their international legal recruiting efforts, with four of the major London-based firms establishing or strengthening their Australia connections:  Morton Rose, Allen & Overy, DLA, and most recently Clifford Chance.

Domestic US firms have also been searching for legal talent while expanding their geographical footprint.  For example, Gordon & Rees recently recruited 2 partners in Atlanta from Epstein Becker & Green, including C. Anthony Mulrain, who will head his new firm’s sports, media and entertainment law practice.  Akin Gump picked up several IP (intellectual property) partners from Woodcock Washburn in Philadelphia.  And Bingham expanded its Washington, DC presence with the acquisition of McKee Nelson and its 120 tax and structured finance specialists.

White & Case recently recruited eight lawyers and 42 staff from German insolvency boutique Schröder Rechtsanwälte.  The Berlin legal recruitment took about half the German law firm’s lawyers.  The team will focus on “major and difficult insolvency proceedings.”

Action on the continent is looking promising, but it’s too early to say whether 2010 will be a better year for lateral moves.

Some in Hong Kong are worried, but should they be?

Hong Kong has been booming.  Its exchange has had more public offerings than any other in the world.  It’s a banking power with a well-developed and trusted legal system.

Shanghai Legal Recruiting vs. Hong Kong Legal Recruiting

But Shanghai was Hong Kong before Hong Kong was Hong Kong.  Before the communists took over in 1949, Shanghai was the area’s leading financial center.  With communists still in charge, will they keep their largesse on the mainland?

Still, Shanghai has a long way to go in setting up the appropriate infrastructure – a well-educated population of English speakers, a stable legal system, a convertible currency — and some think 10 years is too soon.

And, as Anthony Lin points out, “such surveys [as Eversheds’] are to be taken with a grain of salt; after all, over a tenth of Eversheds’ respondents predicted Dubai would emerge as the world’s preeminent financial center in decade’s time.”

Some years ago, mainland Chinese companies that made an initial public offering in Hong Kong would also list their offering on a U.S. market. Such dual listings are now more rare – and that presents lost opportunities to U.S. firms that have no capabilities in the market that last year led the world in IPOs, at $27.2 billion. (But see predictions that legal recruiting will turn to Shanghai within 10 years).

But not all firms consider these facts dispositive.  Some lawyers point to the reduced fees and lower profit margins available in Hong Kong as compared to U.S. legal practice.  Others believe it’s harder to maintain a consistent level of high quality work in foreign-law practice.  Simpson Thacher & Bartlett, Davis Polk & Wardwell, and Sullivan & Cromwell have historically stayed away, or focus on U.S. IPOs for China-based companies.

Still, firms like Shearman & Sterling, London’s Magic Circle and major U.S. firms like Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom, have a long history of establishing local practices globally.  Indeed, Anthony Lin writes in The Am Law Daily blog on AmericanLawyer.com that Shearman & Sterling has recently acquired a Hong-Kong-ready practice by recruiting partners Colin Law and Peter Chen from O’Melveny & Myers. Law, who will lead the office, is experienced in capital markets and once worked for Lovells.

Matthew Bersani, Shearman’s Asia managing partner, says more and more clients are looking for "one-stop-shop" firms. "In Hong Kong listing work, it’s very rare now to see separate U.S. counsel hired.”

Mr. Lin points out that Hong Kong offers only one bar exam a year, in October, and that firms who are merely considering a move may be wise to have their attorneys take and pass it:  “The Hong Kong Law Society requires foreign firms practicing local law to have an equal ratio of Hong Kong-qualified and foreign-qualified lawyers. Having U.S. lawyers who can also be counted as Hong Kong lawyers makes it much easier to meet this ratio requirement should a firm decide on local practice.”

Related:  Mayer Brown calls its merger with Hong Kong’s largest law firm, 260-lawyer Johnson Stokes & Master, an unqualified success.

The Company You Keep

In some markets, you’ve got to be wary of very rich clients, and do your due diligence.  Mainland China, like Russia, has a lot of new and often corrupt wealth.  And some lawyers learn that the hard way.

In 2002, Forbes named Shanghai property developer Zhou Zhengyi the 11th richest man in China.  Not long after, he came up with some tricky methods to acquire a publicly traded company that did property development.  It happened to be part of a history of fraud and corruption, and he ultimately got 19 years in prison.  But that’s not the interesting part, which is:

His lawyers joined him in prison.

Well, maybe not the same prison,  But the three Hong Kong lawyers who worked on his deal — Donald Koo and Vivien Fan of Paul, Hastings, Janofksy & Walker’s Hong Kong office and Simon Lai of Hong Kong-based Deacons – got terms of 2-3 years for drafting the disclosure documents that concealed Zhou’s plans from investors and regulators.

That has led to a lot of soul-searching on the need for more due diligence in wild-west markets like Russia and China, especially on clients whose situations seem too good to be true.

Read the full story of the Hong Kong lawyers caught up in Zhou’s fraud.