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Shearman's previous success in London is eroding away, but can a new organic growth strategy turn things around if NY is pulling in the opposite direction?
Shearman & Sterling had the most powerful brand of any US firm in the City at the start of the decade. But not anymore. As US rival Weil Gotshal & Manges advanced its presence in the capital to become a private equity powerhouse, Shearman failed to capitalise on the multitude of lateral hires it made in the late 1990s and early 2000s.
Yet Shearman is now trying to rejuvenate its London offering by pledging to grow organically, by increasing its trainee intake and reducing the number of lateral hires.
But with Shearman being slammed by ex-employees for its lack of promotion prospects and with its New York headquarters firmly controlling the growth of every office in the network, the aim of organic growth is a mammoth task. Can London managing partner Kenneth MacRitchie pull it off?
Cultural divide
MacRitchie, himself a lateral hire, is facing a host of structural problems.
"US firms don't have trainees. Is it likely that Shearman's headquarters will support the extra cost of more trainees in London?" asks one former partner. "I think they'll struggle to get support for something that New York doesn't have, and that has not been done in London before."
This cultural divide between London and New York has been the key obstacle for growth and promotions in the capital. Associates and counsel felt duped by the firm when hopes of partnership were dashed in recent years.
Earlier this year (21 May) The Lawyer reported that nine counsel left the London office due to a lack of promotion prospects. Six of the nine previous Shearman counsel left to become partners at other firms, including Adam Cooper, who moved to Simmons & Simmons, Elisabeth Baltay, who joined Bingham McCutchen, David Manny and Raminder Singh, who went to Vinson & Elkin, Stephen Jurgenson, who joined Dewey Ballantine, and Angus Rollo, who moved to Sheppard and Wedderburn in May this year. Penny Madden, Andrew Regan and John Schmidt have left the law.
"Everyone knows it's hard to make partner at US firms," says one former counsel at Shearman. "The problem was that so...