Allen & Overy is plowing ahead with US growth plans, even as competitors pull back and deal flows ebb to a trickle.
The UK-founded firm is looking to add about 50 US partners to the nearly 100 it has now over the next two-plus years, said Tim House, Allen & Overy’s senior US partner, in an interview. The firm also plans to boost its hiring of US associates, he said.
“There’s every reason why our strategy should have us equally weighted, if not more heavily weighted, US law to English law,” House said. “We’re on that journey.”
Allen & Overy has nearly doubled its US presence over the last two years, hiring 45 US partners as it expanded into new markets including Boston, Silicon Valley and Los Angeles. Revenue firmwide rose 10% to $2.65 billion in the latest financial year, with more than half of the increase attributed to its US practice.
After hiring so many partners last year, House said he’s seeking associates to handle their work.
That marks a departure from some firms that softened their associate hiring. Silicon Valley firm Gunderson Dettmer this week deferred its hiring of first-year associates to the start of the year, Above The Law reported, prompting concerns a slowdown in demand could lead to other cost-saving moves from firms.
With other firms pulling back from recruiting new partners and associates, he said those markets could see a “repricing toward normality” after two years of frenzied hiring leading to signing bonuses and high pay packages for partners.
House acknowledged his firm’s work is “a little bit slower” since its financial year began in April, particularly in leveraged finance and capital markets.
Global firms are also dealing with the fallout of currency fluctuations that have seen the euro and British pound fall significantly against the dollar, with year-to-date declines of around 15% and 20%, respectively.
Allen & Overy’s bottom line is somewhat insulated from currency moves, House said. The firm brings in about a third of its revenue each in dollars, euro, and pound sterling. But with the bulk of its lawyers in England, its costs are “heavily weighted” toward the pound, House said.
So-called “Magic Circle” firms including Allen & Overy have long sought to develop US practices that rival their size and scope in London, Europe and Asia. They’ve faced stiff competition on their own soil from American firms that have had success luring partners by wielding larger paychecks and forcing UK firms to break from their traditional lockstep pay approach.
Freshfields Bruckhaus Deringer has gained attention in the US for a strong push into the lucrative cross-border mergers and acquisitions deal market since hiring former Cleary Gottlieb & Steen partner Ethan Klingsberg in late 2019. A year ago, Frieshfields lured Cravath Swaine & Moore dealmaker Damien Zoubek to join in New York.
Allen & Overy has focused US growth in private capital and funds work, technology, life sciences, and its projects, energy, natural resources and infrastructure group. The firm last year added eight partners from White & Case to its technology practice and picked up a 19-lawyer renewable energy group from Akin Gump Strauss Hauer & Feld.
“The piece we were missing in the US was real strength in renewables, and that we answered with a substantial hire,” House said. “All of these team moves have been successful, but that’s been particularly so and has a strong wind behind it with the legislative moves in the renewable space in the US.”