News that Lovells lifers Marco Compagnoni and Jonathan Wood have jumped ship to US firm Weil Gotshal is further evidence of the structural shift in the provision of legal services to the European private equity community.
Compagnoni, head of Lovells’ international private equity practice and something of a figurehead in the European market, explained what for him was obviously a tough decision.
“If someone had asked me to move to a US law firm two years ago, I’d have said ‘I’d rather chew off my own arms’,” he said. “But in the last 18 months, deal financing techniques have become much more sophisticated in tandem with the growth of hedge funds. There has been a demand from clients, who are increasingly asking whether you have the capabilities to do these kind of things.”
Compagnoni will be joined by Wood, one of the rising stars in the group and who was thought to be on track for a partnership, and Alison Hampton, a consultant. It is expected that more of the team will announce their intention to follow suit in the next couple of weeks.
David Harris, managing partner of Lovells, agreed that the market was becoming more complex and increasingly competitive, telling IFR Buyouts: “In my view, if you want to be among the leading group of international law firms in the future, then a fuller service US capability is going to be required.”
When quizzed on whether the move would accelerate the firm’s search for a US partner, Harris said: “Do these things have a bearing on strategic thinking? To a point: they do make you think more carefully about the way in which the markets are developing.
“Private equity alone would not be a deciding factor in evaluating the pros and cons of a US merger, but would be one consideration among the many to be assessed, including the extent of client demand for a fuller service US capability. The latter is important, as in my view there needs to be a strong business case for a US merger to overcome the cultural and other challenges in achieving it.”
This is not the first time that an aggressive US law firm has snatched a senior European private equity lawyer and according to market rumours, another private equity team at a UK-based magic circle firm is also weighing a move. It indicates the growing ambition and pulling power of the newer US entrants.
Compagnoni continued: “I have been thinking about the decision for some time and was looking around for a platform that would enable me to offer a broader array of services to clients. There are different types of US firms, with some of them acting simply as a deal platform for US private equity groups. Weil has demonstrated that it wants to invest heavily in Europe to build up its own client base over here.”
The group’s stated ambition is to become the leading private equity law firm in Europe. According to a statement, the London office completed more than 50 private equity deals in 2005 with a total deal value in excess of €26bn.
Compagnoni adds strong relationships with Terra Firma, 3i, Advent International and the Barclay brothers to existing clients, including Lion Capital, Apax Partners, Candover and Bridgepoint.
The momentum that Weil has gained by the latest recruitment coup contrasts with Lovells, which was also rocked last year by the departure of its pre-eminent German private equity lawyer, Oliver Felsenstein, to rival Clifford Chance.
Leah Dunlop, a Rome-based partner, who initially established the private equity practice, will replace Compagnoni while the firm searches for a long-term successor.