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Freshfields touts U.S. inroads one year after Silicon Valley launch

8 minute read

The Freshfields Bruckhaus Deringer offices, Frankfurt, Germany. REUTERS/Ralph Orlowski

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  • The firm is moving to a bigger Bay Area office
  • Its share of U.S. deal work has shot up
  • Lateral hires have been an investment

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(Reuters) - London-founded law firm Freshfields Bruckhaus Deringer made waves when it opened an office in Silicon Valley one year ago, poaching talent from top U.S. firms.

It was an unusual time to launch an office: Much of Big Law was cutting costs as the coronavirus pandemic rocked the economy. But the move appears to be paying off. Freshfields' share of U.S. deal work has shot up since 2020, and it's lured lawyers from more rivals in California, New York and Washington, D.C.

Freshfields announced its Silicon Valley office on July 1, 2020. It launched with existing Freshfields partners Pamela Marcogliese and Alan Ryan, who focuses on antitrust, and five lateral partner hires. Sarah Solum, the office's managing partner, joined from Davis Polk & Wardwell, where she had steered the initial public offerings of Etsy Inc and DocuSign Inc.

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John Fisher, who represented Salesforce.com Inc on its $1.33 billion acquisition of Vlocity Inc, joined from Sidley Austin. Boris Feldman, who has represented Facebook Inc and Alphabet Inc's Google, joined from Wilson Sonsini Goodrich & Rosati. Partners Doru Gavril also joined from Wilson Sonsini and Maj Vaseghi from Latham & Watkins.

Since then, Freshfields has added partner Joseph Halloum from Kirkland & Ellis and at least eight associates in Silicon Valley, based on the firm's website. It also hired former National Security Agency deputy general counsel Brock Dahl as a counsel based in Silicon Valley and D.C.

The firm's global managing partner Alan Mason has moved to the United States, splitting his time between the New York and Silicon Valley offices. The team is moving to a bigger office, too, Solum said.

"Demand has been strong," Solum said. "So I anticipate that we'll continue to grow."

Freshfields has won more U.S. deal work since 2020.

In 2019, the firm held 6.9% of the market share of deals with any U.S. involvement by value, Refinitiv data shows. In 2020 its share grew to 8.4%. By the first quarter of 2021 its market share hit 8.8% - Freshfields advised on more than $76 billion in U.S. announced deals total that quarter, the 10th highest of any law firm.

Ethan Klingsberg, Freshfields' head of U.S. corporate and M&A, who is based in New York, attributed the firm's U.S. growth to its "having a platform and a business strategy that was the right place at the right time."

Freshfields has grown its D.C. antitrust presence alongside its Silicon Valley tech presence, just as companies like Facebook and Google face heightened antitrust scrutiny from federal regulators and lawmakers.

The firm has hired former Justice Department antitrust trial lawyer Julie Elmer and former Hogan Lovells antitrust partner Meghan Rissmiller in D.C. since 2020. It's also added a Committee on Foreign Investment in the United States (CFIUS) adviser in D.C. and partners in New York.

Freshfields has 350 U.S.-qualified lawyers out of more than 2,800 lawyers and other legal professionals in 28 offices globally, according to its website.

RETURN ON INVESTMENT

The years-long process of building up its U.S. operations hasn't been cheap.

Freshfields reported last July that its firmwide revenues rose 3% to over £1.52 billion ($2.1 billion) but that profits per equity partner dipped 1% to about £1.82 million ($2.5 million) in its fiscal year ended April 2020, before it opened in Silicon Valley. A representative said financial results for the firm's latest fiscal year will be released later this month.

A recruiter in a lawsuit filed against Freshfields in 2019 estimated the firm offered Klingsberg, who joined from Cleary Gottlieb Steen & Hamilton that same year, $10 million in annual compensation. (Freshfields declined to comment on Klingsberg's compensation but called the figure inaccurate.)

Klingsberg was just one of many major hires from firms with high profits per partner.

But Freshfields can point to notable U.S. gains since those investments. In its fiscal year ended April 2020, the firm's U.S. revenues rose nearly 11% to £175.7 million ($243 million), according to a filing with the UK corporate register Companies House. Klingsberg, whose clients have included Verizon Communications Inc and Alphabet, said the firm has already unseated rivals for U.S. business.

Mason said that Freshfields' U.S. growth isn't just from putting financial resources into the effort, since "any firm that is well managed and is profitable can do that."

"The commitment is the energy and the time that partners put in every day in the U.S. and around the world to support our Silicon Valley partners, in working for Silicon Valley clients, prioritizing the clients, introducing our Silicon Valley offering to our international client base," he said. "That's where you see the difference between what we're doing [and] what some other firms are doing."

At least four other out-of-state law firms - Paul, Weiss, Rifkind, Wharton & Garrison; Debevoise & Plimpton; Jenner & Block; and Husch Blackwell - have announced new offices in Northern California since spring 2020.

The coronavirus pandemic chipped away at the region's notoriously high rents while highlighting its opportunities as the home of tech companies whose revenues grew despite economic shutdowns. But the law firm boom comes as the region's tech dominance faces challenges: Silicon Valley giants including Oracle and Hewlett Packard Enterprise have moved to Texas, also emboldened by the pandemic.

Freshfields has no plans to join that rush, for now, partners said.

"I think we're in the right place," Solum said.

Read More:

Freshfields to open in Silicon Valley, swipes top partners from U.S. firms

Freshfields U.S. revenues rose almost 11% after Cleary hires - filing

Freshfields sees profits dip as U.S. expansion strategy continues

Law firms flock to Northern California as rents drop and opportunities grow

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Caroline Spiezio covers legal industry news, with a focus on law firms and in-house counsel. She is based in New York. Reach her at Caroline.Spiezio@thomsonreuters.com.

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