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Jacob’s ladder to Europe Valerie Ford Jacob refuses to give up on Europe. Following the Ashurst merger failure, she’s taken its former managing partner instead. Fried Frank’s London strategy is taking another twist CLAIRE SMITH
50 Legal Business May 2004
YOU COULD FORGIVE VALERIE FORD Jacob a sense of déjà vu. As a result of failed mergers with Ashurst Morris Crisp, both Latham & Watkins and now Fried, Frank, Harris, Shriver & Jacobson have had to embark on aggressive European expansion programmes on their own. When, in 2000, Latham’s talks fell down, the US firm brashly announced a ‘plan B’ to grow a European operation organically. Four years later, it’s well on the way – over 100 lawyers in London, plus offices across Europe. A lot of that was thanks to Ashurst. ‘No one had heard of us,’ says Latham’s London managing partner David Miles. ‘That’s changed, and we were helped a lot in that by the discussions with Ashurst.’ Fried Frank is now in the early stages of what it hopes will become a similarly dynamic growth spurt, but Jacob, co-managing partner of the Wall Street firm, cautions: ‘We may not do it quite as fast as that.’ Instead, she’s hired former Ashurst managing partner Justin Spendlove. Spendlove – whom Legal Business profiled in November 2002, calling him ‘American gigolo’ after his predilection for US merger talks – may not be renowned for his feeearning of late. But Jacob has inserted him in Fried Frank’s London office as head of
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> Europe and a member of the executive. Jacob, who was elected to the leadership mid-way through the Ashurst talks, is under pressure to show her partners that this new plan – let’s call it plan J – will pay off.
Practice made perfect ‘It’s such a great thing for us to have got Justin,’ says Jacob, with understandable relief. ‘The guys at Goldman Sachs are so pleased, they just think he’s great.’ Jacob has put all her strategic eggs in a European basket, and needs full support in realising her ambition. Ashurst aside, she’s known for getting her way. ‘The firm, when I was a young lawyer, was very M&A-driven, and I didn’t want to do M&A. A lot of the work had financing aspects, and whenever there was an opportunity to do that I volunteered. As no one else wanted to do it, I got it,’ she says. ‘We were able to get to know the investment banks, and build up a practice. The firm has always been extremely supportive – especially when they saw it was actually going to get going.’ Valerie Ford Jacob joined Fried Frank in 1978, straight out of Cornell University Law School, and immediately stood out. She has since almost single-handedly built from scratch a capital markets practice that regularly represents Bank of America, Goldman Sachs and Merrill Lynch, and is among the best in New York. Those banks have increasingly turned their attentions to Europe, and so has Jacob. She was responsible, in 1997, for the launch of an international securities joint venture with Simmons & Simmons. A partner from Jacob’s New York team sat in Simmons’ offices until 2000, when the alliance collapsed and Fried Frank made its first foray into local law, hiring UK partner Christopher Kandel from O’Melveny & Myers. He left in 2002 for the London office of Cadwalader, Wickersham & Taft. Then there were the merger talks with Ashurst, again aimed at finding the best way to service these investment banks apparently so hungry for what Fried Frank does over there, over here.
Jacob’s backers Jacob was appointed co-managing partner of Fried Frank in March 2003. She shares the post with corporate partner Paul Reinstein – he deals with the day-to-day management in New York, she gets involved with the
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Spendlove, says: ‘When it came to the managing partner position, Valerie was a natural candidate. She had made personal commitments, at personal cost, to further the interests of the firm as a whole. She seemed to have a vision of where the firm should go and how, and people were prepared to sign up for that.’ Eric Cafritz, the head of the Paris office, adds: ‘It was inevitable that she was going to be a managing partner. She was the most natural candidate to ascend to that position. She has a fabulous practice and she is respected by 99% of the firm’s partners.’ Three months later, the Ashurst talks collapsed. Despite failing to link up with one of the City’s most Arsenal fans: Jacob with her son, Oliver profitable and high-quality outfits, Jacob was famously Born: New Jersey stoic. ‘I have very supportive Lives: Park Slope, Brooklyn partners,’ she says, again. ‘And Family: Married with a daughter, 21, and two sons, life is full of disappointments.’ 19 and 13 Mollen adds: ‘Efforts were Hobbies: Spending time with kids, hiking, listening to made to involve as many people music, soccer as possible in the talks. So there Favourite team: Arsenal was a lot more willingness for Last went: To see the 4-2 victory over Liverpool on Good people to say, “OK, that didn’t Friday, at Highbury work out, let’s go and do the Recommended film: As Good As It Gets, Jack Nicholson next thing”, as opposed to Best book: Snow Falling on Cedars, David Guterson blame people. People said we Holiday: The seashore or the Adirondack Mountains have to make this work in a Career highlight: Becoming a partner at Fried Frank different way, rather than Scariest moment: ‘Getting caught in the falling debris and smoke saying, “Valerie, you really on September 11 with two of my partners.’ screwed this up”.’ What they say: ‘There are an awful lot of great people in great There was some fallout American law firms who have had everything though, and partners have left given to them. She basically decided she Fried Frank in the US both wanted to be a capital markets lawyer in a firm during and after the talks. One where nobody saw the need to do that, and she such departee says: ‘She led really went out and built it.’ Former Fried Frank the firm into two-year long partner, Christopher Kandel, now at Cadwalader negotiations with Ashurst, and I thought that those were handled badly. They led to no merger, but a strategic stuff. The Ashurst lot of turmoil at Fried Frank.’ merger talks had then been Other former partners can be equally going on for a year already, so harsh in their assessments. ‘If you don’t the timing of her appointment agree with her you have got a lot of was awkward. Most of the Fried problems ahead of you,’ says one. Another Frank partners were supportive. adds: ‘Some of the things that make her a Robert Mollen, head of the great lawyer externally make her a lousy firm’s London office prior to
VFJ: A LIFE IN FULL
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manager internally. She has the people she really likes and gets on with, and other people she won’t talk to.’
Strategy review
‘Despite being managing partner of Fried Frank, she was working until two in the morning last week for me on documentation. She is a bit of a deal junkie at heart.’ Barry Price, Merrill Lynch
‘Coming through the merger discussions,’ says Jacob, ‘I would now characterise the partnership as extremely energetic and committed to building the firm as a business. Up to a couple of years ago, the firm never had a plan or a strategic vision, just a successful practice in the US. As our clients started to increase their business over here, and as we began to speak to UK people about expanding the firm, that had to change. Going through the whole discussion brought to the partnership a keen focus on where we want to be ten years from now.’ And where the firm wants to be is in Europe, servicing the great US clients that want it to be here. That’s not just the investment banks, it’s also the likes of ntl and Telewest, for whom it is already working in London, along with a raft of other corporates (see box, ‘Fried Frank in London’, p54). It is that opportunity which appeals to Spendlove, who had been in something of a limbo since Christmas, when he had lost his managing partner position at Ashurst. ‘There are a small number of firms that are really effective challengers to the leaders,
Ashurst isn’t prepared to do that? ‘Comparisons are invidious, to be honest,’ he says, uncomfortably. Both Spendlove and Jacob wish the merger had happened – they were, after all, the two partners most central to the discussions. They spent a lot of time travelling around Europe, and Spendlove introduced Jacob to many cities she had not visited before. So there’s a distinct air of disappointment. ‘We wouldn’t have spent the amount of time on it we did if there hadn’t been a worthwhile objective,’ Spendlove says. ‘From my point of view it would have been an achievement that was worth the effort. Spendlove: comparisons with Ashurst are ‘invidious’ The fact it wasn’t achieved is disappointing, but that doesn’t mean it can’t be achieved and it’s a good time to be in in a different way. one of those firms,’ he says. ‘My view now is that it’s not a deal that’s ‘You need to be in a firm that’s possible to do, merging equals,’ he says. prepared to grasp the chal‘Each firm is great and legitimately proud of lenges.’ By implication, does what it has done, and though both were that mean Spendlove thinks prepared to make significant adjustments, in the end there SOCCER MOM was a recognition that it wasn’t possible.’ Jacob adds: ‘I don’t think She also got to visit AC Milan’s training facilities as Jacob is one of a rare bunch of female law firm leaders, there could be a merger of part of a combined camp programme, much to her and says it’s not been an issue: ‘Well, maybe one or equals, there are just too excitement. How Jacob finds the time for such extratwo times, I don’t remember. But certainly never at many differences in the way curricular activity is, all things considered, incredible, Fried Frank or with my clients.’ the businesses are run.’ maintaining as she does a full-time practice while also She grew up in a house full of brothers, which running the firm. One client recounts a story he has helps. She is used to operating in a very male environheard of Jacob joining a conference call with a client ment – and even spends spare time on the soccer Changing face from the recovery room ten minutes after giving birth. pitch, with her sons. The two boys got her involved in The process of getting to know She always finds time for her sons though, and the English football, and she is the founder and director of another law firm’s business in 13-year-old is in the office with her when we meet, a youth soccer foundation in New York at the Metropolsuch detail has clearly taught having joined her on the business trip to London, along itan Oval. She runs it with her husband, after the pair of Fried Frank a lot. As well as a with two of his friends. Together they’ll attend two them saved it by raising $1m from Nike and the US new and ambitious external Arsenal matches, as they are both keen fans and the Soccer Federation. About 200 New York schoolchildren outlook, the firm has made a firm has a box at Highbury stadium. She feels its now play there, and Jacob takes charge of the 13-yearnumber of internal changes. important for her son to join her on the road and in old boys’ team most weekends. The corporate department meetings. ‘It helps him understand what I do – it’s The facility was visited by the Manchester United has been restructured into good for him to see me at work,’ she says. team last year: Jacob took the squad on a guided tour. seven sub-groups: M&A, private equity, asset
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> management, finance, capital markets, international and corporate governance. That change was planned to take effect on completion of the Ashurst merger, but went ahead anyway. A lot has changed in the firm since Jacob took over, some of it precipitated by the departure of Stephen Fraidin, its biggest M&A rainmaker, to Kirkland & Ellis just before the talks broke down. (Indeed, some close to Ashurst blame his departure, and the fact that Fried Frank insisted it was not a problem, for the ultimate breakdown.) Since then Larry Isaacson, the securitisation star with close links to Ashurst’s Erica Handling, has moved to McKee Nelson. Fraidin and Jacob did not get on, and he was an opponent of excessive European expansion. ‘Steve Fraidin left, and he was one of our senior M&A partners. But he was 63 at the time, and I don’t think it was necessarily because of one event,’ Jacob says. ‘Over the years his views were different from those of many in the firm, and he decided to move on. It’s always stressful when people leave, but oddly enough it made the partnership and the institution even stronger, because it became more committed to the business.’ Others echo the line that the firm’s historic situation – where a small cabal of M&A rainmakers kept other partners busy – was rocked by the Fraidin loss, but think it will ultimately have a positive, entrepreneurial outcome. Fraidin declined the opportunity to comment. It is time for a new generation, and the firm’s head of M&A for the last 30 years, Arthur Fleischer, is taking more of a back seat as senior partner. Many describe Jacob as something of a Fleischer protégée. He says: ‘Val has very good political skills in the best sense of the word, meaning in my view that she tries to keep people involved. She explains to everyone what she is trying to do and why she’s trying to do it. ‘She is very positive, persistent, and maintains her composure and a sense of humour about herself and what she’s focusing on, while at the same time remaining very determined.’
Mollen: Jacob made personal commitments
hire, despite the fact that the firm could be viewed as a late arrival in the City. ‘This is a good opportunity for senior lawyers,’ he says. ‘It’s an opportunity to shape a business that will be pretty different from the rest, and be a key player. Quite a lot of the US firms have taken on small teams
FRIED FRANK IN LONDON Despite being in the throes of merger talks, Fried Frank’s four-partner London office advised on the following in 2003: ■
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Spend, spend, spend Spendlove is now charged with bringing a similar determination to bear in Europe. He believes Fried Frank has something genuinely different to offer the potential London lateral
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The year’s largest European M&A transaction, acting for Goldman Sachs as financial adviser to Telecom Italia in its €40bn merger with Olivetti. The successful European restructuring of ntl, first representing the official committee of unsecured creditors in the Chapter 11 reorganisation, and then representing the company in the year’s largest SEC-registered equity offering by a European company, a $1.43bn rights offering on Nasdaq. The pending restructuring of Telewest, for the unofficial committee of bondholders. The formation of the largest European private equity fund, acting as joint counsel with SJ Berwin to Permira on its €5.1bn fund. The year’s largest German M&A deal, as US counsel to Procter & Gamble on the acquisition of Wella. FTSE-100 clients include Gallaher, Hanson, Rio Tinto and Carnival.
for specific purposes – this is different, and will be a genuine drive to build a substantive M&A and corporate finance business, and clearly to do that you need everything like real estate and so on.’ The rest of the firm certainly seems committed to it, and many say that the key dissenters, like Fraidin, have now left. Parisbased Cafritz says: ‘I think one of the things we took away from the negotiations and the examination of the European market was that we very much want to be a focused shop in Europe. I don’t think Fried Frank is going to replicate itself in London, Paris, Frankfurt and elsewhere. I don’t think anybody at Fried Frank at this point wants to be a big British institution.’ The Paris office has grown from an M&A-focused team into a compact yet profitable practice which also does largescale dispute resolution work. Cafritz says: ‘I like to believe that this model has convinced partners in the States, who are a pretty parochial group traditionally, that Europe has a lot of opportunities for lucrative growth.’ Fried Frank is a business described by both current and former partners as much better than it is generally given credit for in the market. One ex-partner says: ‘It’s actually a superb firm, much better than you would expect from the outside. In M&A it may not be the outright leader it was 20 years ago, but it has some very heavyweight senior lawyers.’ At 50 years old, Jacob is a relatively young head for a US firm. Fried Frank’s departmental heads include real estate star Jonathan Mechanic and bankruptcy head Brad Scheler – both comparatively young and dynamic. She, they and now Spendlove just need to convince a new generation of top UK and European lawyers to sign up to the new Fried Frank: Merrill Lynch and Goldman Sachs are waiting. Indeed, Barry Price, a managing director at Merrill Lynch who has known her for almost a decade, says: ‘Despite being the managing partner of Fried Frank, she was working until two in the morning last week for me on documentation. She is a bit of a deal junkie at heart.’ For Jacob, transactions are the straightforward bit. ‘At least the deals close,’ she sighs. ‘Partners’ thoughts never do.’ LB claire.smith@legalease.co.uk