Latham & Watkins

If you imagined combining the practice-area strongpoints of a Magic Circle firm with those of its US-headquartered counterparts, you would likely be picturing something similar to Latham & Watkins London office. The firm excels at the high-growth practice areas associated with American firms (private equity and leveraged finance) whilst also offering the sort of full-service approach that allows it to dominate the corporate M&A space as well. To begin, Latham & Watkins excels in areas that US firms in the City are traditionally associated with: private equity and leveraged finance. Regarding the former, Latham & Watkins provides frequent advice for a large cadre of private equity funds including Blackstone, KKR, and Silver Lake among others. This is reflected in its Band 1 Chambers ranking for large private equity buy-outs. Perhaps even more important for the firm’s bottom line, is not the firm’s facilitating deals for sponsors per se, but rather in their lender-side leveraged finance practice. This work, often associated with private equity buyouts, involves using significant amounts of debt to fund an acquisition. Latham & Watkins is particularly adept at supporting banks and other lenders involved in supplying that debt to private equity houses. Often missed in the flow of sponsor-side leveraged finance partners leaving the firm, is that the lender-side partners (led by Jonathan Brownson and Stephen Kensell) have remained. This is immensely important, as their work is both lucrative and frequent. The team have extremely fruitful referral relationships with the two kingmakers of London private equity: Ian Barratt and Neel Sachdev. As long as this continues, Latham & Watkins’ impressive leveraged finance performance is likely to continue. Whilst private equity may be the traditional domain of US firms in London, M&A (and, in particular, public M&A) has been a tougher nut to crack for many American outfits. Not so any longer for Latham & Watkins, which is now the largest corporate practice in the UK by revenue (rumoured to sit at around £350 million). The underlying numbers are just as impressive as the headline figure, with a remarkably healthy leverage of 1.8 associates to partners suggesting the firm is not overly reliant on rainmakers. This performance has come at the expense of the traditional titans of UK blue-chip corporates, the Magic Circle. For instance, waves were made in late 2024, when it was announced that Latham & Watkins had advised a former Linklaters’’ client Anglo American on a share disposition. How has this incursion been possible? The answer likely lies in Latham & Watkins’ ability to replicate the full-service offering traditionally associated with Magic Circle firms. This starts from the firm’s relatively large intake of 30 trainees a year, many of whom end up qualifying in non-transactional departments. It is also reflected in the range of advisory expertise Latham & Watkins has developed. The firm is ranked by Chambers in Band 1 for ESG advice, Band 2 for tax, and Band 2 for financial services regulation, among others. Moving forward, it is clear that Latham & Watkins sees its future as a full-service outfit. In the past promotion round, only one London partner had a corporate, finance, or private equity practice, with the other three coming from traditionally ‘supportive’ areas of the firm. Latham & Watkins primary difficulty is how to maintain its current position. With a remarkable array of valuable talent across the firm, it has been an attractive hunting ground for other City outfits looking to poach partners. Latham & Watkins’ approach has been twofold. First, to accept a high-level of churn for its median-level talent. It has done so through combining a strong promotion pipeline with an aggressive lateral hiring strategy. This allows the firm to cope with a degree of attrition. Second, by offering truly top tier compensation to the exceptional performers which drive the firm’s financial performance. These exceptional performers can receive nearly double the traditional lockstep maximum, bringing their compensation to a sum rumoured to be around £24 million. This may explain the retention of Stephen Kensell’s lender-focused leveraged finance team. In any case, being a phenomenal source of talent for other firms may be something of a luxury problem.