Paul Hastings is getting a new leader for the first time in more than two decades.
It wasn’t supposed to be Frank Lopez.
The firm last year gave the job to Ronan O’Sullivan, a London deals lawyer and then 16-year Paul Hastings veteran, it confirmed. Chairman Seth Zachary had groomed O’Sullivan, 49, for the post.
Months later, Zachary told firm partners O’Sullivan decided against taking the role for “personal reasons.” Zachary threw his weight behind Lopez, 47, a New York securities lawyer who had been with the firm for just more than two years.
“Getting the right person is about choosing someone who has the experience, skills and temperament,” said Ralph Baxter, a law firm consultant. “In a perfect world that person has been with the firm a while and is ready to do it. But the world isn’t perfect.”
The Paul Hastings leadership transition in October will test whether Lopez as a newcomer can build on the growth record of Zachary, who has led the Los Angeles-founded firm through almost a third of its 70-year existence.
The firm under Zachary shifted its focus to New York, grew its headcount by nearly a third to 979 lawyers and quadrupled revenue to nearly $1.6 billion, according to Paul Hastings. Profits per equity partner grew fivefold to just over $4.7 million.
“These are big shoes to fill,” said Baxter, who was chairman at Orrick, Herrington & Sutcliffe for two decades.
The firm declined to make Lopez and Zachary available for interviews.
Lopez ascends as a two-year economic boom subsides and a possible recession looms. Among the global group of attorneys he will lead, many knew little about him until he suddenly became front-runner for the chair job.
Lopez quickly made his mark when he joined Paul Hastings in April 2019.
He had spent 15 years at Proskauer Rose—with a brief stint as an investment banker at Jefferies Group—and advised the likes of Jefferies, Citigroup, JPMorgan and Credit Suisse.
At Paul Hastings, the firm made him co-leader of its securities and capital markets practice. The practice’s revenue jumped 85% over the last three years, according to the firm.
Paul Hastings was among the top 10 legal advisors to initial public offering underwriters last year, working on $11 billion worth of deals, Bloomberg data show.
Lopez significantly grew the firm’s profile on the leveraged finance front, said two former partners, who spoke on the condition of anonymity to discuss internal firm operations.
He also helped the firm poach rival talent, like Skadden partner Jonathan Ko—a special purpose acquisition company specialist who joined before the height of the SPAC market—and Chris DeCresce, Covington & Burling’s capital markets group chief.
Lopez made the firm aware of his interest in climbing the leadership ladder, according to three former Paul Hastings employees. But Zachary, a 70-year-old tax lawyer edging closer to retirement, had a different leader in mind.
O’Sullivan Gets Job
Under Zachary’s leadership, Paul Hastings prides itself on operating democratically.
It has an “open” compensation system that gives partners insight into what their colleagues are making. The approach is uncommon in a Big Law system that often favors opaque salary structures.
Yet, inside the firm, there is no question where the buck stops. Zachary had a significant voice in picking his successor, according to four former employees.
While banks and corporations might look outside to bring in new leaders, Big Law firms typically turn to lawyers who have been with them for several years—or even decades.
Enter O’Sullivan. He had made partner at Paul Hastings a year after coming over from UK’s Herbert Smith in 2005. The firm tapped him as London managing partner five years later.
Partners understood O’Sullivan was next in line for the chairman job after the firm made him global managing partner, according to four former employees. O’Sullivan took on the firm’s No. 3 leadership role in 2018.
He carried out a growth plan in the UK, long a tough nut to crack for US firms, by poaching premier talent from some of the city’s best known law operations.
The London office doubled in size to more than 100 lawyers on O’Sullivan’s watch, focusing largely on private equity and mergers and acquisitions. It reportedly broke the $100 million revenue mark for the first time in 2019, placing it among the largest US firm operations in the UK.
O’Sullivan, who counts professional soccer team owner City Football Group among clients, planned to move to New York after being voted as the firm’s incoming chairman, according to the four former employees.
Paul Hastings, through spokesman Shade Vaughn, declined to elaborate on the personal reasons that changed O’Sullivan’s plans. “Ronan made a personal decision and we do not comment on such matters,” Vaughn said.
O’Sullivan, who continues to practice with Paul Hastings in London, and Teri O’Brien—the California lawyer elected as his second-in-command—didn’t respond to requests for comment when contacted by phone and email.
O’Brien left the firm for Latham & Watkins in March.
Meet the New Boss
O’Sullivan’s reversal on the chair job opened the door for Lopez, who was nominated by Zachary for the job, according to the firm.
Firm managing partner Greg Nitzkowski simultaneously nominated Sherrese Smith, a Washington lawyer who led the data privacy and cybersecurity practice, as his successor.
With support from top leaders, Lopez and Smith became instant front-runners.
“Seth has had an awful lot of influence,” said James Jones, a Georgetown University fellow who studies law firms and led Arnold & Porter as managing partner for nine years. “He has been the driver behind a lot of that firm’s strategic success.”
Zachary oversaw the firm’s geographic shift away from California. Paul Hastings acquired Manhattan real estate firm Battle Fowler, a deal finalized in the months after Zachary took over, to give the firm more lawyers on the East Coast than in California.
Paul Hastings has 327 attorneys in its New York office, compared with 129 in Los Angeles and Century City, California, according to the firm.
Zachary also pushed the firm’s strategy of focusing on the biggest drivers of growth. Those include mergers and acquisitions, private equity and capital markets. Major Wall Street players, including Goldman Sachs, BlackRock and Bridgewater Associates, are Paul Hastings clients.
The past two years in particular were lucrative for Paul Hasting and other Big Law firms. “If I were a law firm leader, I certainly would want to go out on the two most profitable years in the firm’s history,” Jones said.
In the election of Paul Hastings’ new leaders, “partners were encouraged to nominate themselves or others,” Vaughn said. But, with the backing of the firm’s two top leaders, Lopez and Smith earned a super majority vote on the first ballot.