"In a sense, they make money in spite of themselves," he says. "They've become safe, bureaucratic organisations that are very poorly managed. It's very difficult to get decisions made. The partners have a job for life, and some of them are not terribly good. To be honest, being a partner in a big City law firm is boring."
Moreover, he adds, there is deep frustration building up among the thirtysomethings in some of the biggest firms who are coming to the shocking realisation they are not going to become partners: "In many cases the firms have misled these people."
All this is grist to Allen's mill. He is in the business of poaching such people and is finding the terrain fertile. Allen is setting up the London office of Weil, Gotshal & Manges, one of the biggest law firms in the US.
It is perhaps the most serious attempt by a US firm to muscle in on a highly lucrative City market - in this case legal advice to banks.The territory has until now been dominated by Clifford Chance, Allen & Overy and Linklaters & Paines.
In the anonymous world of Square Mile lawyering, 39-year-old Allen is a star. At Clifford Chance he was made a partner at the age of 29 - a record that still stands. Before his 30s he had clinched two important clients for the firm: Chase Manhattan and Bankers Trust - each worth more than pounds 3m in annual billings. He then went on to advise Citicorp, which was restructuring News Corp's $9bn of debt - a saga that saw Rupert Murdoch come within a whisker of going bust. But disenchanted with Clifford Chance, he quit in October 1994 to go travelling.
A year later, Weil Gotshal recruited him and his former Clifford Chance colleague Martin Hughes to spearhead its drive into London. They were soon joined by lawyers from Freshfields and Allen & Overy.
Last week, Allen was beaming over his latest coup - recruiting Nia Morris, a capital markets expert, from Linklaters & Paines. "At partner level, it's virtually unique for Linklaters to lose someone of Nia's calibre. It just doesn't happen. They have found it very hard to accept."
So far, 15 lawyers have been persuaded to desert secure jobs with the big London firms for the comparative insecurity of Weil Gotshal's fifth- floor offices at London Wall. "We're at a fairly advanced stage with another dozen," says Allen.
New recruits have been attracted by the entrepreneurial style of Weil Gotshal, plus the chance to make more money. In a typical blue-chip London firm, partners begin on between pounds 120,000 and pounds 160,000 rising to between pounds 300,000 and pounds 500,000. The "lockstep" system of earnings gives continuous pay rises to partners, regardless of individual performance.
By contrast, Weil Gotshal operates American-style rewards, which are purely merit-based. The junior partner may start on just $300,000 (pounds 199,500), but the stars can make $2m a year if they bring in the business.
Weil Gotshal is investing up to pounds 5m in the new London operation and is prepared to wait three years before expecting a profit. Other US firms such as White & Case, Sidley & Austin, and Milbank, Tweed, Hadley & McCloy have already established modest operations in London. "This is the next stage," says Allen. "We're not going for a niche. We're going for a mainstream area." He expects to offer all kinds of legal services to the banks, from mainstream lending to project finance and derivatives.
The firm officially opens for business on 1 March. But already, Allen says, he has had assurances from Citibank, Chase Manhattan, Bankers Trust, Merrill Lynch and Swiss Bank Corporation that they intend to use the fledgling firm.
Unlike other professional services, where corporate clients tend to stick with one or two advisers, banks seeking legal advice spread their largess much wider.
Over the course of a year, a big bank will use as many as 20 law firms, putting the bulk of work with a preferred four or five. Allen's poaching spree has put more than a few noses out of joint in the more traditional London firms. There will rejoicing in some corners of the City if he fails - and much copycatting if he succeeds.Reuse content