Tax overhaul threatens US firms with four-year cash drain but could boost global mergers

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US law firms are facing a fundamental overhaul over the way they calculate and distribute their profits that could result in far higher short-term tax bills if controversial proposals currently before Congress are approved.

The proposals could see US firms with over $10m in revenues forced to switch their accounting model from a cash basis, under which money received in a financial year is taxable, to a UK-style accrual method, where taxable revenue includes work done but not yet billed or collected.

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LB100 firms review partnership model as HMRC’s LLP changes loom

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The impact of HM Revenue & Customs’ decision to overhaul the way salaried partners are taxed is being felt across the City as a number of leading firms confirm they are reviewing their arrangements, although some of the largest Legal Business 100 firms have come out to categorically deny the changes will have any effect at all.

Firms including Herbert Smith Freehills, Ashurst, TLT, DWF, Weightmans, and Trowers & Hamlins have all confirmed to Legal Business that they are reviewing their partner remuneration arrangements in anticipation of the new rules, which will mean partners with under 25% of their salary attached to profits will be regarded as having a ‘disguised salary’ and treated as employees by tax authorities in a move expected to add thousands of pounds onto firms’ tax bills.

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CC’s Tinkler addresses recent private equity departures

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In mid-February, Latham & Watkins confirmed its third London private equity partner hire from Clifford Chance (CC), with Kem Ihenacho set to follow on the heels of global head of private equity David Walker and newly-made up partner Tom Evans.

Ihenacho was co-head of the Magic Circle giant’s Africa practice, but here London head of corporate, Simon Tinkler, talks to Legal Business about CC’s position in the private equity market.

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Turning the corner, honest: can Shearman turn a proactive run into a sustained revival?

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David Stevenson assesses Shearman’s hopes of regaining its potency

‘The work that’s been done over the last few years is bearing fruit. Like a tree blossoming,’ observes Laurence Levy, head of European M&A at Shearman & Sterling. Long-time Shearman watchers have, of course, become familiar with variations on the revival rhetoric that Shearman has used several times before. But has this once celebrated Wall Street name really rediscovered its winning ways?

Firm-wide, the jury is at best still out, but focusing on its London operation it is easier to be upbeat. The firm’s City arm broke the $100m turnover mark in 2010 and has generally been growing at a respectable clip since then, up from $112.6m in 2012 to $134.8m for the 2013 financial year.

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Return to form for Queen’s Counsel as 100 advocates take silk

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Latest QC promotions round the largest in three years

In stark contrast with the recent decline in the number of Queen’s Counsel (QC) appointments, the latest round announced in February saw 100 advocates awarded the elite kitemark, up by 19% on last year’s all-time-low figure of just 84.

The number of applicants rose this year to 225, in what may be interpreted as the litmus test of confidence in the wider economy, after queries were raised from within the profession over whether previous drops were a reflection of not just the £2,000 cost of applying to become a QC, but also fears that the associated higher rates would not be supported by cash-strapped clients.

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Arbitration heavyweights resign to form boutique

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Partasides and Petrochilos to join former colleague Jan Paulsson

Breakaway arbitration boutiques are increasingly common but they rarely have the gravitas of the latest entrant, as Freshfields Bruckhaus Deringer’s London international arbitration group head Constantine Partasides last month resigned alongside Paris-based partner Georgios Petrochilos, to form a heavyweight trio alongside former co-arbitration head Jan Paulsson.

Dispute resolution partner Partasides spent ten years practising in the Magic Circle firm’s Paris office before returning to the UK in 2007 to head up its top-tier arbitration team. He is listed as a leading individual in The Legal 500 and recent arbitrations he has led include acting for a telecoms operator in a treaty claim regarding an expropriation of a multibillion-dollar business in North Africa.

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Early numbers in US results season confirms solid growth as Shearman and Dechert lead the pack

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US leaders grind out growth in 2013 despite ‘anaemic economy’

Despite having to contend with what Latham & Watkins’ outgoing global chairman Bob Dell described to Legal Business as a still ‘anaemic economy’ last year, early results among the US law firms to disclose their 2013 financials are solid, with many forecasting a return to substantive growth this year.

Dechert was among the first to reveal its financials for 2013, with revenue up by 6.6% to $777.2m from $729m.

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Slaughters adds US capability in Hong Kong as best friends become rivals

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Moore becomes first lateral hire in firm’s 125-year history

It had been well telegraphed but even so news that Slaughter and May was making the first lateral hire in its 125-year history to add US securities capability to its Hong Kong arm was enough to send a minor jolt through the global legal profession.

Slaughters unsurprisingly chose a top-notch CV to break with tradition, hiring Morrison & Foerster’s co-head of China capital markets John Moore. Moore, who joined the UK firm in February as its 12th Hong Kong partner, is the former head of the US capital markets team for Herbert Smith and has also previously held senior roles at Sullivan & Cromwell and Goldman Sachs.

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Global office launches for Norton Rose, Quinn Emanuel, Bakers and Jones Day

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Global 100 firms embraced foreign expansion again in February. Norton Rose Fulbright (NRF) announced a significant addition to its Latin America footprint with the launch of an office in Rio de Janeiro, hiring BP’s global corporate assistant general counsel (GC) Andrew Haynes as office co-head, while US litigation leader Quinn Emanuel Urquhart & Sullivan set up shop in Brussels, Baker & McKenzie in Myanmar and Jones Day in Perth.

NRF’s new office in Brazil, which will also be run by current head of Colombia, Glenn Faass, will be the firm’s third in the region after Venezuela (Caracas) and Colombia (Bogotá), and its 55th office worldwide.

Haynes joined NRF at the start of February from BP, where as assistant GC global corporate he oversaw all M&A legal work for BP.

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Deals: CC, Taylor Wessing and Ashurst act on infra and real estate deals

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Advisers benefit as investors target industrial assets

The shift towards global industrial real estate portfolios as an asset class last month saw Clifford Chance (CC) advise newly-formed SEGRO European Logistics Partnership (SELP) on its €472m acquisition of a portfolio of prime development land in Germany, Poland and France from funds managed by Tristan Capital Partners.

The CC team leading the deal included global head of real estate Adrian Levy, alongside London real estate partner Mark Payne and fellow City-based head of real estate tax David Saleh.

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