Legal Business

A&O gains Shanghai approval on the back of double-digit Asia-Pac growth

A&O gains Shanghai approval on the back of double-digit Asia-Pac growth

After boosting its Asia Pacific turnover by more than 10% last year, Allen & Overy (A&O) has become the latest City giant to receive approval to practise law in China’s Free Trade Zone (FTZ).

The arrangement comes by way of a joint operation with local firm Shanghai Lang Yue Law Firm – called Allen & Overy Lang Yue (FTZ) Joint Operation Office – which received approval from the Shanghai Bureau of Justice, A&O said today (7 January).

The move makes it the second Magic Circle firm to commit to the region, with Linklaters in May 2018 striking a similar arrangement with local firm Zhao Sheng. FTZ rules allow international players to tie-up with domestic firms and practise local law.

For Linklaters, the agreement contributed to double-digit revenue growth in the firm’s non-European offices in the year to April 2019, with Asia-Pacific turnover surging 15% to £226m, its LLP accounts published in November showed.

The latest deal will combine Lang Yue’s PRC law capability with A&O’s international platform to advise on corporate, M&A, private equity, venture capital investments, capital markets, regulatory advisory and compliance matters.

Victor Ho, A&O’s Beijing & Shanghai managing partner, told Legal Business the two firms have been working together on mainly in the corporate/M&A, DCM and ECM areas.

He commented: ‘For example, the teams are currently advising a number of Chinese domestic clients with their overseas IPO projects, in particular by way of red chip or H share listing in Hong Kong.  Other examples include assisting on the Chinese portions of large global transactions.  All of these projects require close collaboration between PRC firms and their international counterparts, the joint operation allows our teams to bring this collaboration to a very high quality level.’

Wenxin Zhou, partner at Lang Yue, said the firms were introduced by a mutual contact a few years ago and have worked together on a significant number of client mandates.  ‘The success of that work is what led to discussions for the Joint Operation and is a continuation of an exceedingly close collaboration.’

Simon Makinson, corporate partner and head of A&O’s Myanmar practice, has played a leading role in the cooperation and will continue to do so.

On A&O’s strategy, Ho added:  ‘Growing our China related business is one of our global strategic priorities as we are committed to providing our clients with the best quality legal coverage wherever they operate and where we can. This includes not just representing MNC clients in China investing in China and Chinese clients investing abroad but assisting our global network with the growing number of Chinese-related projects, Chinese counterparties and China regulatory-related issues.’

A&O’s recently-published LLPs were a fillip for a firm that saw its plans for global elite status stymied by its much-publicised failure to secure a merger with O’Melveny & Myers.

The firm benefited from a foreign exchange gain of £9m, which contributed to 5% revenue growth to £1.627m from £1.552m in 2018, as well as an 8% uptick in pre-tax profit to £708m from £653m the previous year. Profit per equity partner (PEP) was up 1% to £1.66m from last year’s £1.51m, excluding foreign exchange gains and last year’s £21m in exceptional property costs.

Revenue rose across the board geographically, with Asia-Pacific’s income increasing to £244.5m from £221.7m, an uptick of more than 10%.

Meanwhile, A&O is gearing up for a February leadership election that has seen Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, standing for the managing partner role. The spot is hotly-contested after Andrew Ballheimer said in early December that he would retire from A&O at the end of his current term on 30 April 2020.

Liu will be up against London candidates including global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures, as well as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels.

Senior partner Wim Dejonghe is standing for a second term and will be up against Philip Bowden, the City giant’s well-regarded banking co-head.

Other firms to have entered the FTZ include Hogan Lovells, through its association with Fidelity Law in October 2016 and Baker McKenzie, which a year earlier became the first international firm to launch a joint office in the area with Beijing firm FenXun Partners. Holman Fenwick Willan, meanwhile, formalised a local partnership with Wintell & Co in April 2016.

nathalie.tidman@legalease.co.uk

Legal Business

LLP accounts: Pension costs hurt CC profits as A&O leadership sees pay increases

LLP accounts: Pension costs hurt CC profits as A&O leadership sees pay increases

Operating profit at Clifford Chance (CC) UK LLP fell 5% to £260m in the year to 30 April 2019 amid rising pension costs while management at City rival Allen & Overy (A&O) saw a 8% pay rise to £16m, the two firms’ recently published accounts have revealed.

The fall in profits at CC’s LLP – which includes its UK headquarters and eight of its overseas branches – came despite a 4% global revenue increase to £1.693bn as the firm added £70m to its top line.

Operating profit from all of the firm’s 32 offices rose by just £2m to £628m, with the accounts showing a £11m loss in relation to its global pension scheme. The firm’s pension deficit stood at £284m at the end of the financial year, slightly up on £283m the previous year. The firm aims to eliminate the deficit by the end of May 2026, with £17m to be paid into the scheme in the current financial year.

Overall staff costs rose 8% to £766m, while staff costs in the firm’s UK, Abu Dhabi, Amsterdam, Beijing, Brussels, Dubai, Moscow, Seoul and Shanghai branches (which are part of the LLP) rose 17% to £104m, as pension costs in those offices tripled to £6m.

Average staff headcount grew by 200 to 6,208 overall and by 94 to 957 in the LLP. CC’s highest-earning partner received £3m, while the remuneration of the 13 members of the firm’s executive leadership group was £22m; both figures were flat on the previous year.

CC’s accounts also provided a breakdown of the income from different groups of the firm’s clients, showing progress on managing partner Matthew Layton’s long-stated aim of reducing the firm’s reliance on banks. Billings from financial investors rose 8% to £519m, while banks provided £550m, up 4% on 2018, and corporates £624m, up 2%. It means banks accounted for 32% of the firm’s revenue, down from around 50% ten years ago.

Speaking to Legal Business last year, Layton (pictured) said: ‘We saw from December [2018] onwards some volatility resulting from the geopolitical environment: China-US trade wars, slowdown in China and Eurozone growth and the US shutdown and continued uncertainty [over Brexit]. Despite that we had a very strong year.’

Meanwhile, A&O benefited from a foreign exchange gain of £9m, which contributed to 5% revenue growth to £1.627m from £1.552m in 2018, as well as an 8% uptick in pre-tax profit to £708m from £653m the previous year. Profit per equity partner (PEP) was up 1% to £1.66m from last year’s £1.51m, excluding foreign exchange gains and last year’s £21m in exceptional property costs. The firm highlighted more than 20% revenue increase in its Advanced Delivery & Solutions businesses as well as strong performance from its banking, corporate and ICM practices.

After an arduous year involving failed transatlantic merger talks with O’Melveny & Myers, the firm’s management team, including senior partner Wim Dejonghe and managing partner Andrew Ballheimer took home £16m, an 8% increase on the £14.8m they earned the previous year.

The results were slightly marred by staff costs inflated by £49m to £610m from £561m in 2018 due to headcount and pay increases while other operating costs were down by £5m to £308m as the exchange gains kicked in.  Revenue rose across the board geographically as the UK generated £633.3m, up from £620.1m in 2018; continental Europe generated £512.5m, up from £491.9m last year; Asia Pacific’s income increased to £244.5m from £221.7m; the Americas generated £136.4m (£129.4m in 2018); and Middle East and Africa saw an uptick to £100.2m from £89m.

The partnership saw a slight decrease in headcount to 536 from 538 while the number of fee-earners increased to 2,517 from 2,434 in 2018.

The firm had unused committed bank facilities of £150m. Partners’ capital contributions totalled £138m compared with £134m last year and subordinated loans totalled £56m compared with £56m last year.

On the day election fever struck the UK generally, the firm announced on 12 December Dejonghe would be standing for a second term as senior partner, up against Philip Bowden, the City giant’s well-regarded banking co-head. The managing partner spot is more hotly-contested after Ballheimer said earlier that month he would retire from A&O at the end of his current term on 30 April 2020.

The London candidates are global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures who will be considered serious propositions. Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, has also thrown in, as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels.

The board comprises Dejonghe, Ballheimer and six independent partner directors: Paris-based Laëtitia Bernard, Denise Gibson, David Lee and Daniel Shuman in London, Christian Saunders in Dubai, and Tim Stevens in Amsterdam. Pamela Chepiga in New York and Roger Lui in Hong Kong are the two co-opted board members.

The executive committee is made up of Dejonghe, Ballheimer, David Benton, Bowden, Ian Ingram-Johnson, Astrid Kruger, Liu, Meeus, Seward and Barbara Stettner.

Marco.cillario@legalbusiness.co.uk

Nathalie.tidman@legalbusiness.co.uk

Legal Business

Dejonghe to stand again as A&O senior partner as six leadership hopefuls revealed

Dejonghe to stand again as A&O senior partner as six leadership hopefuls revealed

As voters head to the polls on UK general election day, Allen & Overy (A&O) has confirmed the names of six partners who will vie for leadership in its own election in February.

Senior partner Wim Dejonghe (pictured) is standing for a second term and will be up against Philip Bowden, the City giant’s well-regarded banking co-head.

The managing partner spot is more hotly-contested after Andrew Ballheimer said earlier this month that he would retire from A&O at the end of his current term on 30 April 2020. The London candidates are global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures who will be considered serious propositions. Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, has also thrown in, as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels.

The leadership race comes at a crucial time for a firm grappling with thorny strategic decisions around its US strategy after Ballheimer and Dejonghe were forced to abandon marathon merger talks with West Coast firm O’Melveny & Myers in the autumn.

Ballheimer was elected as managing partner in May 2016 and before that was global co-head of corporate. He succeeded Dejonghe, who took up the role of senior partner at the same time.

Successors will be expected to take up the baton of redoubled investment in the US, with Ballheimer promising in September ‘more focus and speed of execution’ in its Stateside recruitment push.

Since then, the firm has had mixed fortunes on the US-front, adding US capability in London in the form of financial services regulation counsel Knox McIlwain as a partner from Cleary Gottlieb Steen & Hamilton  in September, while the following month losing New York leveraged finance partners Alan Rockwell and Michael Chernick  to Shearman & Sterling.

The long-sought deal with O’Melveny also caused some corporate partners to shop around at US rivals, with the departure from London of respected corporate partners Simon Toms and George Knighton to Skadden, Arps, Slate, Meagher & Flom only 10 days after the merger collapsed seen as significant collateral damage.

The election process will see voting take place in February with the senior partner to be announced on 24 February and the managing partner on 27 February. The successful candidates will take up their posts on 1 May 2020.

Nathalie.tidman@legalease.co.uk

For more analysis on A&O’s election see our recent comment piece ‘If A&O’s new leadership team can’t get a mandate, who can?’

Legal Business

Comment: If A&O’s new leadership team can’t get a mandate, who can?

Comment: If A&O’s new leadership team can’t get a mandate, who can?

Writing at the end of November, with this issue hitting desks only a day or two before the candidates for Allen & Overy (A&O)’s leadership elections are announced – this column is truly hostage to fortune. Who will emerge to lead what has for many been the Magic Circle’s most effectively-led player will have significance spreading well beyond A&O’s City HQ. Still, a good track record cannot be counted on swinging re-election for senior partner Wim Dejonghe, thanks to the firm’s marathon but unsuccessful merger attempt with O’Melveny & Myers. That deal had many supporters but also some entrenched opposition, not least a vocal group of City corporate partners. And even many who were sympathetic grew understandably uneasy at the length of time the deal dragged on. Consequently, this looks to be no rubber-stamping exercise for a second term, even if many believe Dejonghe will run again and stands a good chance of re-election. The open nature of the race was further underlined by the late-minute announcement from managing partner Andrew Ballheimer that he would not seek a second term.

Potential candidates are currently keeping their powder dry, but for months there has been talk that the popular and effective banking co-head Philip Bowden will stand as senior partner, representing a serious candidate with a huge constituency. Even a two-horse race is hard to call, but there has also been suggestion that infrastructure head David Lee could throw his hat in. And the managing partner role is expected to attract a wider field: projects head Gareth Price has been cited, another rock solid candidate, while litigation chief Karen Seward must be weighing her chances.

How this plays out will have major consequences for A&O as the firm strives to face thorny strategic issues post-O’Melveny. The current management has been resolute on securing a compelling operation in the vast US market, requiring either a marquee merger or a decade of uncertain investment (and quite likely both). Given that A&O has spent five years scouting for potential suitors there are very few options open – with the firm even struggling to sign up a smaller firm that had, despite a decent pedigree, been falling behind US peers for a decade. But the alternative of building organically will take the kind of sustained investment that A&O’s partnership has historically baulked at.

Yet pressing as such matters are, they remain largely a symptom of a wider malaise, which is the struggle of A&O and its City peers to navigate the tougher post-Lehman environment with their current governance, remuneration and business models. The old Magic Circle formula that developed in the 1990s allowed small groups of individuals to make big decisions, thereby responding decisively and boldly to a changing industry. But for the largest City firms that once-productive model has progressively broken down as these institutions have become sprawling outfits that no longer defer to a handful of influential London figures to make the tough calls, nor give their elected c-suites a clear enough mandate to govern.

The real issue in this election is whether the ultimate winners can secure the right to genuinely lead, which for A&O would require an overhaul of compensation and big answers to big questions on strategic investment priorities. It is less that there are right and wrong answers, more that the Magic Circle keeps avoiding the questions entirely, with a resulting decline in influence globally. If A&O can break that deadlock it will have done itself, and the wider City profession, a huge service

alex.novarese@legalease.co.uk

nathalie.tidman@legalease.co.uk

Legal Business

If A&O’s new team can’t get a mandate, who can?

If A&O’s new team can’t get a mandate, who can?

Writing at the end of November, with this issue hitting desks only a day or two before the candidates for Allen & Overy (A&O)’s leadership elections are announced – this column is truly hostage to fortune. Who will emerge to lead what has for many been the Magic Circle’s most effectively-led player will have significance spreading well beyond A&O’s City HQ. Still, a good track record cannot be counted on swinging re-election for senior partner Wim Dejonghe, thanks to the firm’s marathon but unsuccessful merger attempt with O’Melveny & Myers. That deal had many supporters but also some entrenched opposition, not least a vocal group of City corporate partners. And even many who were sympathetic grew understandably uneasy at the length of time the deal dragged on. Consequently, this looks to be no rubber-stamping exercise for a second term, even if many believe Dejonghe will run again and stands a good chance of re-election. The open nature of the race was further underlined by the late-minute announcement from managing partner Andrew Ballheimer that he would not seek a second term.

Potential candidates are currently keeping their powder dry, but for months there has been talk that the popular and effective banking co-head Philip Bowden will stand as senior partner, representing a serious candidate with a huge constituency. Even a two-horse race is hard to call, but there has also been suggestion that infrastructure head David Lee could throw his hat in. And the managing partner role is expected to attract a wider field: projects head Gareth Price has been cited, another rock solid candidate, while litigation chief Karen Seward must be weighing her chances.

Legal Business

‘Dynamic and excellent’: A&O chooses Johannesburg for second cost-saving hub as Steptoe launches in Hong Kong with CC pair

‘Dynamic and excellent’: A&O chooses Johannesburg for second cost-saving hub as Steptoe launches in Hong Kong with CC pair

Allen & Overy has built on the success of its Belfast cost-saving centre with the launch of another in Johannesburg as Steptoe and Johnson has forayed into Hong Kong with the hire of a Clifford Chance (CC) team.

Set to open its doors in the first half of 2020, A&O’s Johannesburg Legal Services Centre (LSC) is hoped to emulate the success of the firm’s Belfast offering, geared towards cost-effective resourcing of transactions by legal professionals, associate solicitors and science analysts.

As with the flagship Belfast hub, staff in Johannesburg will work on document-based matters, including due diligence, litigation reviews, drafting, negotiating and research, aided by project management and legal technology. The LSC will form part of the firm’s Advanced Delivery and Solutions (AD&S) offering, which includes Fuse, A&O Consulting, Peerpoint and A&O’s legal tech solutions.

Belfast opened in late 2011 and now houses more than 115 fee-earners. Early this year, Angela Clist, A&O’s securitisation partner and co-head of the global financial institutions group, was hired as head of the LSC to replace Jane Townsend when she retired.

Andrew Trahair, A&O’s former banking co-head and managing partner hopeful, was hired in January to head the AD&S a week after Peerpoint chief executive Richard Punt departed for Thomson Reuters. Peerpoint founder and managing director Ben Williams and Asia-Pacific head Carolyn Aldous took Punt’s place.

Speaking to Legal Business about the rationale for choosing Johannesburg and her ambitions, Clist said: ‘We needed to increase the service in the UK and European markets. Having a similar time zone was key and Johannesburg offered us that.

She added: ‘We have had an office there for five years so we are able to use existing space in that office to house the new team. We are able to learn from really good legal experts here – it was the obvious solution.’

Clist said the plan was to be more conservative with headcount than in Belfast, with a target to grow to around 30 people within the next three years. She said that hiring was also continuing apace in Belfast, with 25 graduates hired this year.

‘I am so impressed by the team on the ground in Johannesburg and that we’ll be creating something as dynamic and excellent as we have in Belfast. The reason we have LSC is to provide value for our clients and ensure that the junior and process-driven tasks are performed at the right level and at the right price.’

It is expected that most of the work will come via A&O’s European and UK networks and that recruitment will start in mid-January.

Clist added that it was not a matter of simply transplanting the Belfast way of doing things to a different jurisdiction and that some tweaks would be likely, for example of the training programme for new graduates, owing to the different education system.

Elsewhere, Washington-based Steptoe has hired Wendy Wysong from CC to spearhead the expansion of its cross-border investigations, compliance and enforcement practice in Asia with the opening of a Hong Kong office.

Wysong will be joined by CC counsel Ali Burney, with the move following on from the hire to the London practice of Zoe Osborne from the Magic Circle firm in October. Wysong was previously an assistant US attorney in Washington DC and deputy assistant secretary for export enforcement in the Department of Commerce’s Bureau of Industry & Security.

The new office, which has been approved by the Hong Kong Law Society, will be the firm’s second in Asia after the Beijing office opened in 2010. Partner Susan Munro will move over from the Beijing office with further counsel and associates set to join in Hong Kong soon.

Steptoe chair Phil West commented: ‘Wendy is perhaps the most prominent Hong Kong practitioner in areas that complement key Steptoe strengths: white-collar defense, FCPA, export controls and economic sanctions. Wendy and her team will bring great additional talent to our already deep bench in these areas, enabling us to further support our clients’ Asia-based needs.’

nathalie.tidman@legalease.co.uk

Legal Business

Ballheimer announces surprise retirement as A&O leadership race heats up

Ballheimer announces surprise retirement as A&O leadership race heats up

As the Allen & Overy (A&O) leadership elections heat up, managing partner Andrew Ballheimer has announced his retirement from the firm at the end of his current term on 30 April 2020.

The surprise move comes in the month the City giant is to announce the list of contenders for senior partner and managing partner and follows an eventful couple of years dominated by the marathon merger bid with O’Melveny & Myers, which was abandoned in the autumn.

Ballheimer was elected as managing partner in May 2016 and before that was global co-head of corporate. He succeeded Wim Dejonghe, who took up the role of senior partner at the same time.

Commenting on his decision, Ballheimer noted in a statement: ‘This has been an immensely difficult decision for me, as A&O has been my professional home for almost a lifetime and it has been a unique privilege to serve in my current role. I am happy that the firm is in such great financial shape and, as a result, after 35 years in private practice, including 15 years in various senior leadership roles at A&O, I feel it is a good time to explore new challenges in the outside world, including in the wider community, before I am too old!’

The firm said in a statement that during Ballheimer’s tenure, client revenue grew 26% and profit per equity partner grew 38% in the first three financial years, while the current financial year’s trading ‘continues this trend of significant growth.’

The 58-year-old lawyer’s departure paves the way for potential candidates such as litigation chief Karen Seward and projects head Gareth Price, both of whom have been cited as potential candidates for the managing partner role.

There has also been talk that Philip Bowden, the firm’s respected banking co-head, is likely to stand against Dejonghe for the senior partner role, with infrastructure head David Lee seen as another potential figure. The field of candidates is due to be unveiled on 12 December, with the winners announced in February.

Ballheimer joined A&O in 1987 and became partner in 1994. He has worked in London, Tokyo and New York, where he was head of international capital markets. He was managing partner of the London corporate department from 2005 to 2010 and then global co-head of corporate from 2010 to 2016.

nathalie.tidman@legalease.co.uk

Legal Business

Dealwatch: A&O and Ashurst close £1.2bn UK tunnel project as US-led buyouts take centre stage

Dealwatch: A&O and Ashurst close £1.2bn UK tunnel project as US-led buyouts take centre stage

Allen & Overy and Ashurst won leading roles on the £1.2bn Silvertown Tunnel project, the only big-ticket UK-led deal this week in a market awash with US buyouts.

A&O advised a consortium including Aberdeen Standard Investments, BAM PPP PGGM, Cintra, Macquarie and SK Group on the Silvertown Tunnel PPP with a team led by David Lee and including partners Mark Walker and Sara Pickersgill.

An Ashurst team led by partners Terry van Poortvliet and Jonathan Turner advised the procuring authority, Transport for London, on the tunnel, which will run under the River Thames and reduce congestion at the existing Blackwall Tunnel.

Lee commented: ‘This PPP deal is a significant UK infrastructure project which will bring huge benefits to South East London. It is interesting to note that in a world in which political discourse remains outspoken and disruption to our political system continues unabated, business and the public sector can still work together quietly and effectively to deliver important projects.’

Meanwhile leading US firms have dominated this week as LVMH Moët Hennessy Louis Vuitton (LVMH) acquires global jeweller Tiffany & Co for $16.2bn and eBay sold StubHub to Viagogo for $4.05bn.

Skadden, Arps, Slate, Meagher & Flom advised LVMH on its acquisition of Tiffany & Co for $135 per share in cash, with a valuation of roughly $16.2bn.

The Skadden team was led by New York partners Howard Ellin and Sean Doyle. Allen & Overy advised the banks financing LVMH with a team led by counsel Thomas Roy and partners London-based partner Nick Clark and Todd Koretzky out of New York providing support.

Roy commented: ‘Assembling loan facilities of this size in such a short time period is a testament to the strength of LVMH’s banking relationships and the depth of the European loan market.’

A Sullivan & Cromwell team led by New York corporate partners Frank Aquila and Melissa Sawyer advised Tiffany.

The deal is expected to close in the middle of 2020 and is subject to customary closing conditions, regulatory approvals and approval from Tiffany’s shareholders.

Meanwhile, Wachtell Lipton Rosen & Katz, Skadden and Kirkland & Ellis have all won lead mandates alongside Quinn Emanuel Urquhart & Sullivan as eBay agreed to sell StubHub to Viagogo for a purchase price of $4.05bn in cash.

Both StubHub and Viagogo are ticket marketplaces occupying the live sport, music and entertainment events space, with Viagogo having a much larger international presence, while StubHub is exclusively based in the US. Viagogo’s founder and chief executive Eric Baker co-founded StubHub in 2000 but left the company before eBay acquired it for $310m in 2007.

Baker commented: ‘It has long been my wish to unite the two companies. Buyers will have a wider choice of tickets, and sellers will have a wider network of buyers. Bringing these two companies together creates a win-win for fans – more choice and better pricing.’

Ebay is being advised by a Wachtell team led by corporate partners Daniel Neff, Karessa Cain and Raaj Narayan and includes restructuring and finance partner John Sobolewski and tax partner T.Eiko Stange. Quinn Emanuel is also advising eBay.

Viagogo is being advised by a Skadden team led by M&A partners Howard Ellin and Michael Chitwood and IP and technology partner Stuart Levi as well as a Kirkland team led by debt finance partners Jason Kanner and Andrea Weintraub and capital markets partner Sophia Hudson.

The sale is expected to close by the end of the first quarter of 2020 and is subject to regulatory approval and customary closing conditions.

Finally, Skadden also led on another big-ticket transaction, advising PayPal in its $4bn acquisition of Honey.

The Skadden team advising PayPal was led by corporate partner Michael Mies and antitrust/competition partner Ingrid Vandenborre. Latham & Watkins advised Honey Science Corporation with a team led by Los Angeles corporate partners Alex Voxman and Jordan Miller.

muna.abdi@legalease.co.uk

Legal Business

Deal View: A&O’s corporate practice has matured nicely but will O’Melveny fallout take its toll?

Deal View: A&O’s corporate practice has matured nicely but will O’Melveny fallout take its toll?

Habitually viewed as the poor relation to its unparalleled banking and finance practice, Allen & Overy (A&O)’s corporate team has stepped up in recent years, the culmination of a decades-spanning campaign to forge a top-tier name in M&A.

Richard Browne, co-head of corporate, stresses the level of growth the 161-partner practice has seen, having increased its fee income by 50% in the last decade. ‘In the dark ages when I started, A&O’s corporate practice was not the best. It was a banking and finance firm. That is no longer the case at all. Corporate has become the same size as the banking business. It is incredibly profitable, with top-tier work and clients.’

Legal Business

A&O’s transatlantic woes continue as New York leveraged finance pair quit for Shearman

A&O’s transatlantic woes continue as New York leveraged finance pair quit for Shearman

Allen & Overy (A&O) has suffered a fresh blow to its transatlantic aspirations following its failed US merger as two key leveraged finance partners depart for Shearman & Sterling.

Alan Rockwell and Michael Chernick are leaving A&O’s New York office for the US firm just a month after A&O lost well-respected London corporate partners Simon Toms and George Knighton to Skadden, Arps, Slate, Meagher & Flom. That blow came only 10 days after the Magic Circle firm’s long-winded merger talks with O’Melveny & Meyers came to nothing and was widely viewed as collateral damage from the failed tie-up.

A&O broke its lockstep to hire the two partners, with Rockwell joining as part of a four-partner team from White & Case in 2016 and Chernick as part of a three-partner team from Paul Hastings the following year.

Shearman senior partner David Beveridge said: ‘The opportunity to add Alan and Michael to our team is significant for the firm as we look to further cement our position as one of the leading transatlantic leveraged finance firms.’

The New York exits come only a month after A&O’s managing partner Andrew Ballheimer vowed ‘more focus and speed of execution’ in the Magic Circle firm’s US recruitment push as new partners, including US lawyers, had recently been voted in by the partnership.

A spokesperson for A&O said: ‘We thank Alan Rockwell and Michael Chernick for their contributions during their time at A&O and wish them all the best for the future. Our New York leveraged finance practice continues to be a robust and integral part of A&O’s global offering.’

For Shearman, the hires follow high-yield star Ward McKimm famously in July 2018 returning to the firm after a three-year stint at Freshfields Bruckhaus Deringer. The firm had taken the symbolic step to break its much-cherished lockstep to lure him from US rival Kirkland & Ellis in 2015, a move which exercised changes to the partnership ushered in the previous year to attract top US talent.

nathalie.tidman@legalease.co.uk