Legal Business

After the surge a pause – expansive A&O sees a lull in growth as first Magic Circle player confirms 2013 results

After the surge a pause – expansive A&O sees a lull in growth as first Magic Circle player confirms 2013 results

Having been the stand-out City player in its weight class since the 2008 banking crisis re-shaped the global legal market, Allen & Overy (A&O) has this year seen a relative slow-down in growth as the firm becomes the first Magic Circle practice to unveil its 2012/13 results.

The 525-partner law firm saw a 0.6% increase in revenues for its year to April 2013, with income hitting £1.19bn. Profit per equity partner was also flat at £1.1m while total profits before tax were up 2% to £496.7m.

A&O managing partner Wim Dejonghe cited a noticeable improvement in the fourth quarter of the financial year with strong performances in the City firm’s emerging markets and Asian practices.

Dejonghe told Legal Business: ‘Europe’s outlook is not great so we chose to expand in the US and the emerging markets and we still want to grow further in the US. In terms of Asia, it’s all about investment such as infrastructure; there is a growing middle class so you see increased M&A activity there rather than in the established markets and this leads to arbitration work.’

He added that the firm had invested in operational and financial efficiencies. A&O’s staff costs were down from £446.8m in 2011/12 to £438.6m while its operating expenses rose to £244.3m from £238.4m in the previous financial year.

The fall in staff costs were primarily due to A&O’s Belfast support hub becoming fully operational after an initial launch in late 2011. At the beginning of 2013, the firm moved a number of support roles out of Europe and the US into Belfast, with further moves expected later this year.

In the last 12 months, the firm launched in Istanbul, Ho Chi Minh City and Hanoi, totalling 14 new offices in 11 countries since 2008. During this five-year period, turnover has grown by 7%, profit by 15% and its partnership has increased by 7%. The profit distribution will range from £627,000 for a partner with 20 profit sharing points to £1,566,000 for a partner with 50 profit sharing points. In 2012 that range was £640,000 to £1,601,000.

Dejonghe said the firm had seen a growing volume of inter-Asian investment flows. ‘There are a number of matters that have a cross border element and links to the number of offices we have opened. ‘Nevertheless, the European market is still of great importance in terms of generating the firm’s total revenues.’

The firm reported a 2.7% drop in half-year revenues at the end of October 2012, but has seen activity pick up since the start of 2013. On the current outlook, Dejonghe commented: ‘The last couple of weeks, the global markets have gotten a little nervous again on the back of stock markets dropping and quantitative easing stopping, so the early signs of recovery have been shaken. But based on the initial months, we are confident we will have an encouraging year in terms of performance.’

A&O’s results set the scene for its City peers, though it is clear that elite London firms have generally faced challenging trading conditions through 2012/13 after a painfully slow period during the summer of 2012. A&O has been the best relative performer in London’s big four international Magic Circle firms over the last five years, maintaining a heavy investment programme while its peers have generally retrenched.

See Legal Business’ Global 100 special on Friday (5 July) to find out how A&O matches up to the world’s largest law firms.

Jaishree.kalia@legalease.co.uk.

Legal Business

Visa Europe’s GC joins A&O’s global antitrust practice

Allen & Overy (A&O) has hired Visa Europe’s general counsel (GC), executive vice president and company secretary Vanessa Turner as a partner in its global antitrust practice.

Turner will be based in the Magic Circle firm’s Brussels office, advising European and international clients dealing with EU and other regulators on merger clearance, cartels and other antitrust and competition matters.

Legal Business

A&O finance veteran joins Co-op

Alistair Asher takes on GC role as firm acts on major bank rescue

Securing a major deal and having one of your partners take a senior role with the same client is a nice trick to pull off but Allen & Overy (A&O) appeared to have managed that last month after securing a lead role on the Co-op’s rescue plan and ‘donating’ a veteran partner to the lender’s management team.

On 18 June, A&O confirmed that global financial institutions head Alistair Asher is leaving to join the Co-operative Bank as its new general counsel.

Asher will advise on the restructuring of the mutually owned lender and help speed up its management overhaul under its new chief executive Euan Sutherland. Asher retired on 1 July after 34 years with the Magic Circle firm and took on the new role immediately. The veteran partner had previously advised the Co-op on its 2009 merger with Britannia Building Society.

Legal Business

Two birds, one stone – A&O finance veterans joins Co-op team as GC as firm acts on rescue

Two birds, one stone – A&O finance veterans joins Co-op team as GC as firm acts on rescue

Securing a major deal and having one of your partners take a senior role with the same client is a nice trick to pull off but Allen & Overy (A&O) appears to have managed that this week after securing a lead role on the Co-op’s rescue plan and ‘donating’ a veteran partner to the lender’s management team.

A&O today (18 June) confirmed that global financial institutions head Alistair Asher is leaving the law firm to join the Co-operative Bank as its new general counsel.

Asher will advise on the restructuring of the mutually-owned lender and help speed up its management overhaul under its new chief executive Euan Sutherland. Asher will retire from the Magic Circle firm on 1 July after 34 years with A&O and will take on the new role immediately. The veteran partner had previously advised the Co-op on its 2009 merger with Britannia Building Society.

The news comes as A&O this week advised on the lender’s high stakes rescue deal, for which Asher was one of the lead partners.

The Co-op will raise a total of £1.5bn in capital using a ‘bail-in’ process, where its bondholders will exchange £1bn in debt for a minority equity interest in the bank, ahead of its London Stock Exchange listing. Under the deal, £1bn will be contributed this year with the remaining £500m being paid next year.

The bail-in was launched after Co-op disclosed a number of problem loans, leading bank regulators to demand it significantly bolster its capital.

Three A&O partners will lead on the bank’s restructuring and share listings including global restructuring and insolvency managing partner Mark Sterling, corporate finance partner David Broadley and debt capital markets partner Matthew Hartley.

Others advising are A&O’s building societies and mutual head Richard Slynn, partner Etay Katz on regulatory issues, Vimal Tilakapala on tax and Dana Burstow on pensions. Meanwhile, insurance head Philip Jarvis will lead on the announced plan to dispose of the group’s general insurance business.

It is understood that Linklaters has also been instructed to advise on an area of the shake-up, with the firm fielding a team under finance partner David Ereira. The firm declined to comment.

Sterling said: ‘In a major corporate deal which involves new equity, new debt and new regulation, you need a full team on board with around three or four partners leading.’

Nice work to have in a turbulent market.

 

jaishree.kalia@legalease.co.uk

Legal Business

Visa Europe’s GC joins A&O’s global antitrust practice

Allen & Overy (A&O) has hired Visa Europe’s general counsel (GC) and executive vice president and company secretary Vanessa Turner as a partner in its global antitrust practice.

Turner will be based in the Magic Circle’s Brussels office, advising European and international clients dealing with EU and other regulators on merger clearance, cartels and other antitrust and competition matters.

Prior to joining Visa Europe, Turner was a special adviser at the Office of International Affairs of the U.S. Federal Trade Commission in Washington D.C. and New York and was a member of the cabinet of the EU Commissioner for competition policy.

Dirk Arts, head of A&O’s Brussels antitrust practice, said: ‘We are delighted to welcome Vanessa to our team. She brings a wealth of experience from the European Commission and the financial services sector. Vanessa will boost the capacity of our Brussels team, as part of our global network, to coordinate and handle issues relating to multi-jurisdictional transactions and cartel investigations.’

Turner added: ‘Allen & Overy’s international practice is a great fit for my European and U.S. experience and I’m delighted to join their excellent EU competition law team. I look forward to returning to private practice to advise international clients on their EU and global antitrust strategies using my experience gained at the Commission and as a general counsel.’

High profile cases that A&O’s antitrust and competition team have advised on include Sun Microsystems $7bn merger with Oracle, Seagate Technology on the merger control aspects of its $1.4bn acquisition of the hard disk drive business of Samsung Electronics, and Mubadala Development Company (as the largest investor in the Sony consortium) on its joint acquisition of the EMI music publishing business.

caroline.hill@legalease.co.uk

Legal Business

Revolving Doors: Chadbourne, A&O, Trowers and Pinsent Masons boost City offering

London dominated the lateral hiring scene over the past week with firms including US Chadbourne & Parke, Allen & Overy (A&O), Eversheds and Pinsent Masons strengthening their City offering.

Chadbourne’s 36-lawyer London office, which acts a hub for the firm’s emerging and developing markets practice, has hired banking and finance partner Partha Pal from the City arm of top 15 US firm Sidley Austin.

‘Strengthening Chadbourne’s banking and finance capabilities in London is critical to enhancing our ability to execute emerging-markets transactions governed by English law,’ said newly-elected regional managing partner Adrian Mecz.

Pal was a partner in Sidley’s global finance group, focussing on banking and structured finance transactions and related restructurings and dispute resolution.

The good news story for the firm’s London office comes days after its New York counterpart lost a three-partner litigation and arbitration team to Hogan Lovells Manhattan office.

Elsewhere, A&O has hired Goldman Sachs lawyer Denise Gibson as a banking partner in its leveraged finance practice. Gibson left the Magic Circle firm two years ago as a senior associate to join the US investment banking giant.

A&O has regularly advised Goldman Sachs as a joint lead arranger on deals such as Tesco Plc’s series of credit-linked CMBS-style financing, led by structured finance partner Christian Lambie and real estate finance partner Arthur Dyson. The sixth in the series, worth £490m, was announced in February this year and involved Goldman Sachs and Barclays as joint lead managers.

In other hires, Eversheds equity capital markets (ECM) head Neil Matthews is leaving to join Field Fisher Waterhouse (FFW) as a partner in the firm’s London corporate practice. Matthews, who will join FFW in August, has been at Eversheds since 1989, making partner in 1996 advising on IPOs for companies including Abcam, Ilika, May Gurney, Norcon and Plusnet.

FFW managing partner Michael Chissick said the appointment was part of a wider recruitment programme largely covering corporate, which he described as ‘underweight.’

Meanwhile, top 20 UK firm Pinsent Masons has appointed Bircham Dyson Bell’s head of major projects Robbie Owen to head its infrastructure planning and government affairs division within the firm’s planning & environment team, which will now include a parliamentary agency capability at Westminster.

Owen, who will join Pinsents City office later in the summer, is an authorised ‘Roll A’ parliamentary agent authorised by parliament to act as an agent for those promoting and opposing private bills and hybrid bills. He is currently advising on projects including the London Underground’s Northern Line extension and the high-speed HS2 rail line.

Elsewhere, top 50 firm Trowers & Hamlins has hired RadcliffesLeBrasseur’s tax and private client head Simon Goldring as head of private wealth. Goldring has been a partner at RadcliffesLeBrasseur since 2008 before becoming department head in 2009.

Trowers & Hamlins senior partner Jennie Gubbins said: ‘Private wealth is proving an increasingly integral part of our service offering, and with his reputation and experience, Simon is perfectly placed to lead the charge in taking our practice to the next level.’

In a further London hire, City firm Fox Williams has strengthened its employment team with the appointment of Pinsent Masons partner Helen Farr.

Farr has extensive experience in the application of TUPE and has advised on a variety of TUPE transfers, including business acquisitions, mergers, private sector outsourcing and PPP/PFI projects within the private and public sectors.

Jane Mann, head of the employment practice, said: ‘Helen’s expertise across all areas of employment law and her involvement within the financial and professional services sectors make her a brilliant fit for our firm. We are experiencing increased demand from clients in the financial and professional services sectors and are able to offer them a broad range of contentious and non-contentious advice across our specialist teams.’

francesca.fanshawe@legalease.co.uk

To be included in future Revolving Door round-ups send your lateral hire announcements to caroline.hill@legalease.co.uk

Legal Business

A&O falls behind on associate pay table as it announces a freeze

Allen & Overy (A&O) has become the latest of the Magic Circle to reveal that it is holding its associate salaries at last year’s levels, meaning its associates will rank as the lowest paid of its rivals so far.

The firm will continue paying newly-qualified (NQ) lawyers £61,500; £1,500 less than Slaughter and May, £2,500 less than Linklaters and £3,500 less than Freshfields Bruckhaus Deringer.

A&O’s first-year post-qualification experience (PQE) pay will remain unchanged at £68,500, as will second and third-year PQE salaries at £74,500 and £86,000 respectively. Last year the firm announced associate pay increases of between £500 – £1,000, following a hold on pay in 2011-2012.

The decision places the firm at the bottom of the associate pay table after Linklaters this year announced it is to increase NQ pay from £61,500 to £64,000. Freshfields, on the other hand, chose to hold associate pay but still tops the table, awarding career milestones foundation (the equivalent to NQ) lawyers between £65,000 and £72,500. Genevieve Tennant, global director of HR at A&O said: ‘I think the bonus pool is very important in this discussion – our NQ’s will receive a £5,000 bonus this year and this keeps us at a competitive position. This year we have differentiated bonuses up the PQ level. We focus on total rewards and make adjustments where appropriate.’

On the other hand, trainee salaries at A&O went up last month for the first time in three years after the firm bumped up first year trainee pay by £1,000 to £39,000, while second year’s got to take home an extra £800 totalling £44,000. The salaries now match its Magic Circle peer group for trainee wages, aside from Linklaters, which award its first year trainees £500 more.

Clifford Chance remains the last Magic Circle firm to reveal its associate pay bands for 2013-2014.

Associates at City firms have seen their salaries drop by around 15% in real terms post the collapse of Lehman in 2009, which saw many firms cutting pay packets for NQ lawyers by around £6,000. Aside from Freshfields with its new career milestones arrangement, firms are still below the £66,000 pay bracket for NQs.

Legal Business

Enter A&O, exit CC for Aviva’s top roster but insurance giant drives a hard bargain

Allen & Overy (A&O) has won a place on Aviva’s top corporate panel after a lengthy review that saw Clifford Chance (CC) lose its spot as plc adviser.

The move comes as Aviva also kick-started its UK and Europe panel selection process in mid-April, following an overhaul of its 280-staff global legal team.

The review of the plc panel was led by general counsel (GC) and company secretary Kirsty Cooper and Aviva Group GC Monica Risam (pictured).

A&O joins the re-appointed Slaughter and May, while previous panel member CC had pitched alongside Linklaters for a coveted advisory spot.

Plc panel firms will be called on for Aviva’s strategic corporate and contentious work. In order to secure a place on the panel, advisers were required to give assurances that they will act for Aviva in a wide context, including potentially against a bank.

The latter assurance is a surprise move for finance leader A&O, which has entrenched relationships with many of the world’s leading financial institutions. Aviva’s A&O relationship is led by head of the insurance group, Philip Jarvis, and corporate finance partner David Broadley. At Slaughters, meanwhile, Aviva’s relationship partners are Jonathan Marks and Richard Smith.

Aviva’s Cooper told Legal Business: ‘You can’t sell yourself to a FTSE 100 company and say you are conflicted from acting against any major bank.’

The review was particularly rigorous and saw partners put in front of a number of Aviva’s heads of business in order to test their ability to advise the company’s top management. Cooper added: ‘They need to be able to build a relationship with our key stakeholder functions such as finance, treasury and M&A.’

Risam added: ‘You could see the ones who did well and those who were uncomfortable.’

Driven by Aviva’s procurement team, plc panel firms offered discounts of 15-25% on standard rates. This pricing structure is being used as a guideline for the 25 firms recently invited to pitch for Aviva’s UK and European panel. Requests for proposals (RFPs) were sent out in mid-April, with results expected to be announced in June.

Firms invited to pitch include Ashurst, Latham & Watkins, Willkie Farr & Gallagher, Pinsent Masons, Berwin Leighton Paisner, Clyde & Co and DLA Piper. CC and Linklaters have also been invited to pitch again, while Risam said Slaughters and A&O will be ‘grand-fathered’ onto the panel by virtue of their appointment to the plc line-up.

The RFPs have been sent out to firms in the UK, Ireland, Italy, Spain, France, Turkey, Poland and Asia. As all the firms invited to pitch are already known to Aviva and have been tested in roles they have undertaken for the company, the panel selection process will largely focus on ways to achieve the best cost arrangements. Risam said: ‘The natural next step is that we are leveraging across the function. We are trying to get the maximum bang for our buck.’

The selection process had been delayed by the extensive restructuring of Aviva – including the legal team – after acting chief executive John McFarlane last year decreed the insurance giant needed to focus on its core markets, sell off under-performing businesses and cut staff.

Last year the legal team downsized by 10%. As a result, it looks unlikely to lose staff in the latest round of 2,000 redundancies announced in April this year.

Cooper said: ‘[McFarlane] felt that Aviva was too bureaucratic and wanted it to be more nimble. He conducted a review of all businesses and functions with the aim of de-layering and restructuring them and that applied to legal.

‘We lost 10% of our headcount last year. We tried to do it by natural wastage but we had to lose a couple of lawyers in the process.’

Click here for more GC coverage. See Legal Business next month for more on Aviva and its shake-up.

caroline.hill@legalease.co.uk

Legal Business

Recent spate of lateral hires a blip in a quiet year so far

Recent spate of lateral hires a blip in a quiet year so far

Despite the City lateral hire market recently showing few signs of returning to its pre-credit crunch peak, yesterday (1 May) saw a string of key partner hires announced by Allen & Overy (A&O), DLA Piper, Orrick Herrington & Sutcliffe and Olswang.

A&O announced the hire of Fried Frank partner Alasdair Balfour to join its City antitrust group, while DLA Piper expanded its London corporate group with the hire of Berwin Leighton Paisner partner Rob Salter and Kirkland & Ellis partner Anu Balasubramanian.

Meanwhile, Herbert Smith Freehills has seen the departure of another high-profile disputes partner with global co-head of arbitration Charles Kaplan leaving to join Orrick.

In a further announcement, Olswang revealed it has boosted its IP practice with the hire of McDermott Will & Emery’s former head of European IP prosecution and opposition practices, Justin Hill. Notable London hires earlier this month include Shearman & Sterling’s global head of project development and finance, Tim Pick, who joined Freshfields Bruckhaus Deringer’s City office at the start of May.

The hires come despite recent data revealing that London lateral hires in the first quarter of 2013 stood at an almost record low. According to Motive Legal Consulting’s London Lateral Hiring Trends Bulletin for January to March 2013 , ‘Q1 2013 was the second-worst Q1 for seven years, ‘beaten’ only by the depths of the recession.’

Just 101 hires were announced during this period, dominated by litigation (20%), closely followed by corporate (16%).

These latest announcements are likely to be the culmination of a spike in firms looking to make strategic hires at the start of the year, although few firms are interested in hiring purely for growth’s sake. At recruiter First Counsel, head of the private practice group William Cock said: ‘The start of this year was quite buoyant and we were starting to get to a situation where there was more strategic hiring -firms wanting to grow and making strategic hires to achieve that.’

This is demonstrated among hires including DLA’s Balasubramanian, who said: ‘In addition to its strong global private equity practice, DLA Piper has a keen interest in India, and offers me an excellent platform on which to build my practice in the region and increase the firm’s penetration of India-related transactions.’

As firms focus on their year-ends there has once again been a predictable dip in interest in lateral hires, although with a slew of results expected this week – Forsters yesterday reported a rise in fee income of 16% – firms may shortly be in the position to execute their next London move.

caroline.hill@legalease.co.uk

Legal Business

A&O introduces first trainee salary increase since 2010

A&O introduces first trainee salary increase since 2010

Allen & Overy has increased trainee pay rates bringing to an end a three-year freeze and has promoted 24 lawyers to the role of counsel.

The Magic Circle firm is the first to raise the stakes amongst its peers this year, with second-year trainee rates increasing by £800 to £44,000 – £200 less than the previous increase in May 2010, where pay packets grew from £42,200 to £43,200.

First-year trainees will take home £39,000 – an increase of £1,000 from May 2008 when wages grew from £37,000 to £38,000. The changes will take effect from September this year.

Meanwhile, the firm also announced 24 promotions to its counsel role across seven practice areas, with the highest number of promotions within banking (nine) and corporate (six).

International capital markets and litigation received four and two promotions respectively with one each in the know-how, international arbitration and tax groups.

The promotions will see 13 of the firm’s global offices take in counsel from 1 May 2013, with former senior associate Diane Richardson being promoted in London, while Hong Kong and Luxembourg offices received six and three individuals respectively.

Managing partner Wim Dejonghe said: ‘The promotions cover a broad range of practice groups with the majority coming from outside London, reflecting the continuing growth of our global network.’

A spokesperson at the firm added: ‘The counsel role can be an alternative career path for those high-performing individuals who, for whatever reason, do not aspire to partnership but still aspire to a demanding and challenging role with opportunities for development, or can be a role taken before later being promoted to partner.’

jaishree.kalia@legalease.co.uk