Legal Business

Great bright hopes – searching out the City rainmakers of 2020

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Magic Circle AshurstHerbert Smith FreehillsHogan Lovells
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Who will be the next generation of corporate heavyweights that top City firms will rely on to drive their businesses in the decade ahead? Legal Business canvassed a wide group of deal veterans to identify the ones to watch.

It is often said that the best of the City’s M&A partners were battled-hardened and defined by the early 1990s recession. That formative experience is often argued to have helped refine the skills and ethos of the select band of M&A heavyweights that dominated the City legal market through the last 15 years.

Legal Business

The air of unreality – can the big deal deliver for Ashurst?

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Legal mergers Ashurst
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‘Historically, what killed Ashurst’s mergers has been apathy. Latham, Fried Frank, Clifford Chance – people were apathetic.’ So recalls one former veteran of the City firm.

As Legal Business goes to press Ashurst is finally about to vote on a transformative merger with its Australian partner. But even two years since the firm agreed a formal alliance with big six Australian outfit Blake Dawson, the idea of Ashurst going through with the tie-up still seems odd, unreal even, though this timeframe was always set out and the Australian practice immediately took the name of its City suitor.

Legal Business

Ashurst closes in on Australian tie-up and leadership election

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As Ashurst dots the Is and crosses the Ts on its merger with Australian top-tier firm Blake Dawson, a number of partners report an internal mood of resignation, despite a two-year courtship that has avoided significant tension or fallout.

As Legal Business went to press, both firms were to vote on full financial integration following the 2011 deal that aligned the pair ahead of this year’s vote. The merger will create a top 50 global law firm with revenues of well over £500m.

Legal Business

Approved: Ashurst achieves full financial integration and single profit pool

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Ashurst today (26 September) effectively threw down the gauntlet to a number of its newly-merged competitors by announcing it has ‘overwhelmingly’ voted in favour of full financial integration with Blake Dawson, including agreeing on a single profit pool.

The united firm will operate a managed lockstep and will have a single unified management structure operating globally under the Ashurst brand, after Blake Dawson rebranded as Ashurst Australia.

The merger – which creates a firm of more than 3,500 people, including 1,800 lawyers, across 28 offices in 16 countries – will take effect on 1 November 2013. Its combined revenues will exceed £550m (A$930m), placing it just outside the top 10 of the LB100.

Ashurst senior partner Charlie Geffen told Legal Business: ‘Now we have a single profit pool, a single partnership compensation system and a single governance system. We think those things really matter and they are not easy to achieve.’

Remuneration and profit sharing are typically the largest stumbling blocks to any merger and Herbert Smith, which voted on financial integration with Australia’s Freehills in June 2012, has yet to come to an agreement with its partners over remuneration. Norton Rose Fulbright, which has undergone expansion in South Africa, Canada and most recently in the US through its merger with Fulbright & Jaworksi, has adopted the verein model with the intention to move largely towards financial merger but has yet to achieve that goal.

Geffen added: ‘We are believers in the global elite model. There will be a small band of firms in the club and we believe that we’ve got a really good crack at being one of them.’

The vote, which was brought forward by six months to this October, required a 75% majority, a target that is understood to have easily been achieved.

James Collis has already been confirmed as global managing partner of the combined firm, while the elections for the role of chair and vice-chair – to replace the current senior partner position – and for the management board of 14 will take place in stages, with the chairman election expected to take place first.

Collis said: ‘Over the last few years a great deal of work has taken place across practices and functions in terms of integrating the businesses and we have been operating as one firm for some time. Full economic integration will facilitate even greater collaboration and flexibility across teams and practices globally, thereby enhancing client service and opportunities for revenue growth as well as driving greater efficiency.’

sarah.downey@legalease.co.uk

Legal Business

Ashurst gears up for new chairman election as Oz merger vote is brought forward

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As Ashurst nears a crucial vote on full integration with Australian partner Blake Dawson – now known as Ashurst Australia – the firm’s partners are also poised to elect the firm’s next chairman.

Partners were informed this morning (23 September) that Ashurst dispute resolution partner Ben Tidswell and Ashurst Australia competition and consumer protection partner Peter Armitage will be running for the role alongside current senior partner Charlie Geffen, whose role will be replaced by the new chairman position.

Voting will start this week – from 27 September until 15 October – with an announcement of the outcome due the following day. Voting to elect the vice-chairman role will follow once the chairman has been chosen.

London-based Tidswell, who advises on restructuring, insolvency and banking disputes, is a current board member while Sydney-based Armitage leads the Australian competition and consumer protection team.

However, Geffen is widely tipped to remain in the top role. One partner at Ashurst says: ‘I can’t see a change in chairman in the short term. It would concern me if there was a change – maybe in two or three years’ time.’

Also sitting on the firm’s board will be global managing partner James Collis and chief financial officer Brian Dunlop.

The vote for the firm to fully merge with legacy Blake Dawson will close by the end of this week – ahead of the previously expected timescale of the end of October. However, a 75% majority vote is required from partners at both ends for the combination to go ahead as one partnership with a shared global profit pool, something that is by no means a forgone conclusion.

The Asia operations of both firms combined back in March 2012.

Jaishree.kalia@legalease.co.uk

Legal Business

Redundancy watch: MMS loses 28 staff and Shakespeares launches consultation as Ashurst’s Scottish fallout continues

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Job cuts AshurstMaclay Murray & SpensShakespeare Martineau
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Redundancy is a word that has been heard rather less over the quieter summer months but yesterday (9 September) Scottish firm Maclay Murray & Spens confirmed it has made a total of 28 staff redundant. Meanwhile, Midlands firm Shakespeares this week confirmed the launch of a consultation over 19 secretarial roles as Ashurst completes the first stage of a redundancy process affecting 350 roles.

Maclays first announced in early June its plans to make up to 30 legal and support staff redundant across its Edinburgh, Glasgow and London offices in a range of practice areas, particularly property and corporate. A statement released by the firm yesterday said: ‘While we regret having to take these steps, they are necessary for the implementation of the firm’s future growth strategy.’

The firm – which has suffered disappointing financial results for the last few years and this year saw revenue drop a further 13% to £40.9m and profit per equity partner down by 22% to £211,000 – began a strategic review of its business in June 2011, which was temporarily put on hold when the firm entered merger talks with legacy firm Bond Pearce (now Bond Dickinson); discussions which never came to fruition.

Speaking earlier to Legal Business, managing partner Chris Smylie said: ‘When we started our strategic review in 2012, it was for us a process of redefinition as well as a drive for focus. With around a third of our revenue coming from our London office, we consider ourselves a UK national cross-border practice not a Scots firm with a London office as we are still regarded in some quarters. It is this reputation that we want to build and focus on. While it has worked well for the likes of Brodies and Burness Paull to maintain a Scotland focused practice, that wouldn’t be the right thing for our clients or our business.’

Meanwhile, Midlands firm Shakespeares, which announced the acquisition of Leicester-based property firm Marrons and Coventry-based Newsome Vaughan last week, is restructuring its secretarial function and launched a redundancy round at the end of last week with 19 out of 100 secretarial roles put at risk across its seven offices.

At the same time, the firm is creating 18 new administrative roles and some of those under review may be re-hired as administrators carrying out paralegal as well as secretarial work.

This latest development follows a redundancy consultation launched in September last year, shortly after the fast-expanding firm’s merger with Harvey Ingram, in which it cut 54 roles.

Elsewhere Ashurst, which made public in June its plan to launch a new Glasgow unit to lower costs in a move which sees 350 London support roles placed at risk of redundancy, has confirmed that it has completed the initial stage of this consultation and that individual consultations are now in process.

The restructuring will see 150 new roles created in Glasgow in the first 12 months, 120 of which will be in the support services function and 30 of which are legal analyst roles. The 350 London staff now undergoing individual consultations will be offered the opportunity to move to the new base.

Results of the final outcome are expected at the end of the year with staff expected to leave or transfer in early 2014.

Berwin Leighton Paisner, DWF, Hill Dickinson and Taylor Wessing have all announced job cuts as a result of consultations which have completed in the last couple of months, while Watson Farley and recently merged Bond Dickinson have both launched consultations of their own, with confirmation of the number of roles cut expected from Watson Farley at the end of this week.

francesca.fanshawe@legalease.co.uk

Legal Business

Revolving Doors: Ashurst makes key energy hire in New York as Gibson Dunn and Squire Sanders expand in London

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Strategic recruitment AshurstGibson, Dunn & CrutcherSquire Patton Boggs
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Ashurst this week announced the hire of Allen & Overy (A&O) energy partner Charles Williams in a bid to boost its New York energy, resources and infrastructure practice.

The move strengthens the firm’s position within the US public-private partnership (PPP) space – dubbed P3 in the US – an area Williams focussed on at A&O. He brings with him experience of representing the public sector, sponsors and lenders within the transportation sector and advising on renewables projects in the North, Central and South America.

Head of Ashurst’s energy, resources and infrastructure team in the Americas, Jason Radford, said: ‘Combining Ashurst’s credentials as a leading international firm in the P3 and renewables field with our US public finance capability provides us with a very strong platform for our US practice. Charles has an excellent reputation as a leading practitioner in this market and his appointment is a further significant boost to our offering.

‘The US has the potential to become one of the world’s largest PPP and renewables markets and we are confident that the addition of Charles to our team will allow us to capitalise on the significant opportunities in these sectors.’

Radford transferred to New York in September 2011 to build a platform with the firm’s US partners within the transport sector. Provided the US PPP market continues to grow as well as Ashurst’s market share, Radford aims to expand the team further over the next year to broaden its client offering.

Williams added: ‘To date the US P3 market has been dominated by transportation projects but increasingly we are seeing other sectors develop, including water/waste water and social infrastructure.’

Elsewhere, Gibson, Dunn & Crutcher has hired international arbitration partner Penny Madden in London. Madden has been a partner at Skadden, Arps, Slate, Meagher & Flom’s in London since 2007, prior to which she practiced at Clifford Chance and Shearman & Sterling.

Gibson Dunn’s senior partner in the dispute resolution group, Philip Rocher, said: ‘In addition to her international arbitration practice, Penny has significant regulatory and investigations experience. These areas have been a significant driver of our recent growth, and Penny will add to our ability to meet our clients’ needs.’

In a further high profile London move, Addleshaw Goddard’s head of structured finance Mark Thomas has joined Squire Sanders’ financial services practice group (FSPG) in London. The hire is the fifth in a series of senior appointments to Squires growing financial services practice in the past 10 months.

Jim Barresi, partner and global leader of the FSPG said: ‘Mark’s skills and experience are increasingly important to minimizing the cost of capital in the wake of regulatory reform. His expertise complements our existing practice in asset-based lending and asset finance, capital markets and banking regulation and will expand our ability to provide in Europe some of the services we provide clients in the US.’

jaishree.kalia@legalease.co.uk

Legal Business

Full speed ahead – Ashurst puts in place joint corporate structure as full integration looms

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As Ashurst proceeds headlong towards its October vote on full financial integration with Asia Pac’s Blake Dawson the firm has put in place a democratic corporate structure that sees current managing partner (MP) James Collis confirmed as global MP of the merged entity.

Many of the appointments are expected; Ashurst Australia’s managing partner John Carrington will retain that role, although more of a surprise is the fact that the senior partner title currently held by Charlie Geffen will disappear, to be replaced on a new-look joint board by an elected chairman and vice chairman, who must come from different legacy firms (a betting person might suggest Geffen and Ashurst Australia’s chairman Mary Padbury are naturals for the roles.)

The board will be made up of 14 members, which aside from the chair roles include the managing partner, four elected legacy Ashurst partners, an elected Asia partner, three elected legacy Blake Dawson partners, two independent members and a non-voting chief financial officer.

The latter three positions have already been filled externally to some fanfare – in April the 1007-lawyer firm announced it had hired Allen & Overy’s London CFO Brian Dunlop to take on that equivalent role in place of former financial director Nigel Morland. A month later came the announcement that high profile ex-Takeover Panel head Robert Gillespie and Commonwealth Bank of Australia chairman David Turner are to act as independent non-executive board members as the firm seeks experienced counsel on its strategic direction and corporate governance.

All remaining elected positions will be voted on later this year, with the vote expected to take place around October.

The firm is also introducing a new global divisional structure along four business lines – corporate, commercial and competition; disputes, intellectual property and employment; energy, resources, real estate and infrastructure and finance – each co-led by Ashurst and Ashurst Australia partners.

Geffen said: ‘The management structure and team we have put in place reflects the ambition of the firm and gives us a strong global platform to achieve our strategy and vision for the merged firm. Our new structure will ensure that we operate as efficiently as possible and will help us to deliver excellence in client service.’

Chairman of Ashurst Australia Mary Padbury, added: ‘We are already very much operating as one firm and the new governance and management structure we are putting in place will help maximise the benefits of integration by ensuring we are best placed to serve global clients and get our global teams working together as effectively as possible.’

The vote on full financial integration is a serious hurdle but, for that betting person, according to one insider it is regarded internally as little more than a formality.

caroline.hill@legalease.co.uk

Global divisional structure in full:

– Corporate, commercial and competition will be co-led by Sydney-based Phil Breden and London-based Stephen Lloyd;

– Disputes, intellectual property and employment to be co-led by London-based Simon Bromwich and Sydney-based Lisa Ritson;

– Energy, resources, real estate and infrastructure to be co-led by London-based Mark Elsey and Perth-based Geoff Gishubl; and

– Finance co-led by Sydney-based Paul Jenkins and Paris-based Laurent Mabilat.

Legal Business

Reporting season floodgates open as four major City firms reveal 2012/13 revenues

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Financial results 2012/13 AshurstFreshfields Bruckhaus DeringerLinklaters
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Reporting season has opened in earnest in the City as Freshfields Bruckhaus Deringer today (5 July) reveals it has bucked the trend towards flat revenue growth among its Magic Circle rivals while Linklaters, Ashurst and Norton Rose Fulbright disclose a varying set of 2012/13 numbers.

In a year that has already seen a number of managing partners blame challenging market conditions for flat revenue streams, Freshfields reported a 7.2% revenue increase from £1.139bn to £1.22bn, while its profit per equity partner (PEP) rose by 7.6% to £1.398m.

Global managing partner Ted Burke said: ‘Over the past six years we have worked hard at making our offering across our practices, sectors and geographies as nimble and flexible as possible to ensure we can adapt to changing client demand. We feel that we are now very well-placed to provide the transactional, regulatory, contentious and risk management help our clients need, wherever in the world they want it. These strong results demonstrate how this approach is working’.

Headline deals for the 2332-lawyer firm have included its role advising the government on the long-running IPO of Royal Mail, and advising Betfair on CVC Capital Partners’ £910m takeover bid. For Q1 of 2013, Freshfields was ranked by mergermarket in third place for global M&A behind US firms Davis Polk & Wardwell and Wachtell, Lipton, Rosen & Katz, and second for global buyouts behind Kirkland & Ellis.

In contrast, Magic Circle rival Linklaters‘ turnover dropped by 1% to £1.195bn, although its PEP saw the second-largest increase among the Magic Circle, up 6% to £1.260m. Linklaters global managing partner Simon Davies said: ‘I’m cautiously optimistic. Our longer term growth will continue at a lower pace. There’s plenty of cash in the market, although not much optimism on where to deploy it. We’re very comfortable with our model. There’s not a market that we should be in and are not.’

Flat revenues amid challenging conditions are also a feature of Ashurst’s past year, which in line with many City firms reported a slow start to the year and a strong final quarter. The top 20 firm saw its turnover increase only marginally from £322m in 2012 to £323m (0.3%) over the past financial year. PEP is down by 8.6% from £744,000 to £680,000. The partner profit range has also dropped to £375,000 to £975,000 (down from £405,000 to £1,052,000 in 2012) and the firm’s net profit was down from £112m to £105m.

Ashurst managing partner James Collis said: ‘Market conditions remain challenging and this has inevitably impacted activity levels…The year was characterised by a difficult first half, a better second half and a strong last quarter.

‘In the last year, our non-UK revenue accounted for 41% of the total. We have seen a notable improvement in performance in the last year in Asia, Middle East and the US. In the UK, activity in energy, transport and infrastructure and finance has been particularly robust. That said, market conditions in Continental Europe have continued to be challenging and the weakening in the Euro has had a marked impact.’

Elsewhere, Norton Rose Fulbright disclosed a 1% increase in revenue to $1.334bn. That figure does not include Fulbright Jaworski’s revenues after the firms’ merger went live on 3 June. In Sterling terms that figure is £845.3m (converting at average exchange rates during the year), up 3% from £822.3m last year. However, the firm has declared an overall increase of 4% owing to depreciation against Sterling of the SA Rand.

Global chief executive Peter Martyr said: ‘We are happy with a 4% growth across the world, particularly given the economic climate and the huge strategic steps we have made.’

Yesterday, Allen & Overy reported a 0.6% increase in revenues for its year to April 2013, with income hitting £1.19bn and flat profit per equity partner of £1.1m.

Outside of the Magic Circle, many of the top 50 UK firms have revealed spikes in turnover off the back of recent mergers and international expansion. Top-20 firm Pinsent Masons posted a 40% increase in revenue from £221m to £309m following its merger with McGrigors last June. The firms, which would have had a combined turnover last year of around £294m, have in real terms seen a growth in revenue of 5%.

Clyde & Co, meanwhile, saw a hike in turnover of 17% as it continues to see the effects of its 2011 merger with Barlow Lyde & Gilbert. The insurance-focused firm’s revenues are up to £336.6m from £287m last financial year, having shot up by 38% the year before in the more immediate aftermath of its merger with Barlows. PEP is also up 4% this year from £558,000 to £580,000.

However, it has also been a good year for boutique and specialist firms, including litigation outfit Stewarts Law, which on 3 July announced an increase in turnover of 29.5% to £45.2m for 2012/13 and average profits per equity partner of £1.1m.

Macfarlanes, on the other hand, stands out for being one of the few firms to have announced significant increases in turnover and profit without having expanded from its single site office or made changes to its predominantly transactional practice.

The high-performing City firm posted a 12% increase in revenues for 2012/2013 from £102.2m to £114.16m. The firm, which recorded an 8% rise in revenues in 2011/2012, continues to be one of the most profitable firms in the City, with net income up 16% from £42.44m to £49.25m, equating to a PEP of £985,000 – an increase of 9% on 2011/2012. Profit per lawyer at the firm stands at £158,000 – a rise of 7%.

jaishree.kalia@legalease.co.uk

Legal Business

Ashurst’s new Glasgow unit ‘part of a continuing trend’

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Law firms look outside City to meet client cost expectations

It is a sign of the times that the majority of City partners can’t understand the fuss around Ashurst’s new low-cost base in Scotland.

The top-15 UK firm announced in mid-June that it is to create a 150-strong unit in Glasgow, headed by former Dundas & Wilson partner Michael Polson, which will cover back office support and volume legal work, initially document review in litigation and corporate.

The move echoes earlier initiatives, launched to more fanfare, by Herbert Smith Freehills (HSF) (then just Herbert Smith) and Allen & Overy (A&O), which set up volume support operations in Belfast in 2011 and 2012 respectively as a means of lowering client costs.