Legal Business

Revolving Doors: Baker Botts takes Kirkland capital markets partner in Houston as Cooley adds tax partner and DLA makes litigation play in LA

City laterals stayed quiet last week continuing a recent hiatus while the US was the centre of attention internationally with DLA Piper, Baker Botts and Cooley all making hires across the Atlantic.

US laterals defined last week’s international recruitment round, with Baker Botts leading the way with a strategic hire from American powerhouse Kirkland & Ellis. Capital markets partner Justin Hoffman joined the firm in its Houston office, after spending two years as a partner at Kirkland.

Hoffman’s practice focuses on debt and equity capital market transactions, as well as corporate governance and compliance. Speaking to Legal Business, Hoffman explained the rationale for his move.

‘Baker Botts is a very established name in Houston. It has a very broad corporate practice, representing both issuers and underwriters. My practice is a perfect fit here.’

Moving to the West Coast, in Los Angeles Cooley further expanded its global tax practice with the hire of Alexander Lee from McDermott Will & Emery. Lee had previously spearheaded McDermott’s tax practice as a partner and focuses his practice on national and global transactional tax matters as well as private mergers and acquisitions.

‘Alexander’s deep knowledge of international transactional tax work further strengthens Cooley’s offerings for established industry giants and disruptive startups alike,’ said Mike Lincoln, chair of Cooley’s global business department. ‘Alexander has the wealth of experience needed to meet increasingly complex tax demands on large, cross-border deals.’

Rounding off the US moves, DLA also made a play in Los Angeles, announcing the hire of Levi Heath from Barnes & Thornburg where he had worked since 2011. As a partner at Barnes, Heath focused on civil and commercial litigation, including toxic tort and product liability defence. Heath will now boost the litigation capabilities of DLA on the West Coast where the firm has made a series of hires after completing a merger with Los Angeles-based boutique Liner last October.

Dentons meanwhile added to its Scottish bench with a hire in Glasgow, as Roddy Harrison joins the firm’s private client and charities team in the UK tax department. Harrison arrives at Dentons from BTO Solicitors where he headed the private client practice and was a partner for over 15 years. He has experience advising private clients and high net worth individuals on personal and business matters, including capital taxes planning and estate planning.

Legal Business

Texan draw: Baker Botts latest to make major play with nine partner NRF hire

In yet another significant Texan transfer, Baker Botts has expanded its Houston offering bringing in a nine partner team from Norton Rose Fulbright (NRF).

The move comes as NRF announced earlier today (21 February) it had agreed to merge with 400-lawyer Chadbourne & Parke. The merger will see Chadbourne’s $250m practice bolted on to NRF’s US arm under the verein structure, giving the combined firm a potential global turnover of around $2bn. Houston is the home of NRF’s 2013 merger partner Fulbright & Jaworski.

Among those joining Baker Botts is NRF’s former head of US M&A and securities practice David Peterman, the former head of its Houston corporate and M&A practice Efren Acosta and the former head of NRF’s US tax practice Robert Phillpott. Corporate partners Edward Rhyne, Natasha Khan and Dan Tristan, global projects partners Ned Crady and Daniel Mark and tax partner Ron Scharnberg also join the firm.

Baker Botts managing partner Andrew Baker said: ‘These new additions dramatically enhance our strength in the areas of private equity, mergers and acquisitions, tax, finance and projects in the upstream, midstream and downstream energy markets.’

Gibson, Dunn & Crutcher, Winston & Strawn and Dorsey & Whitney all announced new offices in Texas earlier this month. Gibson Dunn confirmed it had opened a new Houston office with eight partners, while Winston & Strawn has taken on 23 new partners from eight different firms and has launched an office in Dallas. NRF head of US business law Tom Hughes was among the team that made the move. Dorsey also opened an office in Dallas with five partners from Schiff Hardin bringing its office count to 14 offices.

Legal Business

Freshfields and Baker Botts take pole position on F1 sell off


Over 100 lawyers involved as PE firm sells sport to Liberty Media

Just six months a partner, Freshfields Bruckhaus Deringer’s Charles Hayes has led the firm’s team advising Formula One Group (F1) and CVC Capital Partners on the £6.4bn sale of F1 to Liberty Media Corporation, advised by Baker Botts.

Legal Business

Freshfields and Baker Botts steer CVC and Liberty through £6.4bn Formula One deal


Freshfields Bruckhaus Deringer and Baker Botts have won spots advising as CVC Capital Partners looks to sell off Formula One (F1) to Liberty Media Corporation for £6.4bn.

News of the deal comes after the London-based private equity house celebrated ten years since it first bought into the sport earlier this year in what has been described as the most lucrative private equity deal in history. If the acquisition goes through, the move would see F1 listed on Nasdaq.

There has been some turbulence over the past 12 months with the spotlight on CVC and F1’s owner Bernie Ecclestone after a revolt from supporters and F1 drivers alike following a debate around pay television after Sky secured a six-year deal from 2019 with only the British Grand Prix to be shown free-to-air.

CVC turned to its long-time adviser Freshfields, which earlier this year acted for CVC on its bid to acquire a majority stake in Germany’s largest private sports betting group Tipico Group with a team including Germany-based Juliane Hilf and Georg Roderburg with London partners Alex Mitchell and Rob Carlton. The firm also guided CVC through its £800m acquisition of Sky Bet in 2014 after advising on its £551m acquisition of insulation solutions company Paroc with a team led by corporate partner Tim Wilmot.

Freshfields has strong ties with CVC, with the founder of the Magic Circle firm’s London private equity practice Chris Bown moving to CVC in 2013 to advise its deal teams.

Meanwhile, Baker Botts is acting for Liberty Media for the second time this year after a team lead by Michael Calhoon acted on a lawsuit between Liberty and media company Vivendi Universal. A jury sitting in the Southern District of New York found Vivendi liable for breach of contract and securities fraud and awarded Liberty Media €765m.

The US firm also advised Liberty Interactive on its acquisition of e-commerce company Zulily for $2.4bn in 2015.

Macfarlanes also acted on the deal, advising members of Formula One’s senior management with a team including corporate head Ian Martin, corporate partner Stephen Drewitt and tax partner Peter Abbott.

Legal Business

Significant departures: Trowers loses management duo to Baker Botts in Dubai


Baker Botts has bolstered its corporate and disputes practice in Dubai with the double-hire of Trowers & Hamlins’ head of UAE Abdullah Mutawi, alongside fellow partner and international disputes resolution chief Lucas Pitts.

Mutawi will join the firm as a partner in the corporate group, while Pitts will add to the firm’s international disputes offering, with both being based in Dubai.

Mutawi has been a partner at Trowers for the last decade and became the head of UAE in September 2011. Before this, he was a senior associate at Norton Rose for four years. In his new role at Baker Botts, he will focus on cross-border M&A, capital markets and securities transactions for the telecoms and financial institutions sectors across the Middle East.

Lucas joined Trowers in March 2007 and recently led the litigation for the Bahrain domiciled commercial bank The International Banking Corporation. Lucas has experience of advising on disputes relating to telecommunications, banking, insolvency, aviation and fraud, with experience in the UAE, Saudi Arabia, the US, Africa and Europe.

Baker Botts managing partner Andrew Baker said: ‘Both Abdullah and Lucas have a deep background and wealth of experience throughout the Middle East and Africa. Their addition will increase our regional and international capabilities in the areas of corporate law and international disputes Resolution.’

Legal Business

US revenue round-up: Paul Weiss and Davis Polk surpass the billion-dollar mark


US firms’ financials are continuing their positive trend, with recent releases showing revenue spikes and profit boosts including for Davis Polk & Wardwell and Paul, Weiss, Rifkind, Wharton & Garrison which both broke the billion-dollar mark in gross revenues last year.

For Davis Polk, both its revenue and partner profits were significantly higher; revenue was up 12.8% from $975m in 2013 to $1.1bn last year, while its average profits per partner crossed the three-million-dollar threshold to $3.3m, rising 12%. The positive result is a fundamental boost for the firm that was widely perceived to have drifted off course during the 2000s.

Similarly, disputes leader Paul Weiss has particularly outshone competitors enjoying its 15th record-breaking year in revenues in a row. Gross turnover surged to $1.03bn, up 11% from when the firm grossed $934.5m in 2013 and lifting average partner profits by 6% from $3.6m to $3.8m in 2014. The firm’s overall headcount rose 10% percent from 854 to 943, while partner ranks grew by just four heads to 135, a more modest 3% rise.

Since the credit crunch hit, Paul Weiss is one of the few firms that has managed to keep revenues well above water. Speaking to Legal Business earlier this year, Paul Weiss chairman Brad Karp said: ‘Breaking the billion-dollar revenue mark in 2014 was a very significant milestone for us. We are very proud of what we have accomplished – not just in 2014, but in the seven years since the financial crisis began. Over that period, our revenues have increased by 60%, our profitability has increased by 50%, and our pro bono hours have increased by more than 50%.’

Also enjoying double-digit growth so far this was energy focused Houston firm Baker Botts, which recently saw its revenue shoot up 11.4% to $653m from $586m in 2013, while net income soared 22.6% to $299.3m. But it was the firms’ profits per partner that truly shone at $1.7m – a 25.5% increase on 2013’s $1.36m – this was after the firm posted flat partner profits in 2013.

‘2014 was an exceptional year,’ said the firm’s managing partner Andrew Baker. ‘We achieved these results while making sizable new investments in our long term growth in the form of substantial new marketing, business development, practice management, pricing and information technology systems.’

For more analysis of the surging US market see: The blessed – unheralded, Wall Street’s elite comes roaring back

Legal Business

US financials 2014: Baker Botts grows revenues 11% as turnover picks-up at Dechert, McDermott and Goodwin Procter


Following Weil Gotshal & Manges’ impressive profit increase, other US firm numbers continue to paint a positive picture Stateside with Baker Botts recording 11% revenue growth while Dechert, Goodwin Procter and McDermott Will & Emery all see increased turnover.

Baker Botts’ firm-wide revenues saw an 11.4% jump as they leapt from $586m in 2013 to $653m in 2014. Profits rose even faster, moving from $244m to $299m, a 22.6% growth rate, while profit per partner was boosted 25.5% from $1.36m to $1.7m as partner numbers fell from 180 to 176.

Andrew Baker, managing partner at Baker Botts said that the results had been achieved while ‘making sizable new investments in our long term growth in the form of substantial new marketing, business development, practice management, pricing and information technology systems.’

Turnover at disputes shop Dechert also grew strongly at 8%, increasing to $893.4m in 2014 from $777.2m the year before, while revenue per lawyer stood at just over $957,000 – up 4% on last year’s total of $920,000. Profit per equity partner (PEP) also rose to $2.3m from $2.2m posting a 7.7% increase while including non-equity partners brought that average down to $1.6m.

Nearly three quarters of the revenues were derived from the firm’s offices in North America, followed by Europe with just under a quarter, and around 1% of revenue coming each from the firm’s Asia and Middle East offerings.

Dechert’s partnership comprises 164 equity partners, just one more than in 2013, while the number of non-equity partners grew from 119 in 2013 to 124. Total lawyers at the firm grew 4% from 845 to 877. However, the firm’s figures show that only 11% of the equity partnership are female, with the remaining 89% being male.

Meanwhile, Goodwin Procter posted a revenue increase of 4% to $785.5m for the year ending 31 December 2014, up from $752.5m in 2013, and leading to revenue per lawyer breaking the million dollar mark posting an increase of 6% from $979,000 to $1.04m. The firm’s PEP also rose by 7% to $1.7m from $1.6m.

Slightly slower growth of 2.1% at McDermott Will & Emery still saw the firm increase its turnover from $881m to $900m and generate profits of $311m. Revenues were created by fewer lawyers with headcount at the firm dropping 2.4% from 1021 to 997. However, the number of equity partners rose by 11 to 203 resulting in a slight drop in PEP from $1.54m to $1.53m while non-equity partners remained broadly flat going from 369 to 368.

Legal Business

£58.11 per sq ft: Bird & Bird loses major patent litigator as it commits to £8.3m annual rent bill


Mark Heaney, who heads Bird & Bird’s highly regarded electronics sector group, is leaving for US firm Baker Botts at the end of the year.

Heaney, who started at DLA Piper before being offered partnership in Bird & Bird’s intellectual property group in 2000, has resigned from the firm and will depart at the end of 2014. A handover process is currently in place.

He will become the fourteenth Baker Botts partner in London, which, like its practice in the US, is heavily focused on the energy and gas sector.

A patent litigator by trade, Heaney has been involved in big ticket electronics disputes including Alcatel v Marconi, Halliburton v Smith International and Storage Computer v Hitachi. Heaney successfully defended Microsoft last year after Motorola claimed the software giant had infringed a patent for email synchronisation technology. The England & Wales Court of Appeal found the patent invalid on the ground of obviousness.

He is also the second major patent litigator to leave Bird & Bird for a US firm in the last 18 months, with the firm’s co-head of life sciences Trevor Cook having departed for Wilmer Cutler Pickering Hale and Dorr.

The tech-centric firm recently committed to a pre-let that will see it pay £8.28m a year to lease 12/14 New Fetter Lane. The agreement, which weighs in at £58.11 per sq ft, makes the annual cost of the property worth 38% of Bird & Bird’s current leasehold expenditure globally. In 2013/14 the firm paid £21.5m in rent.

Last year, CMS Cameron McKenna agreed a move to cannon place for £42 per sq ft and one managing partner said that Bird & Bird’s deal ‘seems a little high’.

A spokesperson for Bird & Bird said: ‘We have not decided on the outcome of our other three buildings in London but have flexible terms in place whereby we can assess growth levels at a later date.’

Legal Business

Covington and Baker Botts act as Yukos minority shareholders defeat Russia


Baker Botts was defeated again in the long-running Yukos saga as Covington & Burling succeed in having a Russian jurisdictional challenge dismissed by a Swedish court.

After a five-year wrangle over the jurisdiction of an arbitration tribunal administered by the Stockholm Chamber of Commerce, a Swedish court has dismissed Russia’s challenge that former head of arbitration at Freshfields and co-founder of Three Crowns Jan Paulsson, Toby Landau QC of Essex Court Chambers and Judge Brower of 20 Essex Street had no authority to decide a dispute brought against Russia by a group of Spanish investors. It also concluded that despite Russia’s objections, the Spanish funds should be awarded costs.

The challenge was unusual in that most states can only challenge the jurisdiction of arbitration tribunals following an award, which did not come until 2012. Russia sought a declaratory judgment action asking to declare that the tribunal lacked jurisdiction and the challenge was escalated to the Supreme Court, which decided in 2012 that the challenge could proceed.

‘The writing is on the wall. Once again, Russia has been held accountable for its actions,” said Covington & Burling’s partner Marney Cheek who represented the Spanish investors. ‘Now that the Swedish court has rejected Russia’s challenge, we call upon Russia to accept its international responsibility to compensate Yukos investors.’

Partner Jonathan Gimblett who worked alongside Cheek added: ‘This decision is significant because it suggests that Russia will have no more success avoiding its treaty obligations in appeals to national courts than it had in the underlying arbitrations.’

The tribunal was challenged in the local courts in 2009 after deciding they had authority concerning the dispute brought under the Spain-Russia bilateral investment treaty. The tribunal went on to award the investors $2m in damages after unanimously concluding that Russia expropriated Yukos, a figure that has since risen to $3m as the unpaid award has accrued interest. Covington & Burling’s Washington, DC-based partners Marney Cheek and Gimblett represented the Spanish investors alongside co-counsel Kaj Hobér of Mannheimer Swartling Advokatbyrå, Paulo Fohlin of Advokatfirman Odebjer Fohlin and Silvia Dahlberg of Advokatfirman Vinge.

London-based partner Jay Alexander of Baker Botts, which also represented Russia in its recent defeat to a group of majority shareholders that left Russia facing a $50bn bill, represented the state alongside local firm Lindahl.

Legal Business

Shearman & Sterling secures historic $50bn arbitration award in epic Yukos dispute


Russia has been ordered to pay $50.08bn to the majority shareholders in Yukos Oil Company, once Russia’s largest oil producer, by an arbitral tribunal sitting in The Hague under the auspices of the Permanent Court of Arbitration (PCA).

The tribunal held unanimously that Russia breached its international obligations under the Energy Charter Treaty (ECT) by destroying Yukos Oil Company and appropriating its assets in an historic award rendered on 18 July.

The award is 20 times larger than the previous record for an arbitral award, the $2.16bn secured by Dow Chemical Company against Kuwaiti Petrochemical Industries Company over a failed joint venture in 2013.

The tribunal ruled that ‘Yukos was the object of a series of politically-motivated attacks by the Russian authorities that eventually led to its destruction’, with the Russian Federation’s aim being ‘to bankrupt Yukos, assign its assets to a state-controlled company, and incarcerate [Mikhail Khodorkovsky, once Russia’s richest man and a Yukos executive (pictured)] who gave signs of becoming a political competitor.’

At its peak, Yukos had around 100,000 employees, six main refineries and a market capitalisation of about $33bn.

The tribunal also ordered the Russian Federation to pay GML $60m in legal fees, 75% of the fees incurred in these proceedings less a discount based on Yukos’ own liability for the destruction of the company based on aggressive tax optimisation, and €4.2m in arbitration costs.

A Shearman & Sterling Paris-based team made up of Emmanuel Gaillard, who heads the firm’s 80-lawyer international arbitration practice, Yas Banifatemi, partner in charge of the firm’s public international law practice, and counsel Jennifer Younan represented GML, the holding company that indirectly owned the majority of Yukos’ shares.

Gaillard said at a press conference this morning (28 July): ‘There is no appeal. There is only limited action to set aside the award in the Netherlands. The judgment is there after 10 years of battle. The award is unanimous and that will carry a lot of weight in courts around the world. If you look at history and the history of awards against states, at the end of the day they pay.’

The arbitration lasted for nearly a decade with the original claim made in October 2004 for $114bn. Proceedings involved a ten-day hearing on jurisdiction and admissibility in 2008 and a 21-day hearing on the merits in 2012, attended by over 50 party representatives as well as fact witnesses and experts. The parties’ written submissions exceeded 6,500 pages and the transcript of the hearings is over 3,300 pages long. Over 11,000 exhibits were filed with the tribunal.

New York-based partner at Cleary Gottlieb Steen & Hamilton, Lawrence Friedman, and Paris-based Claudia Annacker represented the Russian state alongside Baker Botts’ London-based co-head of international arbitration Jay Alexander and Texas-based partner Michael Goldberg.  

The tribunal was chaired by Yves Fortier, formerly Canada’s representative on the UN Security Council. Russia appointed judge Stephen Schwebel, former president of the International Court of Justice, and the claimants appointed Charles Poncet, partner at CMS von Erlach Poncet in Geneva.

GML’s legal team argued that the expropriation of Yukos, liquidated in 2007, was achieved through a series of steps that included paralysing the company through the arrest, imprisonment and harassment of its management and employees and the enforcement of $24bn tax bill manufactured to take the company’s assets, which were later transferred to Russia’s state-owned companies Rosneft and Gazprom. The team from Shearman & Sterling stated that this allowed Rosneft, which has a market capitalisation of $67bn, to become the nation’s largest oil producer. Russia’s actions culminated in the liquidation of Yukos in November 2007, and the complete and total deprivation of Shearman’s clients’ investments.

‘This award is a major victory for us. After intense scrutiny, the tribunal confirmed what the claimants have been saying all along, namely that Yukos was destroyed, and its assets expropriated, for political reasons’ said Tim Osborne, director of GML.

Gaillard added: “This is a great day for the rule of law: a superpower like the Russian Federation is held accountable for its violations of international law by an independent arbitral tribunal of the highest possible calibre.’

Russia has until 15 January 2015 to pay the award in full. The award is final and binding, and if Russia fails to voluntarily pay the award then the award can be enforced in 150 states under the 1958 New York Convention. After that, interest will start accruing and be compounded annually.

Enforcement of the arbitration award can be made against Russia’s commercial assets, but not sovereign assets, in the event that Russia does not comply.

David Clark, chair of The Russia Foundation and former special adviser to Robin Cook at the UK Foreign Office between 1997 and 2001, said: ‘The Yukos affair was in many ways Putin’s “original sin”. It was the moment when it became clear that he was determined to centralise political power and dismantle any democratic or legal safeguards that stood in his way. Drawing a line under the affair might become a symbol of Russia’s willingness to put relations on a more business-like footing.’