Legal Business

Guest post: Coronavirus tears up competition regimes for foreign investments as Europe struggles to shield reeling economies

Guest post: Coronavirus tears up competition regimes for foreign investments as Europe struggles to shield reeling economies

COVID-19 continues to wreak havoc with the global economy, disrupting all manner of business throughout the world. Stock markets have plummeted and many companies are having to grapple with economic damage that seemed unimaginable at the start of the year.

This unprecedented environment could afford opportunistic buyers the chance to acquire or invest in companies that have been weakened by the crisis. In addition, creditors may unintentionally find themselves in a position where they acquire control over a business.

Before the crisis, the world was already de-globalising with rising national protectionism driving calls for stronger screening of foreign investment across the globe. Now, COVID-19 has prompted some countries to take an even more drastic approach. Some national governments, notably in Europe, are now taking steps to protect companies that have become vulnerable as their economies are struggling from being taken over by foreign investors.

The Spanish government has just introduced a new temporary requirement that ex-ante approval will be required for foreign (non-EU) direct investments in strategic sectors in Spain.

This affects investments in Spanish companies by non-EU/EFTA entities where the foreign investor would (i) hold a stake of 10% or more in the share capital of (ii) acquire the right to participate in the management of or (iii) acquire control of a Spanish company, and applies to a broad range of sectors, namely:

• energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure and sensitive facilities;

• critical technologies and dual-use items, including artificial intelligence, robotics, semiconductors, cyber-security, aerospace, defence, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies;

• supply of key inputs, in particular energy, raw materials and food security; and,

• sectors with access to sensitive information, in particular personal data, or with the ability to control such information.

The French Minister of Economy has stated that the government is ready to protect important French companies by recapitalising them, buying shares or even taking them over. The government has also stated that nationalisation of strategic companies will not be ruled out.

The Italian government, meanwhile, is considering qualifying all Italian companies listed on the Milan Stock Exchange as ‘strategic’ for the purposes of applying the existing Special Powers rules under the foreign investment review regime. This would mean that the Special Powers, which allow the Prime Minister to veto or impose conditions on certain transactions in the defence/homeland security, telecoms, energy, and transportation sectors, could be extended to foreign investment in all Italian-listed entities.

The Hungarian government is able to prevent acquisitions by non-EEA entities in certain strategic industries (eg, finance, telecommunications, energy, defence) for public reasons, including national safety, energy supply, and financial stability. COVID-19 has prompted the government to take control of 140 strategically-important companies in various sectors.

In summary, some countries are using foreign investment screening to protect wider economic and social concerns triggered by COVID-19. At present, this approach seems to be limited to Europe, which makes sense as this region has been declared, for now, as the ‘epicentre’ of the global pandemic. However, as the virus continues to spread, it is possible other countries could take a similar stance to protect their national interests and economies.

These developments highlight the need for investors to carefully consider foreign investment review risks at this highly-sensitive and volatile time both for deals currently underway and transactions being contemplated. Cross-border transactions in strategic sectors will likely encounter tougher scrutiny and face a prolonged approval process. Taking time to understand the rules and identify a regulatory strategy – including calibrated communication with the relevant governmental authorities and thinking about the impact on deal documentation – early in the bid process will minimize the risk of delays, last-minute changes to the deal structure, or failed transactions.

For potential bidders the basic message is that the environment for corporate transactions has already been transformed in Europe by this crisis, and perhaps soon the world. Never has it been more relevant for companies to keep in mind the age-old advice for acquirers: buyer beware.

Samantha Mobley is a partner in Baker McKenzie’s competition and trade practice in London

Legal Business

Coronavirus fallout continues as Latham suspends NY partner conference while Bakers re-opens London branch

Coronavirus fallout continues as Latham suspends NY partner conference while Bakers re-opens London branch

Fears around the spreading coronavirus have yet again affected the business of law, as the world’s second-highest grossing firm Latham & Watkins called off its annual global partnership meeting in New York citing safety concerns.

Meanwhile Baker McKenzie has re-opened its London office today (2 March) after an employee taken ill with suspected symptoms last week tested negative to the COVID-19.

Latham chair Rich Trobman said in a statement on Friday (28 February) that the firm had taken the ‘difficult decision’ to cancel its annual partner meeting ‘with the health and wellbeing of our colleagues and clients foremost in mind’. He added: ‘While we perceive the risks to be small, safety is our first priority, and we thought this decision was in the best interests of all concerned given the uncertainty surrounding COVID-19.’

The conference was due to take place this week, bringing together partners from its 30 offices across the world in Manhattan. Latham has 514 equity partners and 276 income partners.

Elsewhere, Bakers’ London operations were back to business as usual today after the firm shut its 1,000-employee office on Friday citing concerns over a staff member showing suspected symptoms after travelling to northern Italy, Europe’s worst-affected area. The employee underwent tests for the virus and on Sunday the firm received news they were negative, so notified staff that they could return to work as normal today.

A spokesperson for the firm said: ‘Our priority is the health and wellbeing of our people and our clients, and we took these pre-emptive measures out of an abundance of caution.’

Fears around the impact of coronavirus on businesses have been mounting in recent weeks, with many concerned it could have financial crisis-level effect on the global economy. Last Friday news came that US stock markets had suffered their worst week since the 2008 financial crisis, with the three main indexes falling by 10% or more.

Shearman & Sterling has imposed a travel ban for China and Hong Kong, limiting non-essential travel to contaminated jurisdictions and putting in place remote working measures. Dentons has temporarily closed its office in Wuhan, where the virus originated.

Outside law, oil major Chevron last week sent its 300 staff home from Canary Wharf as a precaution, along with Crossrail, which shares the same building.

Marco.cillario@legalbusineess.co.uk

Legal Business

Baker McKenzie shuts London office amid Coronavirus fears

Baker McKenzie shuts London office amid Coronavirus fears

Baker McKenzie has shut its London office as a precaution after a member of staff was taken ill with suspected coronavirus.

First reported in RollonFriday, the firm shut its 100 New Bridge Street office on Thursday afternoon, with the 1,000-strong workforce, including 119 partners, sent home.

It is understood that a Bakers employee returning from northern Italy had been taken ill and is undergoing tests for the virus, also known as COVID-19.

Members of staff will be notified on Sunday whether it is safe to return to work on Monday morning.

A spokesperson for Baker McKenzie said: ‘Our priority is the health and wellbeing of our people and our clients and we have asked our London office employees to work from home for the time being while we are taking precautionary measures in response to a potential case of the COVID-19. We have a well-established agile working programme – including technology and IT systems for home working – which allows us to take these precautionary measures without impacting our client service delivery. We continue to closely monitor the situation and are following the advice and guidance issued by the Government and Public Health England.’

Italy now has more than 500 cases of the virus, of which 17 have proved fatal.

Fears around the impact of coronavirus on businesses have been mounting in recent weeks, with many concerned it could have financial crisis-level effect on the global economy.

Shearman & Sterling is among the firms to have implemented measures to mitigate the threat of the virus, imposing a travel ban for China and Hong Kong, limiting non-essential travel to contaminated jurisdictions, as well as putting in place remote working measures.

Law firm offices in Milan are on shut down after the outbreak, while Dentons temporarily closed its office in Wuhan, where the virus originated.

Meanwhile in the UK, three more cases of the disease have today (28 February) been confirmed, bringing the total to 19.

Outside law, Oil giant Chevron this week sent its 300 staff home from Canary Wharf as a precaution, along with Crossrail, which shares the same building. The real estate company that manages Canary Wharf suggested the firms reacted with an abundance of caution.

nathalie.tidman@legalease.co.uk

Legal Business

Bakers former City head Senior admits to sexually harassing associate but denies abuse of position

Bakers former City head Senior admits to sexually harassing associate but denies abuse of position

Baker McKenzie’s former London managing partner Gary Senior has admitted his behaviour after a firm event in 2012 amounted to sexual harassment towards a junior associate but said he did not believe at the time that his advances were unwanted.

In the third of 15 days of hearings at the Solicitors Disciplinary Tribunal (SDT), Senior admitted today (4 December) that he tried to kiss a female associate half his age and agreed this behaviour was ‘totally inappropriate and unacceptable for a managing partner’, but denied it was an abuse of his position.

He also disagreed with many details of the incident as described by the associate – referred to as Person A due to reporting restrictions – in her witness statement yesterday, including that he hugged her and persisted in his conduct despite her making clear that it was unwanted.

Asked whether he recognised that his behaviour amounted to a breach of the solicitors’ code of conduct requiring lawyers to act with integrity and uphold public trust in the profession, Senior said he could not remember being familiar with the code at the time: ‘I knew there was a code,’ he said. ‘But those are terms I was not familiar with.’

The case was brought to the SDT by the Solicitors Regulation Authority (SRA), which in July referred Senior for prosecution for behaving inappropriately towards person A and seeking to initiate intimate activity with her. He is also accused of trying influence the outcome of the initial investigation into the incident and failing to report it to the SRA.

Bakers is also facing prosecution for the events alongside its former litigation partner Tom Cassels and former HR head Martin Blackburn for their roles in leading the initial investigation.

The hearings began on Monday  with SRA lead counsel Andrew Tabachnik QC of 39 Essex Chambers accusing the firm of ‘collective failure’ for the way it handled the allegations of sexual misconduct against Senior.

The events in question took place following a firm recruitment event on 23 February 2012. Senior and a small group of people went to a night club and a bar. At around 2am a group of five ended up in Senior’s hotel room.

At about 3am the party broke up, and Senior and Person A were left alone. Person A said this was because Senior had asked her to stay to talk with her about something and she felt compelled to remain given his authority as managing partner.

According to Person A’s version, which she recorded in notes in the days following the incident, Senior hugged her, making her feel uncomfortable, asked her to stay after she said she should go and suggestively looked at his bed, all aspects that Senior denies. Person A also denies giving Senior any indication at any point that his behaviour was not unwanted.

Senior admitted he made a compliment about her appearance and then moved to kiss her on the neck, but said the incident was over in a few seconds as her phone started ringing, she said it was her boyfriend calling and he moved back.

According to a witness the tribunal heard yesterday, the three other people who had left the room leaving Senior and Person A alone waited outside the door for a few minutes and then went back into the room, putting an end to the incident.

A few days later, Person A got in touch with Blackburn to report the event. Cassels, now a partner at Linklaters but then a member of Bakers’ London management committee, was subsequently appointed to lead the investigation into the incident.

Senior said today: ‘I operated in the drinking culture that you find in all big law firms, many examples of partners that are willing to drink late into the night with all sorts of employees. I have done more of that than I should have and as a managing partner I recognise that was an error.’

Tabachnik accused Senior of trying to influence the investigation, which concluded with Person A reaching a settlement and leaving the firm, while Senior stayed at Bakers and later took on the role of EMEA chair. Senior eventually left last year after details of the event had emerged and has since taken up a role at the consultancy Finlay Gardener.

The hearing comes weeks after former Freshfields Bruckhaus Deringer partner Ryan Beckwith was found guilty of improperly engaging in sexual activity with a junior female colleague and is the latest in a string of similar allegations to hit the profession.

The case continues.

Marco.cillario@legalbusiness.co.uk

 

Legal Business

Bakers accused of ‘failure’ over handling of allegations of sexual misconduct against former London head

Bakers accused of ‘failure’ over handling of allegations of sexual misconduct against former London head

Baker McKenzie was accused of ‘collective failure’ for the way it handled allegations of sexual misconduct against its former London head Gary Senior yesterday (2 December), beginning a 15-day Solicitors Disciplinary Tribunal (SDT) hearing.

Solicitors Regulation Authority (SRA) lead counsel Andrew Tabachnik QC of 39 Essex Chambers said the firm allowed Senior to seek to influence the conduct and outcome of an investigation into a complaint made against him by a junior associate.

The associate – referred to as Person A due to reporting restrictions – alleged Senior propositioned her in his hotel room in the early hours of 24 February 2012, made an inappropriate compliment about her appearance and gave her an ‘unwelcome’ and ‘unwanted’ kiss on the neck.

Bakers has also been accused of failing to report the matter to the SRA until February 2018 despite being aware that Senior had sought to initiate intimate activity with the associate, was guilty of a serious error of judgment and that his conduct was aggravated by his seniority. The firm’s former litigation partner, Tom Cassels, and former HR head, Martin Blackburn, are also facing prosecution for their roles in leading the initial investigation into Senior’s misconduct.

‘This is not a case where people apply their minds to the reporting obligations and decide [that] on balance it is not reportable [to the SRA],’ said Tabachnik. ‘This is a situation where no-one thought about it at all, and that’s what makes it culpable.’

The SRA referred Senior, Bakers, Cassels and Blackburn for prosecution in July after details of the episode first emerged in February 2018.

The events in question took place following a firm recruitment event on 23 February 2012. After dinner Senior and a small group of people went to a bar, a night club and then back to his hotel at about 2am, according to Person A.

Finding the hotel bar closed, a group of five ended up in Senior’s room, where they ordered other drinks. At about 3am the party broke up, and Senior and Person A ended up alone, which she says was because he invited her to stay.

Tabachnik said that Senior told Person A she was very attractive, followed by leaning in to kiss her on her neck, which was ‘unwelcome’ and ‘unwanted’. After she had left the room a few minutes later, Senior sent Person A an email saying: ‘Sorry!!’

Tabachnik added that Person A was ‘extremely distressed by the actions of her managing partner’ and ‘didn’t welcome the prospect of any further encounter with him’. He added: ‘She was fearful that her career at the firm would be adversely affected by the fact that she had rejected her managing partner’s advances.’

A few days later, Person A got in touch with Blackburn and Senior issued an apology, saying he was ‘deeply sorry’ and ‘very embarrassed’. Senior added he could see that it was ‘a totally inappropriate situation’, that he respected the way she reacted and this would have ‘no impact whatsoever’ on Person A’s career.

Cassels, who at the time was a member of the firm’s London management committee, was subsequently appointed to lead the investigation into the event. Tabachnik said that neither Cassels nor Blackburn were accused of acting in bad faith or without integrity. He also announced the SRA had dropped one of the original allegations against each of them following the review of the witness statement by person A, meaning they are no longer accused of misleading Person A into believing that the investigation had been undertaken independently of Senior’s influence.

Tabachnik said the investigation process into Senior’s misconduct ‘went far too rapidly with insufficient questions being asked’. He spoke of ‘short soundings’ and ‘barely a piece of paper in sight’, as well as a failure to get the firm’s general counsel properly involved in the process. ‘They were dealing with a notorious micro-manager, they knew there were no boundaries in place, they knew they were dealing with matters that involved investigating one of the key decision makers and there is no evidence of any step taken to prevent [Senior] from influencing the outcome.’

The firm reached a settlement with Person A, who was given two years’ salary plus £15,000 and left the firm. Senior stayed at Bakers and later took on the role of EMEA head. He eventually left last year after details of the event had emerged and has since taken up a role at Finlay Gardener.

Blackburn left Bakers in 2014 and is now UK people director at KPMG, while Cassels joined Linklaters in 2016.

A spokesperson for Bakers said in a statement: ‘We have been co-operating fully with the SRA since the beginning of this process last year. In September 2018, we shared with the SRA the findings of the report we commissioned into the 2012 incident which was carried out in conjunction with the law firm Simmons & Simmons. We’ve learned much from this episode, recognised what went wrong and have well-established and effective policies and programs in place across the firm.’

The trial continues.

marco.cillario@legalease.co.uk

Legal Business

Chadwick gets second term as Bakers’ London head after winning contested election

Chadwick gets second term as Bakers’ London head after winning contested election

Baker McKenzie tax partner Alex Chadwick (pictured) will lead the firm’s City office until the end of 2022 after seeing off competition from antitrust partner Samantha Mobley.

The firm announced today (19 November) the election of Chadwick for a second three-year term at the helm of the firm’s 500-strong London base, following a contested vote last night.

A Bakers lifer, he joined the firm as a trainee in 1990, made partner in 1999 and went on to head the firm’s City tax practice. He first took on the role of London managing partner in September 2016, when his predecessor, the late Paul Rawlinson, became the firm’s global chair.

A member of the London management committee, Mobley had earlier this year also put her name forward in the race to become Bakers’ chair but did not make the final three shortlist. The election eventually saw Hong Kong-based Milton Cheng elected to the role in September.

Under Chadwick’s tenure the firm’s London office has grown revenue 40% and scored 26 laterals in a bid to strengthen its transactional practices.

The last few months were troubled, however. In August, the Solicitors Regulation Authority referred Bakers’ former London head Gary Senior for prosecution to the Solicitors Disciplinary Tribunal (SDT) after he ‘behaved in an inappropriate manner’ and ‘sought to initiate intimate activity’ with a junior member of staff in 2012. The hearings will start on 2 December.

While in April, the firm announced the unexpected death of Rawlinson, six months after he took what was expected to be a temporary leave of absence due to exhaustion.

Commenting on his re-appointment, Chadwick said in a statement: ‘I am very honoured to be elected managing partner of Baker McKenzie in London once more. I am grateful to have an opportunity to build on the progress we have achieved so far and to continue expanding Baker McKenzie’s presence in London, as the City remains a vitally important financial centre for the firm.’

marco.cillario@legalease.co.uk

Legal Business

New brooms – Asian coup for Bakers as Clydes, HSF and TLT announce leadership changes

New brooms – Asian coup for Bakers as Clydes, HSF and TLT announce leadership changes

Anna Cole-Bailey rounds up the latest management reshuffles at home and abroad

The autumn saw significant c-suite changes announced at Global 100 and Legal Business 100 (LB100) players, with Baker McKenzie voting in Milton Cheng as its new chair in a victory for the Asia partnership, while the figureheads of Herbert Smith Freehills (HSF), TLT and Clyde & Co will step down to pave the way for successors.

Legal Business

Bakers makes eleventh City lateral in last year with Ashurst corporate hire

Bakers makes eleventh City lateral in last year with Ashurst corporate hire

Ashurst’s global head of corporate Jason Radford (pictured) is unfazed by the loss to Baker McKenzie’s prolific City hiring spree of corporate partner Nick Bryans and has pledged a sustained investment drive to maintain the firm’s recent financial rebound.

An Ashurst-lifer and partner since 2005, Bryans is joining the London office of Bakers. He follows ten other laterals the expansive firm has made already in London over the last year. He was head of the Ashurst’s Middle East practice in Dubai from 2007 to 2010 and a member of the firm’s Japanese practice group.

Specialising in M&A and equity capital markets, Bryans is focused on energy and resources, infrastructure, transport, pharma and life sciences, industrials and TMT. He advises corporates, banks and financial sponsors on public and private mergers, acquisitions and joint ventures, IPOs, private placements and other capital raising deals.

Jane Hobson, head of Bakers’ London M&A practice, commented: ‘Nick’s hire will enhance Baker McKenzie’s market profile in London and accelerate the pace of the step-change we are already seeing in our transactional practices.’

Bryans added: ‘What really appealed to me about Baker McKenzie is its stellar global platform, the breadth of its client base and the strength of its brand. There is also a palpable sense of momentum behind the growth and trajectory of the firm’s transactional practices.’

This is Bakers’ eleventh London partner addition in the last year, following on from the hires of Marc Florent from Allen & Overy (dispute resolution), Prabhu Narasimhan from White & Case (tax), Philip Thomson from Ashurst (corporate/energy, mining & infrastructure), Philip Annett from A&O (financial services), Caitlin McErlane from Sidley Austin (financial services), Peter Lu from White & Case (corporate M&A), Rob Mathews from White & Case (capital markets), David Becker from White & Case (capital markets), Mathew Dening from Sidley Austin (structured capital markets) and Haden Henderson from Ropes & Gray (capital markets).

Meanwhile, Radford is optimistic that the firm’s sharpened focus on financial performance has it well-placed to sustain the upward momentum of its recent success. On the back of three consecutive years of growth, Ashurst added £77m to its top line to hit £641m for the year to 30 April 2019, a significant 14% increase on the £564m turnover of last year. PEP also soared 31% to £972,000 from last year’s £743,000, putting Ashurst within sight of its stated intention of smashing the £1m PEP barrier in the next financial year.

Radford told Legal Business: ‘We have invested considerably in our global corporate capability, having hired six laterals so far this year. This is all part of a drive to create a higher performing corporate team to consolidate and build on our major successes over the last two years.’

He said there was scope to hire more laterals for the corporate practice over the next few months, with London, France, Italy and Germany all cited as areas of intended investment.

nathalie.tidman@legalease.co.uk

Legal Business

Asia coup for Bakers as partnership chooses Hong Kong’s Cheng as new chair

Asia coup for Bakers as partnership chooses Hong Kong’s Cheng as new chair

The partnership of global giant Baker McKenzie has voted in Milton Cheng to become the firm’s next chair.

A Bakers lifer, Cheng (pictured) currently serves as the firm’s Hong Kong managing partner, as well as chief executive for the Asia-Pacific region. Cheng will officially take over the role on 17 October, replacing acting global chair Jaime Trujillo, and is set to serve a four-year term. His appointment marks the first time a partner from the Asia practice has taken the top role at the firm.

Cheng said: ‘I am truly honoured by the trust my fellow partners have placed in me. I look forward to working with all of them and my colleagues across the world to build on the great work of my predecessors to make Baker McKenzie the global law firm of choice.’

Cheng first joined the firm as a trainee in Singapore before becoming partner in 1999, later assuming the role of managing partner of the Hong Kong, China, Vietnam and Korea offices in 2014. His election can be seen as significant victory for the firm’s Asia partnership, having resisted challenges from North America head Colin Murray and EMEA chief executive Fiona Carlin.

Bakers’ seven-strong appointments committee drew up the shortlist of three earlier this month after soundings with partners over the summer, with the process being undertaken on a quick timetable following the unexpected death of Paul Rawlinson in April.

Trujillo added: ‘We had a group of outstanding candidates for our next chair and the partners had a difficult decision to make. In choosing Milton, we have someone who can take this great firm to the next level.’

Cheng will hope his first year at the helm of Bakers ends with a marked improvement on the most recent financial results at the firm, with market volatility meaning revenue grew 4.4% in constant currency terms but only 1.2% in dollar terms.

thomas.alan@legalbusiness.co.uk

Legal Business

Three in the race to be next Bakers chair as partners prepare to vote

Three in the race to be next Bakers chair as partners prepare to vote

Baker McKenzie EMEA chief executive Fiona Carlin (pictured), Hong Kong managing partner Milton Cheng and North America head Colin Murray have made the final stage of the election process to become the firm’s next chair.

Bakers’ seven-strong appointments committee drew up the shortlist of three candidates earlier this week following soundings with partners over the summer, whittled down from a list of six contenders who had initially been in the running.

The firm’s equity partners will vote to elect the next chair in the next two weeks.

Latin America head Jamie Trujillo, who took over as acting chair when Paul Rawlinson stepped down from the role in October last year, was among the candidates putting their names forward at the beginning of the summer. London competition partner Samantha Mobley and Sydney-based TMT head Anne-Marie Allgrove were the other two who failed to make the final cut.

The process took place on an unusually quick timetable in exceptional circumstances, after the election was triggered by the unexpected death of Rawlinson in April.

The three remaining candidates represent the firm’s three key regions, with Bakers long intending to establish three separate profit centres – in Europe, America and Asia – by 2020.

Brussels-based Carlin was previously chair of the firm’s antitrust practice and was elected to her current role in February 2018 after the firm agreed to integrate London and eight of its EMEA offices into one profit pool for the first time. The number of offices in the group has since grown to 16.

With some partners expecting the next chair to stem from the firm’s Asian partnership, Cheng is also a strong candidate. As well as managing the Hong Kong office, he is the chief executive overseeing eight of Bakers’ Asia Pacific offices. He joined the firm as a trainee in 1990 and has since also worked in its London and Singapore offices.

Meanwhile, San Francisco-based litigator Murray manages the firm’s practices in the US, Mexico and Canada. He joined Bakers in 2000 after spending seven years as deputy district attorney in San Diego.

The next chair will take over from Trujillo at the end of the firm’s global partnership meeting, to be held in London in the week starting 14th October.

A spokesperson for Bakers said in a statement: ‘We don’t comment on internal matters and will make an announcement about our new chair in due course once they have been appointed.’

marco.cillario@legalease.co.uk