Legal Business

‘We will continue to review and innovate in this area’: Baker & McKenzie overhauls pay structure in Europe and Asia

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The world’s largest law firm, Baker & McKenzie, is set to overhaul its longstanding remuneration system in Europe and Asia, with a large percentage of pay set to be decided by the success of each region.

Currently, around 60% of partner pay comes from the firm’s global profit pool, with the remaining 40% handed out from profits generated nationally. Before the end of this year, the firm will begin phasing out the local profit pools, with profits being reallocated regionally into two pots, with one for Baker & McKenzie’s 17 Asia-Pacific offices and another for its 33 offices in Europe, the Middle East and Africa.

Baker & McKenzie has operated as a Swiss Verein since 2004, a decision management says was designed to add a layer of legal protection rather than separate partners and their pay by jurisdiction. Christine Lagarde, now head of the International Monetary Fund, kickstarted the firm’s push to greater integrate partner pay during her time as chair in the early 2000s to reduce the disparity between locations.

Now, the firm will scrap local profit pools and remuneration in Asia and EMEA in a bid to push the number of referrals around the firm’s 77 offices. Last year, 55% of the firm’s $2.54bn revenue came from clients using five or more offices and management believes this can be increased following a raft of new office openings. The change was ratified at the firm’s annual partners meeting in London last month after the partnership voted in favour of the shake-up earlier this year.

Baker & McKenzie in 2005 established a regional profit pool and remuneration system for its nine offices in North America. This latest overhaul is the most radical change to its pay structure since then and means that the majority of the firm will be paid on a global and regional basis. The firm’s fastest growing region last year, 15-office strong Latin America, is the last remaining region with the traditional mix of payment based on the profits generated by a partner’s own office and global pool.

However, a senior partner at the firm concedes that the varying profitability of offices across the network means partners in London, which will be in the same regional pool as offices in Kiev, Warsaw, Almaty and Baku, are likely to be worse off as a result. They said: ‘It will be a staggered process as there will be three components to begin with: global, regional and local. The plan is that, in the long run, profits will rise on the back of greater motivation and accountability for sharing work across offices as pay will be centralised.’

Increasingly, remuneration at Baker & McKenzie is centred on how much work is brought in that can be shared around the network, with changes made in 2011 to reward partners who focus on major international clients, while it has also introduced more credit for partners who perform well on client management, one of the global firm’s core areas of focus.

The shifting pay structure comes while the 4,000-lawyer firm also reallocates power from heads of offices to global practice heads as it looks to push clients towards its other offices, with the budget for heads of practices, who are increasingly in charge of lateral recruitment, rising by 10% for this financial year.

A spokesperson for the firm said: ‘Partners in Baker & McKenzie are remunerated according to a range of factors and criteria designed to encourage behaviour aligned with our global strategic priorities. The system has been refined over the years and will continue to be refined as the needs of our business and our clients develop. We will continue to review and innovate in this area.’

tom.moore@legalease.co.uk

Legal Business

Baker & McKenzie overhauls pay structure in Europe and Asia

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Larger regional pools to replace national pay by year end.

The world’s largest law firm, Baker & McKenzie, is set to overhaul its longstanding remuneration system in Europe and Asia, with a large percentage of pay set to be decided by the success of each region.

Legal Business

Dealwatch: Baker & McKenzie and Norton Rose Fulbright lead on Battersea Power Station £1.4bn real estate financing

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In what constitutes one of the biggest UK real estate financings in recent years, Battersea Power Station has raised £1.4bn from a syndicate of Asian and Middle Eastern banks with Baker & McKenzie and Norton Rose Fulbright landing key advisory roles.

Announced yesterday (28 October), and signalling the high demand by domestic and international investors for real estate as an alternative asset class, the financing on the deal comprises a £750m facility to fund the development of the Power Station building; and a £600m facility to fund the development of Electric Boulevard.

Bakers’ London real estate partners Justin Salkeld and Stephen Turner advised the lenders alongside the firm’s Europe head of energy, mining and infrastructure, Mike Webster, and Singapore-based principal Emmanuel Hadjidakis. Norton Rose Fulbright’s team included Dan Kennedy on financing aspects of the deal and partner Dan Wagerfield on property aspects.

Although not typically ranked for its capabilities in property finance, Bakers has acted on certain heavyweight mandates in the burgeoning real estate market previously, including Salkeld acting for CIMB Bank Berhad and a syndicate of banks on the £790m refinancing of the site acquisition and development financing for phase one construction at Battersea Power Station. More recently, the top Global 100 firm secured a role advising on the receivership of London’s iconic building, the Gherkin, valued at around £650m and put up for sale after collapsing into receivership earlier this year. With the 40-storey skyscraper expected to be purchased by a foreign buyer, Bakers acted for the facility agent for the senior lender syndicate and its receivers Deloitte.

Norton Rose Fulbright, meanwhile, is ranked top tier in commercial property and typically takes on large-scale, long term development projects including Battersea Power Station and London Gateway.

sarah.downey@legalease.co.uk

Legal Business

Bakers takes three partners from DLA as it merges in Mexico while Clydes hires three to launch in Brisbane

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Baker & McKenzie has hired three partners from DLA Piper’s Mexico City office as the latter combines with a local outfit to extend its offering, meanwhile Clyde & Co has launched in Brisbane after taking three partners from Sparke Helmore.

DLA Piper is combining with Mexican firm Gallastegui y Lozano (GyL) in Mexico City under the name DLA Piper Gallastegui y Lozano. In total, seven GyL partners will join with business, telecoms, pharma and M&A specialist Eduardo Gallastegui taking on the role of managing partner.

The combined Mexican firm will house 23 lawyers in total with other partners joining including Maria Eugenia Rios, Gerardo Lozano, Jorge Benejam, Gabriela Alaña, Marcelo Paramo and Cecilia Azar.

However, DLA Piper’s Mexico City office, which opened in 2012, has lost three partners to Baker & Mckenzie with corproate/M&A partners Carlos Valencia and Tatiana Escribano and real estate and infrastructure partner Miguel de Erice joining along with a four-strong team of lawyers.

Meanwhile, Clyde & Co has launched its fourth Australian office – Brisbane – with the hire of three partners from local firm Sparke Helmore.

Partners Matthew Pokarier, Jacinta Long and Maxine Tills join the firm with Pokarier heading the Brisbane practice. The new team will focus on all classes of insurance, but particularly professional, directors’ and officers’, product and general liability, as well as commercial litigation.

Clyde & Co confirmed it is looking to hire a further 20 lawyers in Brisbane this year, in a bid to boost headcount in Australia to over 100. Clyde & Co Australia managing partner John Edmond said: ‘Our opening in Brisbane sees the achievement of our Australian strategy of a four-office national spread.’

Clyde & Co launched in Australia in October 2012 with offices in Sydney and Perth with the acquisition of a specialist insurance team from Australian firm Allens.  In September 2013, the firm opened a Melbourne office, and added infrastructure, transportation and international trade expertise.

jaishree.kalia@legalease.co.uk

Legal Business

Dealwatch: After GSK deal, Linklaters leads for Novartis on $275m sale of influenza vaccines as Bakers acts for CSL

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Linklaters and Baker & McKenzie have won lead roles advising on Novartis’ definitive agreement to divest its influenza vaccines business to Australian biotech firm CSL Limited (CSL), for $275m.

Linklaters acted for Novartis with a team including corporate partners Matt Bland and Aisling Zarraga, alongside IP partners John Crozier and Nigel Jones, and New York-based antitrust partner Tom McGrath. Baker & McKenzie represented CSL with M&A partner Jane Hobson leading, alongside IT/commercial partner Duncan Reid-Thomas, IP partner Hiroshi Sheraton, and employment partners John Evason and Jeremy Edwards.

Under the agreement, CSL will acquire Novartis’ influenza vaccines business including the development pipeline. The transaction will be completed subject to regulatory approval and is expected to close in the second half of 2015.

Baker & McKenzie’s Hobson said: ‘We are delighted to have partnered with CSL on this transformative acquisition for them, which will see CSL become the number two global player in the worldwide influenza vaccine industry.’

The sale comes after Novartis agreed to divest the non-influenza segments of Novartis Vaccines to GlaxoSmithKline (GSK) in April this year, after which, Novartis would strengthen the company’s innovative pharmaceuticals business by acquiring GSK oncology products. Magic Circle trio Slaughter and May, Freshfields Bruckhaus Deringer and Linklaters advised on that deal with Freshfields working alongside Linklaters for Novartis.

Novartis chief executive Joseph Jimenez said: ‘In CSL, we have found not only an owner for the influenza business that shares our commitment to protecting public health, but also a strong growth platform for the business and our associates.’

The Novartis influenza vaccines business has delivered almost one billion doses of seasonal and pandemic influenza vaccines globally over the last 30 years.

jaishree.kalia@legalease.co.uk

Legal Business

Asia round-up: Hogan Lovells turns to A&O for first partner based in Vietnam, while Bakers appoints new MP

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Hogan Lovells has put its first partner on the ground in Vietnam, recruiting Allen & Overy’s (A&O) senior associate Jeff Olson as a partner to its corporate practice. Meanwhile, Baker & McKenzie elected partner Milton Cheng to serve as managing partner for its Hong Kong, China, Korea and Vietnam offices where he succeeds Paul Tan who held the position since October 2012.

Hogan Lovells hire of Olson is indicative of recent strategic expansion made by the firm in the Asia region, including the hire of Freshfields Bruckhaus Deringer TMT partner Mark Parsons in January this year and Kirkland & Ellis private equity partner Steven Tran last month, of which both moved to its Hong Kong office. US-qualified Olson joined from A&O’s Vietnam office and has moved to Hogan Lovells Ho Chi Minh City office.

Global head of Hogan Lovells’ corporate practice, David Gibbons, said: ‘Vietnam is a key market for our international clients and a gateway to ASEAN international trade. Jeff’s presence on the ground in Vietnam will complement our offering, along with the recent arrivals of Steven Tran and Mark Parsons in Hong Kong’.

Baker & McKenzie also made appointments in the region, electing longstanding partner Milton Cheng to succeed Paul Tan as managing partner for its Hong Kong, China, Korea and Vietnam offices. Having joined the firm’s London office in 1990 as a trainee, dual-qualified Cheng relocated to join the Hong Kong office in 1993 as an associate and became an equity partner in 2004. Previous management roles undertaken by Cheng includes serving as co-head of the corporate group and head of the firm’s Asia-Pacific mergers and acquisitions group.

Ashurst has also expanded in the region adding to its Hong Kong roster with the hire of Slaughter and May lawyer Ben Hammond, who specialises in non-contentious regulatory work.

The firm has made concerted efforts in recent months to improve its Asia offering, and finance practices in particular, and in May hired White & Case finance partner Kate Allchurch in Singapore, and relocated London-based finance partner Chris Tang and Sydney-based Doos Choi to Hong Kong.

Jonny Gordon, co-head of the global financial regulation practice and based in Sydney, said: ‘Hong Kong is a key financial centre for our clients in the Asia-Pacific region, and the addition of Ben in the non-contentious space complements our already strong contentious offering in the Hong Kong market and in the region generally’.

sarah.downey@legalease.co.uk    

Legal Business

En masse management shakeup at Baker & McKenzie as chairman Eduardo Leite handed a two-year extension

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Chairman of the world’s largest law firm Baker & McKenzie, Eduardo Leite, has had his term extended by two years after not being opposed as the firm swaps three of its executive committee.

The two-year extension will take effect at the end of the firm’s annual meeting this week in London, which will be attended by more than 700 partners from the firm’s 77 offices. Leite has been chairman since 2010 and has increased the budget for practices, which predominantly covers the cost of lateral hires, by 10% as he seeks to parachute more dispute resolution and compliance lawyers into the firm’s offices.

Talking to Legal Business, Leite said: ‘We’ll be strengthening areas that clients are insisting more and more that they need our help with. I would put them in three baskets: transactional, dispute resolution, compliance. I see weakness everywhere I go. I see places we need to improve and we need to innovate and keep on filling practice gaps. There are opportunities to grow but we need people on the ground.’

Three of the firm’s eight-person executive committee have stepped down, with M&A partners Koen Vanhaerents in Brussels, Winston Zee in Hong Kong and Phil Suse in Chicago being replaced by Amsterdam-based tax partner Erik Scheer, Hong Kong-based co-chairman of compliance in Asia Gary Seib and Chicago-based head of the firm’s global pharmaceutical & healthcare industry group Mike Wagner.

Meanwhile, executive committee members Bruce Hambrett based in Singapore, Gary Senior in London and Jim Holloway in Toronto are assuming regional chairmanships for Asia Pacific, EMEA and North America respectively while Claudia Prado continues as Latin America chair.

In a wide ranging refresh of its leadership, Baker & McKenzie also made new appointments to head its global capital markets, compliance, dispute resolution, employment, IT, real estate and tax and trade practices.

London litigator Tom Cassels has stepped up to spearhead the firm’s dispute resolution group, overseeing 700 lawyers globally. London-based Harry Small has been replaced as head of Baker & McKenzie’s global technology practice group and is succeeded by Sydney-based Anne-Marie Allgrove.

Other global heads of practice include Mini vandePol, compliance; Guenther Heckelmann, employment; Jose Larroque, real estate; Koen Vahaerents, capital markets; Duane Weber, tax and Edmundo Elias, trade and commerce.

tom.moore@legalease.co.uk

Legal Business

Baker & McKenzie ups its bet on Saudi Arabia with second office

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Baker & McKenzie and its Saudi Arabian association Legal Advisors, Abdulaziz I Al-Ajlan & Partners, are set to open a second office in Saudi Arabia with a launch in the country’s commercial centre Jeddah.

The office will house two partners with Bahrain-based Islamic finance partner Julie Alexander taking on management of the new office. She will be joined by recently recruited Islamic finance and transactions lawyer Basel Barakat. The pair have been tasked with boosting the amount of work secured from Jeddah-based banking clients.

Finance partner Alexander will split her time between the Bahrain office and Jeddah. She represents banks, borrowers and project sponsors on Islamic, project and contractor finance transactions. Barakat, who joined from Law Firm of Hassan Mahassni in April, relocates from Riyadh, and has taken lead roles on the financing of Saudi Arabia’s new raft of power, infrastructure and water projects.

‘Having an on-the-ground presence in Jeddah and partners of Basel’s calibre will considerably enhance our service offering for high-end finance and corporate advice,’ said Alexander.

Jeddah becomes the firm’s seventh office in the Middle East, with offices in Abu Dhabi, Bahrain, Cairo, Doha and Dubai, as well as the associated office in Riyadh, manned by more than 300 lawyers and support staff.

‘Legal Advisors and Baker & McKenzie have regularly advised a large number of Jeddah-based clients for many years from Riyadh and Bahrain,’ said George Sayen, regional head of corporate. ‘Together with Legal Advisors’ long standing practice in Riyadh, this opening in Jeddah demonstrates our strong commitment to the Saudi Arabian market.’

A number of other law firms have established offices through associations in the city. Ashurst opened last year [2013] with Faisal Adnan Baassiri Law Firm, while Hogan Lovells operates through an association with The Law Office of Montaser Al-Mohammed and Simmons & Simmons with Hammad & Al-Mehdar. Jones Day entered the market in 2011 alongside openings in Riyadh and Alkhobar.

Revenues at Baker & McKenzie soared to $2.54bn in the last financial year, largely on the back of ramped up expansion, a strategy that has continued in 2014 with new offices in Brisbane and Myanmar.

tom.moore@legalease.co.uk

Legal Business

Bit between the teeth

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 MARKET VIEW – ARBITRATION 

ICSID secretary general Meg Kinnear talks annulment, case administration and the globalisation of treaty arbitration with Baker & McKenzie partners Grant Hanessian and Teddy Baldwin

That more cases were filed at the International Centre for Settlement of Investment Disputes (ICSID) in 2013 than during the first 24 years of its existence reflects the extent to which treaty arbitration is now arguably the fastest-growing area of international dispute resolution. Notwithstanding criticism from some NGOs that treaty arbitration is biased in favour of investors, the fact is that governments prevail in more than half of all treaty cases, and it is clear that a host state’s ability to attract foreign direct investment is diminished substantially unless it offers a system under which to enforce investors’ rights. Arbitration under the ICSID rules remains by far the most popular for investment treaty disputes because its awards may be enforced without recourse to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and because of the strength of the ICSID secretariat and the quality of the arbitrators it appoints. Some users do criticise the length of time it takes ICSID tribunals to render awards – at least 20 of which have been issued five or more years after the filing request.

Legal Business

Baker & McKenzie takes Norton Rose Fulbright’s EMEA head of energy

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Baker & McKenzie has brought in leading energy lawyer, Weero Koster, who headed Norton Rose Fulbright’s EMEA energy practice, to spearhead an energy drive in continental Europe.

Koster, who leaves Norton Rose Fulbright after 12 years at the firm, has been appointed as head of Baker & McKenzie’s Amsterdam energy practice.

Koster, who spearheaded a sizeable expansion of Norton Rose’s energy practice in Europe before its merger with US energy-focused law firm Fulbright last year, specialises in upstream oil and gas and renewable energy projects. He advises on privatizations, mergers and acquisitions, divestments and joint ventures.

A lawyer of 35 years, Koster has had stints at Magic Circle firm Allen & Overy and Dutch firm Houthoff Buruma after starting his career in-house, with time spent at airliners KLM Royal Dutch Airlines and Praxair. Mike Jansen, managing partner of Baker & McKenzie’s Amsterdam office, said that Koster’s arrival ‘further enhances our capabilities, making the energy sector a key focus for the Amsterdam office’.

Koster said: ‘Baker & McKenzie is responding to the reality of the rapidly-changing international energy market. The emergence of unconventional exploration and extraction methods, our sustainability needs, the Netherlands’ desire to become the gas hub of Europe, the nuclear debate, and the emergence of the BRIC countries and Africa make for a complex picture for the energy industry, which is reflected in their growing legal needs.

He added: ‘The global character of Baker & McKenzie and the scale of its EMI Group are ideally placed to meet client demands driven by these developments. I am excited to be further expanding my practice at Baker & McKenzie.’

tom.moore@legalease.co.uk