Legal Business

‘Satisfied’ Baker McKenzie adds $200m to top line but market volatility slows growth to a crawl

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Financial results 2018/19 Baker McKenzie

Baker McKenzie grew revenue to $2.92bn while partner profits hit $1.48m as uncertainty made for a more subdued year at the firm.

In constant currency terms revenue grew 4.4% but edged up only 1.2% in dollar terms, and partner profits grew 3% to $1.48m as net income increased 2% to $1bn. The results are markedly more muted than last year’s 10% constant currency growth and 13% hike in partner profits.

‘We are satisfied with the results,’ Bakers’ acting chair Jaime Trujillo told Legal Business. ‘There have been highlights such as a double-digit growth in London and healthy growth in industries like infrastructure.’

Alongside London, Bogota; Buenos Aires; Istanbul; Prague and Warsaw all saw double-digit revenue increases. Meanwhile, across the EMEA region, turnover was up 5.2% and in North America revenue grew 4%. Although the year-on-year figures are less glowing, the firm has increased its turnover 40% in the last 10 years and, in the same timeframe, grown partner profits 50%.

‘Demand for legal services has seen a noticeable decline,’ continued Trujillo. ‘But it is part of our purpose to help our clients navigate a complex world. We’re happy that our transactional practice saw growth despite volatility which conspires against transactional circles.’

Looking ahead the firm is making preparations for an economic downturn, but Bakers’ CFO Paul Eichelman remains optimistic: ‘We are planning for growth and to have growth. But we recognize the uncertainty and volatility in the market so we will continue to have the same financial discipline we have always had. These choppy times are not a distraction.’

2019 proved to be a trying year for Bakers. In April the firm announced the shock death of global chief Paul Rawlinson, who joined the firm in 1986 and successfully ushered a more ambitious phase for the global giant. More recently the firm made a significant litigation play this week by hiring Allen & Overy partner Marc Florent.

thomas.alan@legalease.co.uk

Legal Business

Allen & Overy loses litigation partner Florent to Baker McKenzie’s City hiring spree

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Strategic recruitment Allen & OveryBaker McKenzie

Allen & Overy (A&O) has lost its second London partner in as many weeks with the defection of Marc Florent (pictured), head of the Magic Circle firm’s UK insolvency litigation practice, to the expansive City office of Baker McKenzie.

The rare London exit nevertheless follows the news last week (19 August) that A&O’s head of fraud Mona Vaswani was leaving after 26 years to join US rival Milbank, Tweed, Hadley & McCloy.

The moves come as A&O has still yet to make an announcement over a potential transatlantic tie-up with the litigation-heavy O’Melveny & Myers after nearly 18 months of speculation.

Florent had been at A&O for more than 19 years and has been a partner since 2002. Before that he worked at fellow Magic Circle firm Freshfields Bruckhaus Deringer for nearly 10 years.

He is experienced in banking and finance litigation with a particular focus on wholesale and retail banking sectors, asset management, funds and sponsors on cross-border matters.

Steve Abraham, Bakers’ London and EMEA head of dispute resolution, commented: ‘Marc is a great addition to our growing and highly successful dispute resolution team in both banking and finance litigation and broader commercial litigation. Marc is a top tier and highly experienced practitioner whose joining will help us to go from strength to strength.’

Bakers’ financial institutions group global chair Jonathan Peddie said the hire would add significantly to the firm’s contentious offering.

In the last 12 months Bakers has made ten London partner hires, including 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).

Former Ropes & Gray partner Tony Horspool also joined the banking and finance team as a consultant specialising in restructuring in August.

Last year A&O lost Daniel Busse, the head of its German dispute resolution team, who left to form his own boutique, as well as intellectual property partner Nicola Dagg, who joined Kirkland & Ellis last October.

muna.abdi@legalease.co.uk

Legal Business

Revolving doors: US moves for Baker McKenzie and Linklaters as Morgan Lewis makes City play

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Strategic recruitment Baker McKenzieBrodiesLinklatersMorgan, Lewis & Bockius

US and City firms have extended their reach in key jurisdictions with Baker McKenzie making a move in Silicon Valley and Linklaters hiring in New York, while Morgan, Lewis & Bockius welcomes infrastructure partner from US rival Latham & Watkins in London.

In London, Morgan Lewis hired infrastructure partner Ayesha Waheed from Latham & Watkins. Waheed focuses on international energy and infrastructure transactions and has experience working through Europe as well as emerging markets in Africa and Asia. She has acted for developers and lenders in oil and gas, power generation, and infrastructure projects around the world and has advised on all aspects of international project financings and privatisations.

London managing partner Frances Murphy told Legal Business: ‘Our goal in the London office continues to be growth and concentrating on qualitative hires that move our existing practices on that base while also being very responsive to client demands, needs and expectations.’

‘As far as we’re seeing currently from client instructions and interests, there’s a deep appetite for strategic investments in strategic geographies. I can only anticipate from that, that we’re going to be seeing the corporate group move from strength to strength. We’ve already moved from seven to ten partners.’ Murphy added.

Baker McKenzie, meanwhile, bolstered its M&A capabilities in Silicon Valley following the hire of Leif King. He joined the firm from Skadden Arps, Slate, Meagher & Flom LLP where he was head of corporate and M&A.

Head of corporate & securities in North America Alan Zoccolillo told Legal Business: ‘As we continue to focus on building out core transactional practice, we saw a great need on the West Coast in the US to build out our tech practice. We hope [King’s] hire will be the first in building a more robust team on the West Coast to help augment our other M&A teams in New York, London and other key centres around the world.’

He added: ‘This is the busiest August I can ever remember. We’re seeing an uptick in work across all sectors, in both strategic M&A and private equity.’

The hire of King follows several recent hires, in line with firm’s strategy to grow its transactional practice in key business centers around the world. These include the hires of life sciences lawyers Randy Sunberg and Denis Segota and Wall Street M&A lawyer Mark Mandel in New York, as well as Peter Lu, Rob Mathews and David Becker in London.

In New York, Linklaters hired Jason Behrens and David Miller from Schulte Roth & Zabel. Behrens has experience in structuring, formation and negotiation of private closed ended funds and acts for sponsors raising funds in a variety of asset classes, including real estate and private equity.

Miller has experience in representing employee benefit plan trusts, funds of funds, foundations, endowments and family offices on their investment into funds and their secondary market transactions.

Linklaters global head of US practice Tom Shropshire told Legal Business: ‘One of the core tenets of the firm-wide strategy is to expand our funds capability and build out our relationships with key clients operating throughout the funds environment. The US market is a key market for both the upstream and downstream sides of funds activity. We want to expand the group to have a broader client base, doing a wider range of work than it had done historically.’

Global head of investment funds Matthew Keogh added: ‘Private equity, real estate, infrastructure and credit funds have raised a lot of money in last four to five years and there are a number of factors which drive that, some of those are macro. We’ve seen a trend for increasingly large funds for top sponsors and those funds to be raised in an environment of high demand.’

Scotland saw a busy week for lateral hires. Clyde & Co announced it was transferring its private client team, led by partner Nikki Dundas, to Scottish firm Gillespie Macandrew in Edinburgh.

The private client team of five, which will operate under Gillespie Macandrew from 2 September 2019, became part of Clyde following its merger with Simpson & Marwick in 2015. Clyde wants to focus on its core sectors of insurance, energy, trade & commodities, transport and infrastructure, while Gillespie Macandrew advises on all areas of land and rural business, private client, commercial real estate, tax and disputes.

Clyde & Co managing partner for Scotland David Tait commented: ‘Gillespie Macandrew is an excellent fit for Nikki and her team and allows them to carry on providing high quality private client work for their clients.

Leading Scottish independent Brodies, meanwhile, added to its employment and immigration practice with the hire of Elaine Mcllroy. Mcllroy has over 17 years of experience as an employment and immigration lawyer and previously led the UK immigration team and Scottish employment practice at Weightmans.

Head of employment Tony Hadden told Legal Business: ‘We wanted to service immigration law requirements from our clients as the seemingly never ending saga of Brexit continues. We’ve had huge number of queries from clients with EU nationals and as Brexit became less and less certain we realised we had to bring in a team to help with those queries.’

muna.abdi@legalease.co.uk

Legal Business

Kingsley Napley, Clydes and Howard Kennedy instructed as Bakers and former London head Senior face SDT prosecution

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Legal regulation Baker McKenzie

Baker McKenzie and its former London head Gary Senior have instructed partners at law firms Kingsley Napley and RadcliffesLeBrasseur as they face prosecution by the Solicitors Disciplinary Tribunal (SDT), with the first hearing scheduled for Monday 12 August.

Partners at Clyde & Co and Howard Kennedy have also been instructed after the Solicitors Regulation Authority (SRA) announced this week (30 July) it had referred Bakers and Senior for prosecution to the SDT after Senior ‘sought to initiate intimate activity’ with a junior member of staff in 2012.

Kingsley Napley’s legal services regulation specialist Iain Miller is acting for Bakers. RadcliffesLeBrasseur’s Nigel West, whose practice focuses on defending solicitors facing SRA investigations and SDT proceedings, will be representing Senior. Bakers’ former litigation partner Tom Cassels and former HR director Martin Blackburn, who are also facing sanction for their roles in leading the initial investigation into Senior’s misconduct, have instructed Clyde & Co’s regulatory investigations partner Fergal Cathie and Howard Kennedy white-collar crime specialist Ian Ryan respectively. The SRA, meanwhile, will be represented by Capsticks disputes and investigations partner Daniel Purcell.

The SRA has alleged that Senior sought to initiate intimate activity with the junior member of staff, whose identity has not been disclosed, in circumstances in which he was in a position of ‘authority and responsibility’ over them and had knowingly caused them to be alone with him.

The allegations also state that Senior improperly sought to influence the conduct and outcome of the initial investigation launched into the episode seven years ago and try to prevent details on the incident being appropriately shared within the firm.

Bakers, Cassels and Blackburn are accused of allowing Senior to ‘improperly influence’ the investigation launched into the episode and failing to report the matter to the SRA until February last year despite being aware of the facts.

All allegations are subject to the SDT hearing and are as yet unproven.

Senior stayed at Bakers and took on subsequent roles following the episode. He led the firm’s London office until 2013, when he took on the role of EMEA chair. In 2016 he stood for global chair in the election eventually won by Paul Rawlinson.

Senior eventually left the firm last year after details of the episode emerged and has since taken up a role at Finlay Gardener. Former HR director Blackburn left Bakers in 2014 and is now UK people director at KPMG, while litigation partner Cassels joined Linklaters in 2016.

marco.cillario@legalbusiness.co.uk

 

Legal Business

SRA refers Bakers and former head Gary Senior for prosecution over ‘inappropriate’ behaviour as #MeToo cloud hangs over firm

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Legal regulation Baker McKenzie

The Solicitors Regulation Authority (SRA) has referred Baker McKenzie and its 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.

In a decision announced today (30 July), the firm was referred to the SDT for allowing Senior to ‘improperly influence’ the investigation launched into the episode and for not reporting the matter to the SRA until February last year despite being aware of the facts.

The firm’s former partner Tom Cassels and former HR director Martin Blackburn have also been referred for their roles in leading the initial investigation into Senior’s misconduct. Both are accused of allowing Senior to influence the outcome of the investigation and failing to report the matter to the SRA.

The SRA decision states that Bakers, Cassels and Blackburn were aware that Senior had been guilty of ‘a serious error of judgment’ and that Senior’s behaviour was ‘aggravated by his seniority’.

All allegations are subject to a hearing before the SDT and are as yet unproven.

The decision by the SRA published today (30 July) names Senior as the partner involved in an episode in 2012 which came to light in February last year. Senior’s name had however remained under wraps until today.

A spokesperson for Bakers said in a statement: ‘As we have previously disclosed, we have been co-operating fully with the SRA since the beginning of this process last year, including sharing with them in September the full findings of the report we commissioned into the 2012 incident which was carried out last year in conjunction with the law firm Simmons & Simmons. It was that report which brought to light the full extent to which our internal processes fell short of what should be expected and were undermined in a way that was unacceptable and should never have happened.’

The statement added: ‘As we said last September both publicly and privately to the SRA, we fully accept there were significant shortcomings in the procedures that we followed in 2012 and subsequently. This is something which we very much regret. We could and should have done much better in handling the issue at the time and subsequently, and we have since introduced and reinforced robust processes to ensure these shortcomings can never be repeated. As a result of our review of the incident from which we are determined to learn and improve, we have enhanced our internal due diligence processes, including around the way we vet candidates for promotion in the firm. We have also taken steps to encourage a “speak up” culture across the firm. We are confident that these changes will prevent something like this from ever happening again.’

The SRA’s decision published today alleges Senior sought to initiate intimate activity with the junior member of staff, whose identity is not disclosed, in circumstances in which he was in a position of ‘authority and responsibility’ over them and had knowingly caused them to be alone with him.

Senior is accused of having attempted to embrace and kiss the junior member of staff without consent and to have persisted in such conduct despite the person involved indicating that it was not appropriate. The allegations also refer to Senior improperly seeking to influence the conduct and outcome of the investigation and try to prevent details on the incident being appropriately shared within the firm.

According to details that emerged last year, the member of staff involved in the incident left the firm after reaching a settlement, which included terms that their identity remained confidential.

Meanwhile, Bakers attracted criticism for allowing Senior to stay at the firm and take on subsequent roles following the episode. He led the firm’s London office until 2013, when he took on the role of EMEA chair. In 2016 he stood for global chair in the election eventually won by Paul Rawlinson.

Senior had joined the firm in 1984, made partner in the corporate practice in 1992 and had been London head since 2003. After the allegations emerged in February 2018, Senior left the firm  and Bakers appointed Simmons & Simmons to conduct an independent review of how the firm handled the accusations six years before.

Senior has now taken up a role at Finlay Gardener. Former HR director Blackburn left Bakers in 2014 and is now UK people director at KPMG, while litigation partner Cassels joined Linklaters in 2016.

Linklaters has given full support to Cassels. A spokesperson said in a statement: ‘We note the SRA’s decision to refer this matter to the SDT and Tom has the firm’s full support. Tom is a hugely respected and distinguished lawyer who, since joining us in 2016, has become a trusted and valued partner. He has a long track record of championing diversity initiatives, including our own internal “He for She” campaign and as a mentor for the 30% Club.’

Marco.cillario@legalbusiness.co.uk

Legal Business

Legal 500 Data: Behind the story

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The Legal 500 Allen & OveryBaker McKenzieClifford Chance

This issue holds our annual Global 100 survey results, but which Global 100 firms top The Legal 500 for number of top-tier recommendations?

To view the editorial commentary of the rankings go to: legal500.com

Legal Business

Baker McKenzie steps up to associate pay war with 20% NQ salary uplift

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Salaries Baker McKenzie

Baker McKenzie has become the latest law firm to put its newly-qualified (NQ) solicitors in line for a six-digit pay package with an eye-catching 23% increase to its starting rates.

The firm announced today (17 July) it is raising its basic NQ package from £77,000 to a minimum of £95,000, with performance-related bonuses bringing earnings to over £100,000.

Bakers is the latest to follow in the footsteps of Freshfields Bruckhaus Deringer, which in May announced one of the largest real-term pay rises in the City for a decade amid increasing pressure for associate talent from US rivals.

Bakers’ package will now include a £90,000 base salary with a £5,000 sign-in bonus for all its NQs, while top performers will be eligible for a further bonus of more than £5,000.

A spokesperson said the firm had raised its NQ package ‘in line with the London market’ as part of its commitment to remunerate people ‘fairly and competitively’ but declined to disclose the range for performance-related bonuses.

The move is particularly significant coming from a firm that over the last few years has focused on cutting costs amid a push to increase profitability, with an unofficial goal to bring its profits per equity partner (PEP) to $2m.

In October last year Bakers announced a review of its London professional and business services (PBS) staff, with its chief operating officer Jason Marty saying the firm’s priority was to become ‘a more efficient organisation with competitive and sustainable profitability’.

Last month it cut 46 PBS roles, with another 33 still at risk, while in previous months it announced the opening of low-cost hubs in Florida and Buenos Aires.

The firm’s latest financial results in August last year showed PEP increased 13% to $1.44m in the year to 30 June 2018 as revenue hit $2.9bn.

That even a firm which repeatedly stressed its focus on profitability felt the need to increase its starting rate by more than £15,000 shows how intense the war for associate talent in the City has become.

A few weeks after Freshfields raised its starting rate from £85,000 to £100,000 plus bonuses, all four of its Magic Circle rivals followed suit. Clifford Chance (CC) announced a £100,000 package including bonus at the beginning of June, matched by Slaughter and May, Allen & Overy and Linklaters shortly afterwards.

But the war for talent soon widened well beyond the Magic Circle, with Ashurst announcing a 9% pay increase to £105,000 last week after firms including Macfarlanes, Travers Smith and Herbert Smith Freehills made similar moves.

marco.cillario@legalease.co.uk

Legal Business

Revolving doors: Baker McKenzie expands £40m City tax practice as Eversheds makes multiple hires

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Strategic recruitment Baker McKenzieEversheds Sutherland

In a muted week for lateral recruitment, Baker McKenzie and Eversheds Sutherland made hires in the City, while Eversheds also grew on the continent.

Baker McKenzie hired tax partner Prabhu Narasimhan to its London office. Narasimhan joins from White & Case and has experience in advising and delivering cross-border mandates, acting for corporate, private equity and family office clients globally.

Mark Delaney, head of tax, told Legal Business: ‘We went from being a tax practice with revenue of £3m about 13 years ago, to being a £40m standalone tax practice.’

The firm has 16 partners in total and has been growing in areas such as tax disputes, tax advisory, and tax planning as well as seeing an increase in tax transactional work.

‘We are continuing to see a lot of regulatory change, whether that’s Brexit, digital service tax, OECD proposals and around the international tax landscape. Legislative and regulatory change creates demand for our services. The environment for taxpayers – the corporate and the individuals – in terms of tax authority hostility is also still very prevalent,’ he added.

Eversheds, meanwhile, hired Christopher Akinrele to its banking team from Addleshaw Goddard. Akinrele will focus on leveraged finance and has experience advising financial institutions, sponsors and corporate clients in syndicated and leveraged finance transactions.

Finance partner Patrick Davis told Legal Business: ‘We operate our leveraged finance practice on a national and, more increasingly, international basis. We’re seeing a lot of demand for leveraged finance work and wanted to add high-quality bench strength to that team.’

The firm has been expanding its capabilities in the upper mid-market areas of private equity and leveraged finance as well as growing the lender side of the business and capitalising on existing institutional relationships with lender clients, with the hire of Akinrele expected to complement the lender side work the firm is involved in. Despite economic uncertainty, client demand in private equity and leveraged finance was high.

Eversheds head of finance and restructuring Simon Waller commented: ‘Volumes of syndicated debt are down. We see it as flight-to-quality, in that as banks tighten some of their credit processes up they’re looking at quality credit and the work is still around.’

Eversheds also added to its bench in Munich with the hire of Michael Prüßner from Pinsent Masons to its corporate and M&A team from Pinsent Masons. The firm now has 11 partners in its German corporate and M&A practice group.

Finally, TLT grew its banking and finance team with the appointment of Marc Gilston as partner. Gilston, who was previously at Foot Anstey, has experience working with major lenders, corporate investors and businesses.

muna.abdi@legalease.co.uk

Legal Business

Bakers makes up seven in London in bumper promotion round

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Partnership promotions Baker McKenzie

Baker McKenzie has promoted 81 lawyers to partners, continuing a trend which saw several law firms increase their intake this year.

The number of promotions announced today (27 June) and effective from 1 July is 19% up on last year’s scaled back round, which saw 68 minted, and is also up by one on 2017.

Women make up almost 40% of this year’s promotions. With more than 400 women among its 1,550-strong partnership, the firm reiterated last year’s claim that it had the largest female partnership of any law firm.

Promotions in the firm’s City office are also up by one on last year to seven, making London the office with the largest intake this year. The firm added two lawyers to its London private equity practice and two to its IP/tech group, while banking, antitrust and disputes got one new partner each.

Globally, the M&A practice saw the largest intake with 15 lawyers promoted, reflecting the firm’s push to strengthen its transactional capabilities. In line with its traditional strength, tax was the second largest group with 13 promoted, while disputes came third at 11.

Bakers also announced today it has promoted 48 salary partners to its equity ranks.

The promotions come off the back of a year which saw Bakers complete 34 laterals, meaning in total the firm added 115 partners to its ranks.

London managing partner Alex Chadwick said: ‘Alongside our recent hires, this significant number of promotions in London reflects our growth plans. At least as importantly, I am thrilled to see more than half are female, which is testament to our ongoing commitment to turn gender aspirations into reality.’

Several firms have increased their partner promotion rounds this year, including all Magic Circle firms bar Slaughter and May, as well as CMS and Eversheds Sutherland.

Bakers’ London partner promotions:

Helen Brown (IP/tech)
David Hart (Private equity)
Julia Hemmings (IP/tech)
Phelim O’Doherty (Private equity)
Sarah Porter (Banking and finance)
James Robinson (Antitrust and competition)
Gemma Willingham (Dispute resolution)

marco.cillario@legalbusiness.co.uk

Legal Business

Bakers scraps 46 City business services staff roles, more at risk

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Job cuts Baker McKenzie

Baker McKenzie is the latest firm to scale down its London business support staff in favour of low-cost centres, scrapping at least 46 City roles and leaving another 33 at risk.

The move comes eight months after the firm launched a review of its London professional and business services (PBS) staff, estimated to include 350 people.

After 97 of those roles were identified as at risk, 15 people were made redundant and a further 31 were moved to different roles within the firm.  A further 18 people had previously resigned, with a spokesperson for the firm saying many of them were replaced without specifying how many.

The firm said in a statement that 33 people remain in roles at risk. The firm is seeking alternative positions for them and offering redundancy packages to those where there are not.

A spokesperson added: ‘The ongoing review in London is part of the firm’s three-year global reorganisation of our PBS functions, which includes the creation of new roles, growth in our service centres and investments in new technologies and new services. We are grateful to our people in London and globally for their engagement, professionalism and patience throughout this process to date. We continue to work with those still in roles at risk and in cases where suitable alternative roles are unavailable will offer an enhanced redundancy package.’

Shortly after launching the review of its London PBS staff in October last year, the firm announced the launch of a low-cost hub in Florida, which will be operational by 2020 and create more than 300 roles, followed by another in Buenos Aires in March this year, expected to employ 200 people.

A number of other firms have put their City support roles under review amid a move towards low cost centres.

Taylor Wessing announced in January it was considering making 13% of its 270-strong City team redundant by the end of 2020 as it looked to create 35 new business services roles in its Liverpool base. Last July, Ashurst slashed 54 of its 100-strong secretarial team and Ince & Co announced 32 redundancies, including 25 business services staff and seven fee earners.

Hogan Lovells also cut 54 of around 500 business services roles in June, moving most of them to low-cost hubs in Birmingham, Johannesburg and Louisville.

marco.cillario@legalease.co.uk