Legal Business

‘High levels of uncertainty’: Eversheds braces for testing times amid robust revenue and profit lift

‘High levels of uncertainty’: Eversheds braces for testing times amid robust revenue and profit lift

While few global firms expect to emerge unscathed from the Covid-19 crisis, Eversheds Sutherland (International) has nevertheless followed many peers in reporting robust revenue and profit increases in the 2019/20 financial year. 

The figures released on Thursday (30 July) for the non-US parts of the business struck a bullish tone, with revenue up a solid 8% to £592m from £548.8m last year and a net profit increase of 5% to £108.8m 

 Profit per equity partner (PEP) also saw a slight 2% uptick to £902,000 on the back of last year’s 9% uptick to £886,000. 

Whereas chief executive Lee Ranson (pictured) was last year nervous of a market slowdown as a result of Brexit, what he called ‘the uncertainty barometer’ has now shifted towards gloomy thoughts of a pandemic fallout. 

These are a good set of results which were delivered against a challenging global economic and geopolitical landscape, compounded in the last two months of the financial year by Covid-19,’ said Ranson in a statement.   

Our strategy has continued to drive strong growth while allowing us to make a number of significant investments across the year, specifically in people, property and our core and client-facing IT offerings.   

While the business has responded well to the challenges and uncertainty created by the pandemic, and adapted quickly to the changing priorities and needs of our clients, there is no doubt that the year ahead will be testing for us all given the high levels of uncertainty across the world,’ Ranson concluded. 

The sentiment is one that would be circulating around the Square Mile if law firm leaders were not all stuck at home. With the pandemic appearing only on the tail end of the 2019/20 reporting period, it is anyone’s guess as to how it will pan out in the financials for the current year. 

nathalie.tidman@legalease.co.uk 

Legal Business

Competition, supply chains and act of God clauses – First considerations for GCs in their Covid-19 responses

Competition, supply chains and act of God clauses – First considerations for GCs in their Covid-19 responses

Businesses have shown remarkable resilience through an era defined by increasingly rapid change. Innovation, diversity and agility have driven adaptability and resilience. But now such resilience is facing a far more severe test in the shape of the coronavirus pandemic sweeping through societies and economies. Yet well-led businesses identify themes and opportunities emerging even from this crisis.

General counsel have the challenge of juggling (i) strategy – working with their boards on strategy and performance; (ii) legal issues and regulatory change; and (iii) team leadership and delivery (who, what, where, how). Identifying a framework and common themes can help decision-making.

One common theme of recent years and the current climate is protectionism. Globalisation and free market flows have shown remarkable resilience to Trump, trade-wars, Brexit and a global surge in populism. Yet the coronavirus is likely to have a far more dramatic impact with a tightening of who and what crosses borders.

Emerging from the crisis quickly and with a robust competitive position will need a clear vision for the future that is more agile, technologically advanced and, more profoundly, operated more ‘locally’ while maintaining a global view.

We are a couple of weeks into the protectionist measures already introduced by individual nations and the EU. Examples include:

  •  changes in foreign investment regimes such as that in Spain designed to shield its markets and Spanish companies becoming targets for foreign investors;
  •  trade restrictions – the European Commission prohibiting unlicensed export of certain personal protective equipment;
  •  last month’s Commission guidance calling on member states to screen FDI on strategic companies coupled with a reminder of other measures including public and health security grounds and the possibility of taking ‘golden shares’ that give controlling stakes.

Force majeure and managing your supply chain

The primary challenge for major companies is the lack of resilience of just-in-time business models. Short-term emergencies may have been factored into contractual arrangements but not severe curtailment. Businesses need to avoid knee-jerk reactions and be aware of wider implications of force majeure clauses such as the extra hurdles some jurisdictions impose for relief and the need to show causation and mitigation.

In some areas a more collaborative approach to supply chains is emerging, for example among the UK supermarket chains (supported by the relaxation of competition rules by the UK Government) and among automotive original equipment manufacturers.

Suppliers are considering retrenchment, reassessing business models and consolidating in key markets while cutting loose underperformers. Losing underperformers can alleviate cash out-flows but will invariably have consequences, possibly leading to the insolvency of the company closing; the need to fund to maintain supply; ransom requests or acquiring the business to maintain supply.

Whereas single point-of-failure assessments previously focused on organisations, it is likely we will see a geographic and regional assessment also needed. All these factors may lead to a near-shoring of supply.

Funding

Businesses are considering short-term needs. We are seeing a large number of clients:

  • requesting waivers for actual and anticipated covenant breaches;
  • drawing down available and seeking to extend facilities. Banks are being pragmatic and supportive, especially where the request is limited to breaches easily identified as a consequence of the virus. Businesses with the experience of managing through the 2008/09 crisis will appreciate the need for good relationships and communications;
  • considering market fundraisings;
  • looking to government financial support such as the Covid Corporate Financing Facility.

A focus on tighter cash management is likely to lead to a focus on core assets and ‘keeping the home fires burning’.

A fit for future legal team

We have seen client legal teams under huge strain. What may have been a luxury or important, but not urgent, has been forced. Measures such as remote and agile working, the use of technology in the widest sense, a critical assessment of shape, function, process, priorities and productivity have all been tested.

Initial responses were necessarily on protecting people and mobilising to agile working to safeguard our teams and their wellbeing while working remotely. But this will be a catalyst for furthering strategic objectives. The quantum leap to this new way of working will help drive progress with diversity, teamwork, resilience and sustainability. The status quo has been challenged.

The current crisis is a huge challenge to us all as we act to protect our businesses in an increasingly protectionist world. If we keep our focus and think strategically, our businesses and our legal teams can emerge stronger, better and fit for the future.

Keri Rees, partner and co-head of corporate and commercial at Eversheds Sutherland

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Legal Business

‘No crown jewels’ but firms rally with coronavirus advice to steer clients through crisis

‘No crown jewels’ but firms rally with coronavirus advice to steer clients through crisis

As cases of the coronavirus accelerate, law firms including Mayer Brown, Eversheds Sutherland, Allen & Overy (A&O), Mishcon de Reya, Hogan Lovells and Fieldfisher have established COVID-19 working groups to help clients.

The moves come after swathes of firms ordered employees to work from home in the City and around the world in an attempt to contain the spread of the disease, which has so far racked up 244,553 confirmed cases globally and claimed 10,031 lives. Cases in the UK have ratcheted up at an alarming rate, with 2,716 cases and 137 deaths reported at the time of writing, with the UK government poised imminently to impose a lockdown to stem the spread.

Mayer Brown has set up a global response team spearheaded by the management committee and office managing partners and launched a COVID-19 web portal and blog to provide answers to frequently emerging questions from clients. Tools include a global travel navigator facility with a heat map of regions affected and various restrictions there.

Speaking to Legal Business, Sally Davies (pictured), Mayer Brown’s London managing partner, said: ‘There has been so much information coming out on coronavirus and we have been sending multiple alerts out to clients. We wanted to consolidate everything in one place and make it easy to navigate.’

Davies said the response was largely crisis management and advisory at this stage, and expects further down the line client questions will turn to recovering money from the government as well as restructurings. The management committee and office managing partners are having daily calls on the coronavirus and have established and email group and WhatsApp group to quickly share knowledge and information.

‘There are questions over what a complete lockdown might mean. Can buildings and businesses be accessed at all? Can contracts be terminated or put on hold? What do the provisions which deal with force majeure and epidemics mean? Who pays for the delays and losses? As well as advice on business rates for large empty offices and employment issues around home working.

Eversheds has augmented its existing firm-wide working group with a global working group to deal with any litigation-related client requests around the coronavirus.

The group includes 13 partners: Jessica Neuberger (UK), Greg Falkof (Paris), Matthew Taylor (UK), Simon Brooks (UK), Paul Taylor (UAE), Michael Bahar (Washington DC), Meghana Shah (New York), Matt Gatewood (Washington DC), Tim Hill (UK), Mark Yeadon (Hong Kong), Joos Hellert (Germany), Yuri Wehrmeijer (Netherlands) and Remi Kleiman (Paris).

Paul Worth, co-head of global litigation, told Legal Business: ‘The global working party was set up to ensure a consistent approach. Just in the UK we have 600 people and 500 lawyers in my group so we wanted to make sure there weren’t hundreds of slightly nuanced responses to, for example, questions around force majeure. We wanted to ensure a joined up approach to make sure we had a clear understanding of client needs.’

Worth says that the firm is using webinars to tackle questions on M&A, real estate litigation, contract termination and force majeure: ‘We are not giving away the crown jewels but are offering high-level advice to clients.’

Worth added that that the firm was producing a global guide to force majeure across 40 jurisdictions to respond to the single biggest issue lawyers are being asked about, taking just a fortnight to produce where it normally can take months.

Worth draws parallels with the foot and mouth disease crisis of 2001 in terms of the types of issues that will likely emerge. ‘We advised the government on many millions of pounds of contract disputes connected with foot and mouth. I expect the coronavirus could lead to disputes around the allocation of government funds and resources. What clients need now is different from what they will need in six months’ time when the impact on global economies will automatically create opportunities for disputes.’

Elsewhere, Fieldfisher has responded with a one-stop-shop to offer commercial, employment, corporate and disputes advice in one place.

Ranjit Dhindsa, head of employment at Fieldfisher, told Legal Business: ‘The hub has expanded into having all the different advice you may need in one place. It has employment lawyers, commercial contract advice, litigation advice, insolvency lawyers, if your business can’t survive. What we have done is forget about expertise in isolation. When a board is in crisis you want the whole picture.’

Latham & Watkins has similarly established a task force, A&O a working group, Mischcon a cross-firm COVID-19 team, Hogan Lovells a hub to assess the potential impacts as well as multiple tools covering areas such as supply chain disruption, and Cooley a coronavirus resource hub to provide clients with advice on the pandemic.

nathalie.tidman@legalease.co.uk

Legal Business

Revolving doors: Ashurst appoints planning co-head as Eversheds bolsters its City commercial practice

Revolving doors: Ashurst appoints planning co-head as Eversheds bolsters its City commercial practice

In a slower week than usual for City laterals, Ashurst appointed a co-head of its planning team as Eversheds Sutherland made hires in London and Hong Kong and Clyde & Co lost a partner in Edinburgh.

Ashurst hired real estate partner Claire Dutch as co-head of the firm’s planning team in London. She joined from Hogan Lovells where she was head of the planning team, focusing on planning law, highway law and heritage law. Dutch also has experience in managing major regeneration projects, including energy and waste projects.

Meanwhile, Eversheds hired partner Simon Lightman to its commercial practice from Morgan, Lewis & Bockius in London.

Lightman has experience in commercial, technology and data transactions with a focus on restructuring and renegotiation of legacy outsourcing arrangements as well as outsourcing deals and procurements. He has acted for customers and suppliers in the financial services sector as well as retail, telecommunications and aviation.

Eversheds also appointed Shepherd and Wedderburn’s banking and finance litigation head to its Edinburgh office.

Frood advises on personal injury, professional negligence, fraud and contentious trust. He has worked with retail banks, building societies and major clearing banks as well as with funders, insurers, auditors and advisers.

These appointments follow a number of recent lateral hires in the litigation & disputes practice including litigation partner Mark Hughes in Hong Kong in October, commercial dispute resolution partner Claire Stockford in London in July and real estate litigation partner Tekla Fellas in London in March.

Partner and head of the technology group Simon Gamlin told Legal Business: ‘We’ve been looking to grow our technology practice particularly in London for the last 18 months. Simon’s practice covers general commercial and technology transactions and that includes traditional IT outsourcing arrangements but also newer more disruptive technologies.

‘We have a steady flow of work in the financial services sector which Simon has expertise in, particularly in banking but he also offers opportunities across a range of other sectors particularly retail and telecoms,’ added Gamlin.

Partner and head of real estate dispute resolution, North at Eversheds Damian Hyndman told Legal Business: ‘Alastair provides us with a great opportunity to consolidate and expand our litigation offering in Scotland. He shares our drive and ambition. He is a talented all round litigator with a particular reputation for banking, finance and insolvency litigation, which complements our existing senior team well. He has demonstrated an ability to successfully grow teams, show strong leadership and he fits in well with the firm’s culture, which is incredibly important. We think his strong personal brand and reputation will help us to grow our global brand in Scotland.’

In another reversal for Clydes, partner Calum Mathieson has left the firm’s Edinburgh office to join Plexus Law. Mathieson acts on complex and large loss employer, public and product liability claims on behalf of insurers and has experience in managing health and safety prosecutions on behalf of corporate insurers.

Mathieson told Legal Business: ‘Plexus is a forward thinking, progressive firm. I’m here to concentrate on developing some of the relationships I already have with a number of insurers.’

‘Partners from Kennedy’s moved across this year and I’ll be working with them in terms of developing the good connections Plexus already has, particularly in the London market,’ added Mathieson.

Elsewhere, DLA Piper added Stephen Wong to its litigation and regulatory practice in Hong Kong. Wong joined the firm from Stevenson, Wong & Co where he was a partner since 2015. Wong has experience in regulation and corporate matters, particularly in regulatory and criminal investigations in connections with commercial crimes.

Head of DLA’s litigation and regulatory practice in Asia Kevin Chan commented: ‘Stephen’s hire is part of our continued investment in the regulatory space in Asia. Our clients increasingly require solutions which help them meet their compliance obligations, as well as manage risk. Stephen’s skillset and experience will be a valuable asset to our team, and will enable us to deepen our relationships with existing and new clients.’

Finally, Paul Hastings added capital markets partner Chaobo Fan from Freshfields Bruckhaus Deringer to its Hong Kong office. Fan has a particular focus on securities offerings, mergers and acquisitions and has experience advising Chinese companies on their listings on the Hong Kong Stock Exchange.

Chair of Paul Hastings Seth Zachary commented: ‘We’re meeting our clients’ demand for help with increasingly complex, multi-jurisdictional transactions. The arrival of top talent like Chaobo adds further depth to our capital markets practice in Hong Kong, one of the world’s premier listing markets.’

muna.abdi@legalease.co.uk

Legal Business

Goodwin and Eversheds make bold corporate plays amid hopes of increasing City transactional firepower

Goodwin and Eversheds make bold corporate plays amid hopes of increasing City transactional firepower

Goodwin Procter and Eversheds Sutherland both made significant corporate hires in November, with the pair recruiting Kirkland & Ellis partner Carl Bradshaw and Simmons & Simmons former head of UK corporate Giles Dennison respectively.

For Goodwin, the hire of Bradshaw comes during an expansive period for the firm, particularly in private equity. He brings nine years of experience from Kirkland – four of which were as partner – and a practice that focuses on cross-border private equity deals; leveraged buyouts; carve-outs; public-to-privates; consortium deals; and co-investments.

Legal Business

Rolling up the sleeves: Eversheds sets out corporate ambitions with hire of Simmons’ UK corporate head

Rolling up the sleeves: Eversheds sets out corporate ambitions with hire of Simmons’ UK corporate head

Eversheds Sutherland is ramping up its City investment plans as the firm looks to become a leading player in the global upper mid-market corporate space.

The firm said today (4 November) it had hired the former head of UK corporate at Simmons & Simmons, Giles Dennison (pictured), in London. Dennison was a Simmons lifer, becoming partner in 2005 before heading the corporate team since 2012.

Dennison is Eversheds’ second corporate partner hire in London in the last year, following Stuart Womersley from Addleshaw Goddard last November, and becomes the firm’s 18th corporate partner in the City. Eversheds’ co-head of global corporate and M&A Richard Moulton, however, told Legal Business he wants that group to expand to 25 partners in the next three to four years.

‘We want to keep building and investing in the City, and following the US merger with Sutherland [Asbill & Brennan in 2017] we want to be a leading global player in the upper mid-market, £200m to £1bn deal range,’ he commented. ‘We do deals larger than that, we’ll do some smaller than that, but that’s the sweet spot and where we want to position ourselves. No firm is dominating in there.’

Moulton believed there was no market leader in that space because of its fragmentation and prevalence of smaller firms. Eversheds’ lead sector groupings for the corporate team included financial services, energy, technology, and diversified industrials.

‘If you’re going to dominate in that market or be a leading player, it’s going to be firms that really crack the global piece, particularly when you’re acting for the larger corporates,’ he added.

Dennison told Legal Business his client base includes UK and US corporates from the TMT, consumer, diversified industry and healthcare sectors, which would be particularly bolstered by Eversheds’ US presence.

‘I spend a bit of time out there but it’s not the same as having the access to the network here,’ he said. ‘There’s a sense of ambition and growth here and a feeling that both as a corporate group and as a firm, they’re on a journey.’

Moulton said Eversheds’ M&A group was as busy as it had ever been despite the patchier market, given the firm’s broad international work which left it less exposed to uncertainty such as Brexit, while mid-market deals tended to always be busier than large cap anyway.

Highlight deals in the past year or so include advising Dairy Crest on its £975m sale to Canadian dairy company Saputo, advising the shareholders of John Guest Holdings on its £687m sale to Reliance Worldwide Corporate, and Rolls-Royce on the £500m sale of its unprofitable commercial marine division to Nordic technology company Kongsberg Gruppen.

The firm would also look to invest in its broader network, having made eight other corporate hires across the US, Manchester and Europe – particularly the Netherlands and Germany – in the last 12 months.

‘It’s hard yards but we’ve got a hungry group of partners who are very ambitious and rolling their sleeves up,’ Moulton added. ‘It’s a little bit of new kid on the block and taking people on in the City.’

hamish.mcnicol@legalease.co.uk

Legal Business

Joining the club: Eversheds hires Hong Kong litigation partner from Slaughters

Joining the club: Eversheds hires Hong Kong litigation partner from Slaughters

Eversheds Sutherland has recruited Slaughter and May litigation partner Mark Hughes in a rare departure for the Magic Circle firm.

Hughes acts on litigation cases in Hong Kong as well as the wider Asia-Pacific market, while also acting on international arbitration matters and cross-border investigations by criminal and regulatory authorities.

Eversheds managing partner for Asia, Stephen Kitts, told Legal Business the firm had been looking to add international arbitration capability in Hong Kong for a while, having slowly built an 18-strong disputes group there, including five partners. The firm opened in Hong Kong ten years ago with just six people, and had grown to about 145 – doubling over the last three years. ‘We’re a relatively young brand in Hong Kong and a bit of a challenger,’ he commented. ‘It’s been a bit of an iterative process but disputes are very important for the firm: we have a top-10 global practice by headcount.’

He added the firm, which last year hired ex-Securities and Futures Commission in-house counsel John Siu from Herbert Smith Freehills, was continuing to look to strengthen in disputes, particularly in international arbitration. ‘International arbitration has a club-like feel to it and we’re not really in the club yet. We regard Mark joining us as a very positive development, however, because of the fact we can attract someone of his calibre.’

Eversheds has made a number of other disputes plays in recent months. In July, the firm strengthened its City disputes bench with the hire of Claire Stockford as a partner from Scottish independent Shepherd and Wedderburn. Stockford’s hire boosted the disputes team to 28 partners in London. More recently, the firm also made arbitration hires in Paris, with Gaëlle Le Quillec and Julien Fouret joining from French boutique Betto Seraglini.

For Slaughters, the departure comes in a jurisdiction where the traditionally lateral-phobic firm has made moves over the last two years. In March, it hired Jing Chen as a partner from the Listing Division of Hong Kong Exchanges and Clearing, while in April 2018, it hired investigations and litigation lawyer Wynne Mok to its Hong Kong office.

thomas.alan@legalbusiness.co.uk

Legal Business

Realistic: Eversheds sets new targets to combat paltry BAME partner numbers

Realistic: Eversheds sets new targets to combat paltry BAME partner numbers

Transatlantic firm Eversheds Sutherland has today (19 September) announced new targets to improve BAME representation across its UK partnership, with the firm’s current figures among the worst in the UK’s top 12.

By 2025 the firm wants 10% of its UK partnership to be comprised of BAME lawyers, with the figure currently standing at just over 5%. Throughout its UK workforce, including partners, the firm wants to hit 14% BAME representation by 2022, with the figure currently sitting at just below 12%.

Legal Business analysis in June showed that across the partnerships of the UK’s top 12 firms, just under 7% identified as BAME, with Eversheds co-chief executive Lee Ranson making clear he wanted the firm to markedly improve its record on diversity.

‘The targets show how serious we are about making our workplace an inclusive one,’ Eversheds partner Naeema Choudry told Legal Business. ‘We did research looking at the industry and at other commercial firms and looked across society as a whole and felt these targets are realistic.’

Currently firms are struggling to reconcile diverse trainee intakes with poor BAME representation at partner level. For Eversheds’ 2020 trainee contract cohort, 18% of the candidates identify as BAME, reflecting the industry’s attrition problem on BAME talent. The firm has also committed to disclosing its ethnicity pay gap figures alongside its gender pay gap report starting in 2020.

Choudry is confident the firm can ensure diversity at the junior and senior ends: ‘We’re working with our recruitment agencies to make sure they’re challenging us and we are receiving a diverse pool of talent. There will be other initiatives announced in due course.’

For more on the legal industry’s record on diversity, read Legal Business’ analysis Ticking boxes.

thomas.alan@legalease.co.uk

Legal Business

Revolving doors: NRF loses insurance team to DAC Beachcroft as Taylor Wessing taps Fieldfisher for life sciences co-head

Revolving doors: NRF loses insurance team to DAC Beachcroft as Taylor Wessing taps Fieldfisher for life sciences co-head

In an otherwise sedate week for City legal recruitment, DAC Beachcroft has proved the exception to the rule for August hiring, adding a seven-strong insurance team from Norton Rose Fulbright (NRF) in London.

The team joining DAC was led by insurance litigation partner Kirsty Hick who joined on 1 August and acts for global and London market insurers. She has experience advising on complex coverage and defense issues as well as warranty and indemnity claims. The firm has been trying to grow its high-end international insurance business for the last few years with the London hires being a significant boon to that strategy.

The move follows the hire in May of Liam O’Connell, who was previously head of NRF’s EMEA insurance claims team.

Legal Business: ‘It’s a reflection of how far we have come as a firm, that we can attract the quality of Kirsty and Liam from a firm like Norton Rose to our firm. We can provide them with a very strong platform from which they can further develop their practice.’

‘There’s only three law firms that can genuinely say they offer a full-service to insurance clients and that’s ourselves, Clyde & Co and Kennedys. The market is consolidated around those three firms and as a result some of the other firms are beginning to lose some of their insurance practices’, Pollitt added.

Legal directors Rebecca Bailey and Sarah O’Connell and senior associates Jack Holling, Natasha Marshall and Cathryn Teverson will join Hick at the firm in September.

Elsewhere, Taylor Wessing has hired Alison Dennis from Fieldfisher to co-head its life sciences and healthcare group.

Dennis is experienced in life sciences regulatory and transactional work, and acts for medical device, pharmaceutical and biotech companies. The hire of Dennis is intended to fill the whole left by the firm’s previous head of life sciences, Malcolm Bates, who will be leaving the firm for Goodwin Procter. Both Dennis and Bates are currently carrying out their notice periods.

Meanwhile, newly formed London firm Avonhurst has added two ex-magic circle lawyers to its team. Ian Frost joins from Vinson & Elkins but spent over 20 years at Freshfields Bruckhaus Deringer working on leveraged finance transactions. James Wyatt joins from Linklaters where he was a senior lawyer in global project finance matters, energy and infrastructure sector finance and infrastructure acquisition finance. The firm was formed last month by Jonathan Bloom, previously a capital markets and funds partner at Jones Day. The firm is focused on offering services around legal, legislative and political risk alongside capital markets advice.

Eversheds Sutherland meanwhile hired partners Werner Brickwedde and Simon Weppner in Dusseldorf. Brickwedde joins the corporate team from Clifford Chance and has experience in cross-border transactions while Weppner joins the tax team from Taylor Wessing. He is focused on the tax structure of company acquisitions and investments.

Alexander Niethammer, head of the commercial practice group commented: ‘We can strengthen our position in providing cross-border transaction and tax advice from one of the most important German locations for foreign direct investments.’

Finally, TLT has expanded its real estate capabilities with the hire of Claire Hamilton from JMW in Manchester. Hamilton has experience in property investment, development and finance and also in-house experience from time spent at MCR Property Group.

muna.abdi@legalease.co.uk

Legal Business

Eversheds spins off New Law arm to supercharge growth and attract external investment

Eversheds spins off New Law arm to supercharge growth and attract external investment

Hamish McNicol reports on Eversheds Sutherland taking the partnership shackles off its Konexo offering

The alternative legal service provider (ALSP) market is estimated to be worth more than $10bn annually. Research led by Thomson Reuters, called Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity, found that the revenue generated from ALSPs had grown to that amount in 2017, up 13% from an estimated $8.4bn a couple of years earlier.