Legal Business

Forsters edges growth forward to £57m as the City looks for good omens

Forsters edges growth forward to £57m as the City looks for good omens

City firm Forsters saw its revenue grow 8% in the last financial year, while profit per equity partner rose 10% to reach £381,000 in a steady year for the firm.

The private client and real estate specialist saw its top line reach £56.8m, despite a much-cited real estate malaise over London, while revenues from its private wealth practice grew 16%, meaning the practice has grown 110% since 2015. The firm’s family team, meanwhile, also saw a strong level of growth, increasing 26%.

Forsters’ results are likely to capture the attention of the rest of the City, with the firm traditionally the first to post its financial results making it something of a bellwether. The results show a modest improvement in overall revenue growth, up one percentage point on 2017/18, when the City’s beleaguered commercial property market – hit by Brexit and stamp duty land tax – made its presence felt and Forsters only managed 7% growth despite a 12% increase in lawyers. Despite the slight uptick, this year’s growth rate is below what the firm recorded in 2017, when revenues were up 9%, bringing to an end six consecutive years of double-digit increases .

Commenting on the results, managing partner Paul Roberts said: ‘After a solid performance in 2018/19 we look forward to the challenge of continuing to grow the business in 2019/20. Our results owe much to a very strong showing in our private wealth practice and a resilient performance from our real estate practice in a market that is nowhere near where it was a few years ago.’

thomas.alan@legalbusiness.co.uk

Legal Business

Forsters upbeat as it posts 9% revenue growth despite flat real estate market

Forsters upbeat as it posts 9% revenue growth despite flat real estate market

Forsters has weathered a slowdown in the real estate market to record 9% revenue growth, although the result brings to an end six consecutive years of double-digit increases.

Buoyed by strong results from the firm’s corporate, banking and private client teams, Forsters has seen revenue climb by 9% to £50.1m. While not matching the revenue growth rate, profit per equity partner (PEP) also rose slightly from £527,000 to £532,000.

With real estate revenues typically making up around half of Forsters’ turnover, a tough market hit by Brexit uncertainty made the firm look to other practices for growth. Forsters acknowledges advising family office client Greybull Capital on its purchase of Tata Steel’s long products business as a highlight. Combining the expertise of the firm’s corporate, banking and real estate practices, the deal saw Greybull pay a nominal £1 for the transaction, preserving 4,400 jobs in the process.

Forsters senior partner Smita Edwards (pictured) told Legal Business: ‘When people stop making decisions on real estate transactions, it has an impact. You’ll find for firms across the board after the Brexit referendum, clients stopped making business decisions for a couple of quarters.’

Managing partner Paul Roberts added: ‘We’ve had a good year compared to many of our competitors. Our belief is that the firm should grow strongly and sustainably. We do recognise some of the challenges out there in the year ahead, but we’re really excited.’

The firm is optimistic for the coming year after the acquisition of Gowling WLG’s London private client team. The team, which joins Forsters on 1 May this year, comprises partners Anthony Thompson, Catharine Bell, Nick Jacob and Daniel Ugur alongside 10 solicitors and five other members of staff.

tom.baker@legalease.co.uk

Legal Business

‘The right move’: Four-partner private client team leaves Gowling WLG for Forsters

‘The right move’: Four-partner private client team leaves Gowling WLG for Forsters

Gowling WLG has lost its legacy Lawrence Graham private client team, including four partners, to Mayfair firm Forsters.

Private client head Anthony Thompson is to depart, along with partners Catharine Bell, Nicholas Jacob and Daniel Ugur. The partners will be joined by 10 lawyers and five staff members.

Legacy firm Lawrence Graham was well known for its private client expertise, with the contentious trusts and probate team, led by Bell, ranked in tier two of The Legal 500. Andrew Witts, now chairman of the combined firm, is also recommended ‘for his experience of running large, complex multijurisdictional fraud and trust disputes in offshore jurisdictions.’ Clients of the team include New World Trust Company and Jersey Trust Company.

In a statement, chief executive David Fennell said: ‘The move by our London private client practice to Forsters is the right one for both the team and Gowling WLG. We had been in discussions with the team for some time, but have agreed that there is no longer a strong strategic fit with the firm’s ambitions.

‘We are focused on our priority practice areas and sectors across our international platform, building on the momentum from the Gowling WLG combination earlier this year. This move will enable Private Client to build its platform within a business which specialises in the private client market and we wish them well.’

Following the move, the Forsters private client team will compromise 48 lawyers and Forsters’ wider private wealth offering, including family and contentious trust and probate, will contribute more than one third of the firm’s revenue. The move will also broaden Forsters’ geographic reach in the Middle East and Asia.

Commenting on the acquisition, Patrick Harney, partner and head of the private client team at Forsters said the team acquisition is highly significant for the firm, increasing the scope and reach of its private wealth services and adding to the expertise for UK domiciled and internationally based clients.

Paul Roberts, managing partner at Forsters added: ‘The Gowling WLG team will be an excellent addition to our private wealth offering and to the wider firm. Our strategy of focusing on what we are good at – real estate and private client – has been successful and we have no intention of changing it. This acquisition will be another significant step in Forsters becoming recognised as a market leader in our chosen areas of excellence.’

The move will benefit the private client team from Gowlings personally, as it is joining a firm that has considerable financial muscle and has been one of the strongest performers in the LB100 in recent years. Fee income grew by 11% in 2015/16 to £46.2m, constituting its sixth consecutive year of double-digit growth since 2011, while PEP stands at £550,000 compared to £382,000 at Gowlings.

kathryn.mccann@legalease.co.uk

Legal Business

Forsters defeats professional negligence suit over Siberian oil deal

Forsters defeats professional negligence suit over Siberian oil deal

Forsters has successfully defended a £70m professional negligence claim taken against it by businessman Rupert Galliers-Pratt at London’s High Court.

A member of the Cayzer investment banking family, the dispute arose after Galliers-Pratt alleged that Forsters acted negligently and in breach of its contractual duties after he found defects in the share purchase agreement used to buy stakes in three Russian oil companies. Galliers-Pratt has instructured Forsters to execute a deal for the 49% stake in Yugra Balt Invest (YBI) owned by Interguarantee in 2010.

Having brought the damages claim through Khanty-Mansiysk Recoveries, of which Galliers-Pratt is director and sole shareholder, the company argued that Irtysh Petroleum lost the opportunity to develop and sell recoverable oil reserves of 70m barrels and prospective and possible reserves of a further 112m barrels as a result of having ‘lost its interest in the licence holders’ of the three Siberian oil blocks. Jeremy Whiteson, Forsters’ former head of corporate who is now at Fladgate, was the partner instructed by Irtysh Petroleum to handle the transfer.

The claim was around double the revenue of Forsters, which in the last financial year saw income rise 13% to £46.7m.

Heard in early March and presided over by Sir Bernard Eder, who is no longer a High Court judge but as an arbitrator or mediator at Essex Court Chambers, the court found in favour of Forsters because there had been a prior settlement agreement.

In his judgment, Eder said the dispute between the parties concerned only the quantum of the invoice – specifically the propriety of including certain time billed and the amount of time billed; and that prior to the execution of the settlement agreement, no allegation had been raised that Forsters had failed to carry out its duties with reasonable skill and care still less that it had failed to carry out certain duties at all.

Further, Eder added that no damages claim by Irtysh ‘of any kind had been intimated let alone the kind of damage now claimed, relating to the failure to complete the registration of Irtysh’s ownership of YBI.’

‘I did not understand [respondent’s counsel] to dispute any of the foregoing and, for present purposes, he was prepared to concede that Irtysh and RGP had no actual knowledge of any lack of proficiency of Forsters’ work on the project at the time of the settlement agreement.’

Such [a] proposition is corroborated by Forsters’ professional duties towards Irtysh because if Forsters had had any reason to believe that it had negligently or in breach of contract caused damage to Irtysh it would have had a duty to tell Irtysh and advise it to seek independent advice; that the fact that Forsters did not do so leads to the conclusion that there was no reason for the parties to believe that Forsters had negligently caused damage to Irtysh.’

Eder declared that the claimant was ‘caught’ by the settlement agreement and that Forsters are entitled to a declaration to such effect. Counsel have been asked to draft an order for approval including costs as well as further directions.

London litigation boutique Humphries Kerstetter served as counsel for the claimant with former Linklaters duo, Mark Humphries and Kristopher Kerstetter, taking the mandate. They retained Simon Davenport QC of 3 Hare Court to act as counsel. Bond Dickinson instructed 4 New Square duo Jamie Smith QC and Anthony Jones for the respondent. Forsters declined to comment on the matter.

sarah.downey@legalease.co.uk

Legal Business

Going private: KWM’s former City tax head resurfaces at Forsters

Going private: KWM’s former City tax head resurfaces at Forsters

Former King & Wood Mallesons head of tax Heather Corben has resurfaced at private client firm Forsters, following the restructuring of KWM’s legacy SJ Berwin practice.

Corben (pictured), whose clients included British Land, Axa REIM, Brockton Capital, LaSalle Investment Management, British Airways Pension Fund and Heron, joins the West End firm as a partner.

Having been head of tax at KWM for more than ten years, Corben is ranked as a leading individual in The Legal 500. For Forsters, the move coincides with the appointment of Ben Barrison from DLA Piper, who joins the firm’s property litigation team.

Forsters has been on a trend-defying run since the onset of the global financial crisis, increasing fee income by 13% in 2015/16 to £46.7m, constituting its sixth consecutive year of double-digit growth since 2011.

Managing partner Paul Roberts said: ‘Heather’s experience and abilities are clear to see. She has a strong track record of advising on the structuring of major corporate and real estate transactions. She will strengthen our already excellent tax team, which can only benefit from her experience.’

The legacy SJ Berwin arm of KWM, covering Europe and the Middle East, was the worst-performing region of the firm last year behind foundation practices in Australia, Hong Kong and China as global revenue dropped 1% to $1.02bn in 2015. London is by far the largest office in the Europe and Middle East region, generating around 65% of the region’s revenue of £191m. It has undergone a cull of 15% of its 160 strong partnership, and voted to inject another £14m into the firm to put it on a firmer footing in July.

The practice is currently without a European managing partner following the resignation of William Boss in January and regional senior partner Stephen Kon informed the partnership this month he will step down as senior partner halfway into his three-year term.

victoria.young@legalease.co.uk

Legal Business

Private wealth continues to pay as Forsters announces sixth year of double-digit revenue growth

Private wealth continues to pay as Forsters announces sixth year of double-digit revenue growth

Despite predictions of tough conditions for mid-tier firms, West End firm Forsters has bucked the trend and announced its fee income grew by 11.3% in 2015/16 to £46.2m, constituting its sixth consecutive year of double-digit growth since 2011.

The firm attributed the growth to its real estate and private wealth practices. Forsters real estate practice posted a 14% increase in fee income due to burgeoning activity in the property market. Increased work flow came from property funds including the British Airways Pension Fund, Aberdeen Asset Management, Rockspring and Savills Investment, and property owners Knight Dragon, Moorfield Group, McDonald’s and The Crown Estate. New instructions were won from LaSalle Investment Management and Qatari Diar.

Meanwhile, the firm’s private wealth business saw fee income rise by over 20% with highlight mandates including advising on Greybull Capital’s purchase of Tata Steel’s long products business and advising Knight Dragon on securing the largest residential planning application ever seen in London for a development at North Greenwich.

It has been a year of highs and lows for the firm however, which had to defend itself against a £70m professional negligence claim filed by businessman Rupert Galliers-Pratt last October. He alleged the firm failed to execute a deal for three oil blocks in Russia.

Forsters managing partner Paul Roberts said: ‘Our strategy of focussing on real estate and private wealth has been central to sustained and consistent growth since 2011. The strength and reputation of these practices helps us support a fantastic client base and enables us to compete for and win significant new clients in these markets.’

In keeping with the trend for UK firms to announce good financials early, Bristol-based LB100 firm TLT revealed its turnover for 2015/16 last week, improving on its strong financial performance of recent years to post a 15% increase in turnover to £71.6m.

The results follow a legal benchmarking report by NatWest in April, which looked at the performance of law firms operating in the SME space. The report forecast those firms with revenue below £46m should expect tougher conditions in 2016 despite generating a 6% increase in average fee income last year.

sarah.downey@legalease.co.uk

Legal Business

Steel deal: Forsters and Slaughters lead as Tata sells first chunk of UK business

Steel deal: Forsters and Slaughters lead as Tata sells first chunk of UK business

Forsters lined up against Magic Circle firm Slaughter and May on Tata Steel’s deal to sell its European long products business to UK investment house Greybull Capital.

The deal covers seven sites making steel used in construction, including Tata Steel’s steelworks in Scunthorpe, and offers a glimmer of hope to some 4,000 employees after the Indian industrial group’s decision to offload its UK business. Greybull will also pick up two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities, as well as a mill in northern France.

The UK steel crisis is the result of a number of factors, including high energy prices and an influx of cheap Chinese steel, but this deal maintains the historic Scunthorpe site home to British steelmaking for over 125 years. Greybull will rename the business British Steel.

Slaughter and May, a long-time adviser to Tata Steel, was instructed on the deal. London-based corporate partner Gary Eaborn is leading a team that includes finance partners Ian Johnson and Andrew McClean, real estate partner John Nevin, tax partner Gareth Miles and IP partner Cathy Connolly.

Forsters, which advised Greybull Capital on its last big deal in 2014 when it took a 90% stake in no-frills airline Monarch, is again advising the investment house on its deal for Tata Steel’s long products business.

Craig Thompson, a London-based M&A partner, is leading on the deal with support from the firm’s head of banking Victoria Edwards and commercial real estate partner Helen Streeton.

Thompson told Legal Business: ‘Politicians were interested in the deal but we just carried on quietly negotiating with Tata, who were very fair to negotiate with. We tried to ignore the political pressure, we’re lawyers – not politicians.’

He added: ‘Greybull are good investors. They invest in good management teams and know how to turn businesses around. They stick with them, they’re not rapacious private equity; they’re very responsible investors. There was some negotiation [over the British Steel brand] but Tata realised it was very important to the long steel business and were very gracious about it in the end.’

The UK Serious Fraud Office confirmed on Friday (8 April) that it opened a criminal investigation in December 2015 into activity at Speciality Steels, a UK business unit of Tata Steel.

tom.moore@legalease.co.uk

Legal Business

Forsters faced with £70m negligence lawsuit over Siberian oil deal

Forsters faced with £70m negligence lawsuit over Siberian oil deal

Forsters is defending a £70m professional negligence claim filed by businessman Rupert Galliers-Pratt in which he alleges the firm failed to execute a deal for three oil blocks in Russia.

A member of the Cayzer investment banking family, Galliers-Pratt alleges that Forsters acted ‘negligently and in breach of its contractual duties’ after finding ‘defects in the share purchase agreement’ used to buy stakes in three Russian oil companies. In court filings seen by Legal Business, the businessman is claiming damages of between $110m and $211m after instructing Forsters to execute a deal for the 49% stake in Yugra Balt Invest owned by Interguarantee in 2010.

However, Clifford Chance discovered in February 2013 that Galliers-Pratt and fellow shareholders in the investment vehicle, Irtysh Petroleum, hadn’t executed the deal under Russian law. The claim is around double the revenue of Forsters, which in the 12 months to 30 April 2015 saw income rise 14% to £41.4m.

Bringing the damages claim through Khanty-Mansiysk Recoveries, of which Galliers-Pratt is director and sole shareholder, the company argues that Irtysh Petroleum ‘lost the opportunity to develop and sell recoverable oil reserves of 70 million barrels and prospective and possible reserves of a further 112 million barrels’ as a result of having ‘lost its interest in the licence holders’ of the three Siberian oil blocks.

Jeremy Whiteson, Forsters’ former head of corporate who is now at Fladgate, had been instructed by Irtysh Petroleum to handle the transfer of Interguarantee’s 49% stake in Yugra Balt Invest in May 2010. Interguarantee was to be allotted 200,000 shares in Irtysh Petroleum in the exchange.

Whiteson informed Galliers-Pratt on 20 May that the share purchase had been completed and Irtysh Petroleum now owned Yugra Balt Invest. However, Galliers-Pratt argues that the deal was never completed as Interguarantee ‘had not entered a change in Yugra Balt Invest’s list of shareholders…to record that Irtysh was now the owner of the shares’ and ‘had not signed and completed a notarised application to the Unified State Register of Legal Entities (USRLE)’. It was upon checking the USRLE database that Clifford Chance discovered the error.

Galliers-Pratt also alleges that the share purchase agreement crafted by Whiteson was also ‘ineffective to impose an enforceable obligation on Interguarantee’.

The filing alleges that Forsters breached its contractual duty to Irtysh Petroleum on 13 occasions, including having ‘failed to ascertain what was required by Russian law to effect the transfer of shares in a Russian company…failed to recognise that it needed specialist advice from Russian lawyers…failed to appreciate that Interguarantee had not transferred the shares in Yugra Balt Invest to Irtysh’. It also rejected Forsters’ position that an earlier fee settlement in 2012 precluded Galliers-Pratt from any claims against it.

The filing, received by the High Court last Friday (23 October), lists London litigation boutique Humphries Kerstetter as counsel for the claimant. Former Linklaters duo, Mark Humphries and Kristopher Kerstetter, has been instructed, and has retained Simon Davenport QC of 3 Hare Court to act as counsel.

Forsters partner Guy Jordan said: ‘We maintain this is a speculative claim that we will defend robustly.  The claim is at an early stage and we are not currently in a position to comment further.’

tom.moore@legalease.co.uk

Legal Business

LB100: The Second 50 – Ports and Storms

LB100: The Second 50 – Ports and Storms

As some seasoned campaigners of the second half of the LB100 prepare to move up a class through mergers, a few City-based specialists continue to defy the tide of consolidation.

Of the merger activity that has swept through the Legal Business 100 (LB100) this year, it is the mid-market City players and national heavyweights that occupy the second 50 of the LB100 that have been most affected.

Legal Business

Forsters appoints new private client head as department hits 164% revenue increase over five years

Forsters appoints new private client head as department hits 164% revenue increase over five years

West End boutique Forsters has appointed Fiona Smith to take over as head of the private client department as it achieves a run of 164% revenue increase over five years.

Smith, who succeeds current head David Robinson at the Mayfair firm, specialises in offshore tax planning, wills, trusts and probate law. She acts as adviser to many of the firm’s longstanding clients, including media figures, entrepreneurs, charities, landed estates and directors or owners of listed UK companies.

Her appointment comes just weeks after the LB100 firm posted a 16% revenue increase, with fee income coming in ahead of budget at £32.5m, up from £28m in 2011-12.

Profits are up by 11% and profits per equity partner increased by 6% from £392,000 in 2011-12 to £431,000 over the last financial year, putting the firm’s PEP comfortably ahead of a number of top 30 LB100 firms including Wragge & Co, Nabarro and DAC Beachcroft.

High points over the year include the successful re-tender of The Crown Estate’s non-core and residential portfolio and the cross-firm work on Greenwich Peninsula.

The 120-lawyer firm attributed its growth in private client work, which averages out at 32.8% a year, to a strategy of lateral hires and more recently as a result of an increased focus on developing referral relationships within international wealth centres such as Hong Kong, Singapore, Malaysia and North America.

Elsewhere the real estate department increased its fee income over the year by 7%, for the first time taking revenues back above pre-2008 levels, and the residential real estate team saw a 30% increase in revenue largely thanks to renewed appetite from overseas investors in Central London property.

Speaking to Legal Business, Smith said the firm plans to further its Asian links and build its onshore practice, while maintaining its strong partner input and low leverage model. ‘We don’t want to get too unwieldy and lose the partner input we are able to offer. Whilst gearing is extremely important, there comes a point where if you have one partner and a huge number of assistants it’s hard to keep the quality levels up.’

sarah.downey@legalease.co.uk