Legal Business

A&O adds NY capability in London as Freshfields lures Linklaters Paris partner

A&O adds NY capability in London as Freshfields lures Linklaters Paris partner

A double Magic Circle hire today (17 September) has seen Allen & Overy (A&O) hiring financial services regulation counsel Knox McIlwain as a partner from Cleary Gottlieb Steen & Hamilton as Freshfields Bruckhaus Deringer bolstered its own regulatory offering, hiring Linklaters’ Paris FinReg partner Marc Perrone.

The hire of McIlwain reunites him with Bob Penn, A&O’s former financial regulatory services head, who re-joined the firm in June 2018 having defected for a two-year stint at Cleary. It also makes good on A&O’s plan to accelerate investment in its US-law capability following protracted and ultimately fruitless merger talks with Los Angeles firm O’Melveny & Myers. Senior partner, Wim Dejonghe, said that the hire demonstrates the firm’s commitment to growing its top-tier global regulatory practice and building on its US capabilities.

Located in London, McIlwain will also form an integral part of the US regulatory team and will focus on financial institution resilience and insolvency as well as working with the global derivatives practice.  Damian Carolan, head of A&O’s London financial services regulatory practice, commented: ‘A huge challenge our clients face is managing the regulatory change agenda across the US, EU and Asia-Pacific. There has been a deluge of reform covering all aspects of financial services, which remains at varying stages of implementation or revision. Knox’s arrival will bolster our transatlantic regulatory capability and improve our coverage of financial institutions’ global regulatory needs.’

Meanwhile Freshfields is in growth mode in Paris, with the hire of Perrone following swiftly after that of arbitration partner Christophe Seraglini from French boutique Betto Seraglini. Perrone, who has been at Linklaters for 14 years and made partner in 2012, advises financial institutions, investment funds and financial services and market infrastructure operators.

Seraglini acts for international companies on disputes in the technology, energy and construction sectors.

Hervé Pisani, managing partner of Freshfields’ Paris office, said: The arrival of Marc and Christophe is a testament to the appeal of the firm and demonstrates our willingness to support our clients on the strategic issues they face, as well as our ambition to consolidate our position in the French and international market with an integrated, global offering in line with the economic and regulatory changes underway.’

nathalie.tidman@legalease.co.uk

 

Legal Business

Dealwatch: Slaughters leads on Hong Kong’s £32bn LSE bid as US firms tap into mid-market

Dealwatch: Slaughters leads on Hong Kong’s £32bn LSE bid as US firms tap into mid-market

Strategic deals have continued into September after a busy summer, with firms rallying to get deals over the line before a Brexit cliff-edge threatens to become a reality.

Slaughter and May has landed a mandate to advise Hong Kong Exchanges and Clearing (HKEX) on a bid which, if successful, would see it acquire the London Stock Exchange (LSE) for £32bn. Partner David Watkins is leading the Slaughters team.

The proposed transaction has already sparked controversy around competition concerns as well as HKEX’s condition that any takeover would be conditional on LSE scrapping its planned $27bn acquisition of financial data business Refinitiv, a deal that was abnnounced in July.

The board of LSE yesterday (11 September) issued a statement describing the proposed acquisition by HKEX as ‘unsolicited, preliminary and highly conditional,’ confirming it continued to make good progress on the Refinitiv deal. A Freshfields Bruckhaus Deringer team led by partners Andrew Hutchings and Stephen Hewes are advising LSE on the Refinitiv deal and is likely to be mandated on this latest transaction.

Meanwhile Weil, Gotshal & Manges is advising Campbell’s Soup Company on the sale of its European chips business which includes Kettle Chips and Metcalfe’s skinny popcorn to Dublin-based Valeo Foods for $80m.

The Weil team was led by corporate partners Michael Aiello, James Harvey and Mike Francies. Partners Joe Pari, Chayim Neubort and Oliver Walker are advising on the tax while partner Barry Fishley is advising on intellectual property and technology.

CapVest and its portfolio company Valeo Foods were advised by a Willkie Farr & Gallagher team led by David Arnold and included associates Andrew Gray, Amelia Doughty, Michael Grant and Gabriella Denlew. Partner Jane Scobie led on the tax aspects.

In 2017, Campbell’s bought Kettle Chips producer Snyder’s-Lane for $4.87bn. The transaction is part of the company’s strategy to focus on its core products of canned soup and snacks. This deal follows Campbell’s sale of Danish manufacturer of baked snacks Kelsen Group to Belgian holding company CTH Invest for $300m.

Campbell’s will retain the Kettle brand business in the US and other area, while Valeo takes control of its UK, Europe and Middle East operation.

Weil has advised Campbell’s on a number of transactions this year, namely the recent sale of KKR to Arnott’s. The deal is subject to customary closing conditions, regulatory approvals and consultations and is expected to close at the end of this year.

Elsewhere, Paul Hastings advised private equity firm Oakley Capital on its investment in the Italian high-end homeware business Alessi.

The Paul Hastings team was led by Anu Balasubramanian and included corporate associates David Prowse and Aimée Fabri from the London office and Juljan Puna and Giulia Fiorelli from the Milan office while Gatti Pavesi Bianchi advised on the financing aspects of the transaction.

Balasubramanian told Legal Business: ‘Given the macroeconomic climate in Europe and the political environment across the board with Brexit, I think there is concern that both the capital line as well as potential opportunities may not dry up necessarily but everything is going to potentially become a little more difficult. People are trying to get deals over the line which is probably why we had the busiest summer.’

Alessi was advised by a team from Italian firm Gattai, Minoli, Agostinelli Partners led by corporate partner Bruno Gattai and includes partners Federico BalRiccardo Agostinelli, Andrea Taurozzi and associates Jacopo Bennard and Jacopo Ceccherini.

Paul Hastings has advised Oakley Capital on its acquisition of EkonVideotel and Seagull as well as their joint venture with Admiral and Mapfre to acquire Rastreator and Acierto.

muna.abdi@legalease.co.uk

Legal Business

A&O’s Mansell to appear before SDT in December as #MeToo fallout promises busy winter

A&O’s Mansell to appear before SDT in December as #MeToo fallout promises busy winter

Allen & Overy (A&O) employment partner Mark Mansell is to face his first Solicitor Disciplinary Tribunal (SDT) hearing on Wednesday 5 December following an investigation into his role drafting a controversial non-disclosure agreement (NDA) for disgraced film producer Harvey Weinstein.

A spokesperson for the SDT confirmed to Legal Business yesterday (9 September) the new date for Mansell’s hearing, which had originally been scheduled for 3 June.

It comes after the Solicitors Regulation Authority (SRA) referred the employment veteran for prosecution on 3 April over the NDA drafted in 1998 when Zelda Perkins (pictured), who worked at Weinstein’s company Miramax, alleged the producer had sexually harassed a colleague.

Mansell instructed A&O partner and general counsel Andrew Clark, while the SRA drafted in Capsticks partner Daniel Purcell. A spokesperson for A&O said the firm was ‘unable to comment on SDT proceedings’.

The SRA announced it was investigating the City firm shortly after Mansell was grilled by a Women and Equalities select committee as part of a probe into the ethics of NDAs in March 2018.

The new date for Mansell’s case management hearing means he will face the SDT three days after Baker McKenzie and its former London head Gary Senior, whose substantive hearings will start on Monday 2 December.

Bakers and Senior had originally been due for a case management hearing on 12 August after the SRA referred them for prosecution over allegations that the latter ‘sought to initiate intimate activity’ with a junior member of staff in 2012 and improperly sought to influence the initial investigation launched into the episode seven years ago.

The case management hearing was later vacated since all parties ‘agreed directions and process’, according to a Bakers spokesperson.

The hearings, which also see Bakers’ former litigation partner Tom Cassels and former HR director Martin Blackburn face prosecution for their roles in leading the initial investigation into Senior’s misconduct, are estimated to last for 15 days.

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.

The struggles of BigLaw with sexual misconduct in the wake of the #MeToo movement will also take centre stage at the end of this month, as Freshfields Bruckhaus Deringer partner Ryan Beckwith faces his next SDT hearing on 30 September.

Beckwith is alleged to have attempted to engage in sexual activity with an intoxicated junior member of staff in an abuse of seniority at an event organised by the firm.

The allegations, published following a case management hearing in the spring, focus on two instances: that Beckwith kissed or attempted to kiss the junior member of staff (the SDT has imposed reporting restrictions on their identity), over whom he was in a position of seniority, and that he initiated and/or engaged in sexual activity with the same person.

The SRA referred the case to the SDT in late June 2018.

marco.cillario@legalease.co.uk

For in-depth coverage of the Weinstein NDA and the controversy over the profession’s role in concealing harassment, see last year’s piece ‘Draining the swamp’ (£)

Legal Business

Freshfields denies wrongdoing in tax advice amid €50m settlement payout

Freshfields denies wrongdoing in tax advice amid €50m settlement payout

Freshfields Bruckhaus Deringer has brought to an end a lawsuit brought against the firm by the liquidator of the insolvent Maple Bank with a €50m settlement payment.

The settlement came to light on Thursday (29 August) at a creditors’ meeting when the liquidator, Michael Frege of CMS, said he had recovered €50m for creditors to settle a €95m claim against the Magic Circle firm brought in April.

The case centres on Freshfields’ advice to the German arm of Maple Bank over controversial ‘cum-ex’ transactions, which employed allegedly fraudulent taxing of dividends to benefit from multiple refunds on tax payments. The deals were outlawed in 2012 but not before numerous financial institutions including BNY Mellon, Deutsche Bank and Société Générale were caught up in the scandal.

Last year a series of raids were carried out by state prosecutors on the Frankfurt offices of Freshfields in connection with the Maples Bank mandate. In November 2018, it emerged that two of the firm’s partners were the subject of a criminal investigation into their role in the scandal.

Freshfields said in a statement: ‘A dispute regarding a potential liability claim stemming from a mandate completed several years ago has been resolved. The parties have agreed after intensive discussions that not only the claim for payment of €95m, but also additional claims, will be withdrawn. We are convinced that our advice always complied with applicable law.’

A spokesperson for CMS told Legal Business: ‘German insolvency proceedings are non-public. Thus, we are not able to provide any further information on this matter. However, as already reported in the press, we can confirm that a settlement has been reached with the amount stated.’

Michael Weigel, litigation partner at Arnold & Porter in Frankfurt, acted for Freshfields and Linklaters advised Frege on behalf of the creditors of Maple Bank.

nathalie.tidman@legalease.co.uk

For more on Freshfields, see our cover feature ‘‘The devil you know – The two visions for Freshfields’ (£)

 

Legal Business

Disputes heavyweights weigh in as Burford Capital alleges ‘illegal manipulation’ of shares after Muddy Waters attack

Disputes heavyweights weigh in as Burford Capital alleges ‘illegal manipulation’ of shares after Muddy Waters attack

Freshfields Bruckhaus Deringer, Quinn Emanuel Urquhart & Sullivan and Morrison & Foester have all been enlisted by litigation funder Burford Capital to pursue claims of illegal market manipulation by short-seller Muddy Waters.

Burford today (12 August) said in a statement that a preliminary finding of its analysis of trading shares last week displayed ‘evidence consistent with illegal market manipulation.’ The statement came after more than £1bn was wiped off the company’s value last week after San Francisco-based Muddy Waters published a report suggesting Burford was ‘a perfect storm for an accounting fiasco.’

This morning’s statement added: ‘While Burford continues to analyse the data, it has made regulatory authorities and criminal prosecutors aware of these preliminary conclusions and Burford is considering its own options.’

This is the latest hit as the pair continue to exchange blows. Burford had looked at trading its shares on 6 August, the same day that Muddy Waters tweeted about an upcoming short target. The next day, Muddy Waters published a report which delivered a diatribe against Burford, describing the litigation funder as a ‘poor business masquerading as a great one.’ Burford responded by calling the report ‘disgusting.’

The Financial Conduct Authority (FCA) confirmed today via a statement that it is looking into the matter: ‘The FCA has been aware of these matters since the first tweet and price movements on Tuesday of last week and at that point we began undertaking wide-ranging enquiries. We will continue to make enquiries using the wide range of data and resources at our disposal.’

Moreover, Muddy Waters is unlikely to be the last short-seller to launch a broadside on the company. Fellow short-seller Gotham City Research – which notoriously helped sink technology provider Quindell in 2014 – has since added pressure by suggesting Burford was ‘inappropriately financed.’

The controversy falls against a backdrop of considerable growth in third-party litigation funding over the last decade, with low interest rates and investor demand to gain access to professional services both accelerating the industry. However, the circling of short-sellers around Burford will fuel many critics who believe the industry requires greater oversight and transparency, while a prolonged legal dispute between Burford and Muddy Waters looks increasingly likely.

thomas.alan@legalease.co.uk

Legal Business

The Global 100: The devil you know – The two visions for Freshfields

The Global 100: The devil you know – The two visions for Freshfields

‘Some of the management are dinosaurs. They don’t understand how important this is.’ So speaks one loyalist Freshfields Bruckhaus Deringer partner of a growing unease shared by some regarding the City giant’s direction.

When Legal Business’ last focus on the 276-year-old institution hit desks in late 2015, the question was how newly-elected senior partner Edward Braham and co-managing partner Chris Pugh would secure the firm’s place in the Global Elite as the challenge from profitable US rivals mounted.

Legal Business

Private equity provides the pace as Freshfields posts second year of steady growth while net profits edge up

Private equity provides the pace as Freshfields posts second year of steady growth while net profits edge up

Freshfields Bruckhaus Deringer  has become the second of the Magic Circle to reveal 2019 results, posting a 6% uptick in profit per equity partner (PEP) to £1.84m, while sustaining last year’s income growth to push its top line up 5%.

The firm’s turnover grew £70m to £1.472bn on last year’s £1.403bn as net profit edged up 1% to £688m from £683m in 2017/18. PEP stood at £1.839m compared with £1.734m last year. While the 5% revenue increase matched last year’s performance, the 2018/19 figures are less striking in terms of profit after Freshfields enjoyed a 12% PEP hike for the 2017/18 financial year.

The results come after Clifford Chance (CC) on Tuesday (2 July) revealed a 4% revenue uptick to £1.693bn and a profit pool up 2% £637m. CC’s PEP increased 1% to £1.62m in the context of a growing partner ranks by four to 562 and equity partners by two to 394.

Stephan Eilers, Freshfields managing partner, told Legal Business: ‘The 5% revenue growth is something we see continuing – we expect to see something like that for this year as well. We have made substantial investments in legal tech headcount for our Manchester and Berlin hubs and have seen even growth across our regions and practice areas.’

Eilers pointed to key mandates for VW and advising hotel group Marriott on its data breach issue as highlights during the year. The global financial institutions group was also cited as a standout performer, with the City giant sustaining robust performance from sponsor clients despite a handful of senior losses in its buyout team.

Victoria Sigeti, London head of private equity, commented: ‘We are thrilled with the results on the GFI side. We have seen double-digit growth and the practice now represents 16% of global revenue. It shows how we differentiate ourselves with our international networks on complex deals. We are continuing to invest in the bench and are planning to make up two more partners in London next year.’

Charles Hayes, co-head of the financial sponsors group, argued that relationships with marquee clients including Advent, CVC, which he advised on its investment in Premiership Rugby, Hellman & Friedman and KKR have continued to serve the Magic Circle firm well. Freshfields also advised a number of bidders on the Nestle Skin Health transaction. Eilers, likewise, described a mandate advising KKR on its proposed investment in Axel Springer, the German media group, as ‘silver from the top German corporate table’.

The elite London firm also made waves in the Square Mile recently by hiking pay for newly-qualified solicitors to £100,000, a symbolic and expensive move that Magic Circle peers had little choice but to follow.

Eilers concluded: ‘After a strong fourth quarter, the new financial year has started well and we remain confident in our prospects and our strategy. It will allow us to continue to deliver the best possible outcomes for our incredible clients.’

But while management will be cheered by a second consecutive year of solid performance, the fundamental reality is unchanged for Freshfields and its London peers: the Magic Circle’s post-banking crisis performance has come nowhere near matching key US rivals .

nathalie.tidman@legalease.co.uk

Legal Business

Freshfields partner fails to block SDT sexual misconduct tribunal

Freshfields partner fails to block SDT sexual misconduct tribunal

The Solicitors Disciplinary Tribunal (SDT) has thrown out an application by Freshfields Bruckhaus Deringer partner Ryan Beckwith to dismiss its prosecution following misconduct allegations made against him by a junior member of staff.

The move came to light today (19 June) on the second day of a case management hearing before the SDT. The case against the restructuring partner will now start on 30 September and run for two weeks, the SDT confirmed.

The Solicitors Regulation Authority (SRA) in May published a list of allegations against Beckwith following a case management hearing the previous week in which Beckwith – who has been placed on indefinite leave by Freshfields – is alleged to have attempted to engage in sexual activity with an intoxicated junior member of staff in an abuse of seniority at an event organised by the firm.

The SRA referred the case to the SDT in late June last year. The allegations are as yet unproven and the SRA declined to comment at this time due to the ongoing hearing.

Freshfields senior partner Edward Braham said: ‘We note the decision of the tribunal and confirm he remains on indefinite leave.’

The allegations centre on two instances. Firstly, that Beckwith kissed or attempted to kiss Person A (the SDT has imposed reporting restrictions on their identity), over whom he was in a position of seniority, and secondly, that he initiated and/or engaged in sexual activity with the same person.

Both he and Person A were allegedly intoxicated at a celebratory event organised by the firm for its partners and employees, and the statement says that Beckwith knew or ought to have known that the Person A gave no indication the approach was wanted, and that he knew or ought to have known his conduct was an abuse of his seniority or authority.

With regards to the second instance, the SRA added that Beckwith knew or ought to have known that Person A was heavily intoxicated to the extent that she was vulnerable and/or her judgement was impaired; that she had not invited him to her home; and that he knew or ought to have known that she had not allowed him into her home with a view to sexual activity taking place.

nathalie.tidman@legalease.co.uk

Legal Business

Paywars III – City elite caught between rock and hard place

Paywars III – City elite caught between rock and hard place

The news last month that Freshfields Bruckhaus Deringer was to push through the highest real-terms pay rises by a major City firm for a decade is a significant moment for the London legal market.

The decision to hike its associate pay scale, raising its benchmark rate for newly-qualified solicitors from £85,000 to £100,000 is a bold and expensive step for the City giant. Back-of-the-envelope calculations suggest such a move, which will put Freshfields well ahead of its Magic Circle peers, comes at an annual cost in the region of £10m.

Legal Business

Associate pay war, anyone? Freshfields sets new Magic Circle standard by raising NQ pay to £100k

Associate pay war, anyone? Freshfields sets new Magic Circle standard by raising NQ pay to £100k

Marco Cillario assesses the City-wide implications of Freshfields’ decision to dramatically hike associate salaries

A decade after leading the way in resetting downwards the going rate for City associates, Freshfields Bruckhaus Deringer in May set a new standard for Magic Circle firms, raising its newly-qualified (NQ) salaries from £85,000 including bonuses to a symbolic £100,000, with bonuses on top.