Legal Business

Freshfields tax drama back in spotlight as Germany’s finance minister throws future mandates into doubt

Freshfields tax drama back in spotlight as Germany’s finance minister throws future mandates into doubt

Freshfields Bruckhaus Deringer has been dragged into the spotlight yet again for its role in the cum-ex tax scandal, with Germany’s finance minister suggesting that the firm should no longer be handed government contracts for its involvement.

Finance minister Olaf Scholz of the Social Democrat Party made the remark on Wednesday (9 September) at the German Bundestag during questioning around what has widely been dubbed the biggest tax fraud in the country’s history.

The minister was quizzed by Stefan Liebich of the leftist Democrat Socialist Party as to whether firms like Freshfields implicated in the scandal should be excluded from future government contracts.

Scholz replied (in translation): ‘Of course, we have to draw conclusions for what we do when we work with companies. In relation to the law firm you mentioned, I said for myself: “I cannot imagine that new assignments will be placed there.”’

This is the latest twist in the long-running cum-ex scandal in which the City giant has been accused of having a pivotal role. It centres on transactions that took advantage of a loophole in German law that allowed investors to claim back dividend tax that was never paid. The practice is claimed to have started in the early 2000s and carried on for several years, costing European taxpayers up to €55bn, according to European Parliament estimates.

In late November 2019, it emerged that Freshfields’ global head of tax, Frankfurt-based Ulf Johannemann, had resigned from the firm. A few days later, he was jailed as a flight risk. Released in December on a €4m bail, he is facing charges of fraud in connection with his advice to the defunct German arm of Maple Bank over the legality of a scheme to reclaim more than €380m in tax that was never paid.

This latest development will be an unwelcome one for Freshfields as it looks to mitigate the damage to the firm’s reputation. Freshfields declined to comment.

However, the cum-ex matter goes far beyond Freshfields’ involvement and is doubtless a political hot potato as Germany braces for its federal election next year.

Moreover, Scholz himself has been accused of intervening in a probe on Warburg Bank in his former role of mayor of Hamburg amid allegations that the tax authorities dropped a substantial claim surrounding the banks involvement in cum-ex transactions.

The minister denies intervening in investigations against the bank and its former boss, Christian Olearius, in relation to serious tax evasion.

For more on Freshfields’ involvement in the cum-ex saga, read Legal Business’ analysis of earlier this year.

nathalie.tidman@legalease.co.uk

Legal Business

Beckwith appeal date set as ex-Freshfields partner challenges liability and costs in #MeToo case

Beckwith appeal date set as ex-Freshfields partner challenges liability and costs in #MeToo case

An appeal by former Freshfields Bruckhaus Deringer partner Ryan Beckwith against the Solicitors Disciplinary Tribunal’s (SDT) decision in his misconduct case is set to be heard in October.

Beckwith filed the High Court appeal against the SDT’s decision on liability and the costs award in February, with the hearing now listed for Wednesday 21 October. 

The appeal follows last October’s high-profile judgment that Beckwith knew or ought to have known that the junior member of staff he engaged in sexual activity with was intoxicated and her judgement impaired and that he knew or ought to have known that his conduct was inappropriate.

Beckwith’s appeal comes after the Solicitors Regulation Authority (SRA), which brought the case to the SDT for prosecution in June 2018, in February said it would not be appealing the sanctions handed down of a £35,000 fine and an order to pay legal costs of £200,000.

Beckwith’s challenge is specifically in relation to the SDT’s decision on liability and the costs awards and does not relate to the fine itself, it is understood.

Also in February, the SDT released its written judgment explaining that the controversial decision to fine instead of ban Beckwith was because his misconduct was ‘a lapse in his judgement’ and ‘unlikely to be repeated’.

In the judgment, the SDT said: ‘There had been no clients involved and there was no suggestion that the work of the respondent was anything other than highly competent. Nor did it consider that the respondent posed a future risk to the reputation of the profession.’

The sanctions were made in light of the tribunal’s decision that ‘this was a one-off incident where there was no suggestion that he [Beckwith] had coerced or manipulated Person A [the junior lawyer]. It was not the applicant’s case that the respondent had deliberately plied Person A with drink with a view to getting her into such an intoxicated state that she would then engage in sexual activity.’

‘Nor was it the case that he had used his position of seniority and authority to engineer the sexual encounter,’ the decision added.

The tribunal found that, although Beckwith had ‘engaged in inappropriate conduct in circumstances where his judgement had been affected by the amount of alcohol he had consumed,’ it did not find that the circumstances of the case were such that a restriction order was necessary in order to protect the public.

Beckwith is being represented by criminal defence partner Nick Brett of Brett Wilson, who has instructed Alisdair Williamson QC of Three Raymond Buildings.

nathalie.tidman@legalease.co.uk

Legal Business

Freshfields refutes partner misconduct in handling alleged rape case as SRA confirms probe 

Freshfields refutes partner misconduct in handling alleged rape case as SRA confirms probe 

Just when Freshfields Bruckhaus Deringer probably thought its #MeToo woes were behind it, a fresh spotlight has been shone on a prominent partner over allegations of misconduct in handling an alleged rape case involving UBS and a Solicitors Regulation Authority (SRA) investigation underway.

The matter came to light on Thursday (13 August) when the The Financial Times reported that influential Freshfields employment partner Caroline Stroud was being investigated by the watchdog for her conduct in dealing with a review of the investment bank’s handling of a rape allegation. 

In a statement, Freshfields said only: ‘We refute the allegations’, made against Stroud after she was drafted in by UBS to review the way in which the bank investigated a complaint of an alleged rape victim against a colleague.

Nevertheless, the SRA has seen fit to launch a probe into the allegations, but would not be drawn on the timeframe. A spokesperson for the SRA said: ‘We are investigating before deciding on any next steps. Our work on this matter continues, but we cannot discuss any details about our work while it is ongoing.’

The regulator is reportedly reviewing complaints that Stroud did not make her role in acting for UBS clear to the alleged victim, referred to as ‘Ms A’, something that the firm and Stroud are said to deny.

This will be another unedifying disclosure after restructuring partner Ryan Beckwith was last October fined by the Solicitors Disciplinary Tribunal (SDT) following a referral from the SRA over inappropriate sexual conduct with a junior lawyer.

The saga prompted the firm to usher in reforms to its handling of such behaviour, including financial penalties, at the end of last year.

There is little doubt that the regulator has, having long been accused for years of enjoying too much of a cosy relationship with City firms, taken an increasingly hard line both on lawyers committing misconduct or attempting to cover it up. However, it took the worldwide #MeToo movement that started in autumn 2017 and triggered a wave of uncomfortable allegations, to galvanise the regulator into action.

As incidents of workplace misconduct must inevitably have all but disappeared with the majority of lawyers and clients still working from home amid the Covid-19 pandemic, this latest episode is a sharp reminder that there are several other ways to be implicated in such controversy. It also begs the question – how many other disclosures relating to historic events have yet to be brought to light?

nathalie.tidman@legalease.co.uk 

Legal Business

Freshfields emerges from year of challenges and investment with 3% revenue increase and flat profit

Freshfields emerges from year of challenges and investment with 3% revenue increase and flat profit

After what has been an eventful year notwithstanding the havoc wrought by the coronavirus crisis, Freshfields Bruckhaus Deringer has closed out the Magic Circle reporting season by announcing a 3% revenue increase to £1.52bn and flat net profit at £685m.

Profit per equity partner (PEP) stood at £1.82m, slightly down on last year’s £1.839m.

While not as pacey as last year’s performance, when turnover grew £70m to £1.472bn on the previous year’s £1.403bn and net profit edged up 1% to £688m from £683m in 2017/18, the more muted results nevertheless come on the back of a level of investment in the US business unparalleled among the firm’s peer group.

Last October, Freshfields took a surprisingly adventurous tack with the hire of a four-partner M&A team in Wall Street, led by prominent M&A veteran Ethan Klingsberg (pictured), from Cleary Gottlieb Steen & Hamilton.

The move was a substantial shot in the arm for Freshfields’ heady stateside ambitions. Then, early this month the firm announced it had recruited five senior lawyers from major US firms to launch a practice in Silicon Valley under the leadership of Davis Polk & Wardwell securities partner Sarah Solum.

Freshfields’ financials on Wednesday (22 July) follow hot on the heels of Clifford Chance (CC)’s the previous day, with robust growth in the face of the most challenging trading environment since the banking crisis. The City leader said revenues for the 2019/20 period were up 6% to £1.803bn, while profit per equity partner increased 5% to £1.69m. Partnership profit for the year totalled £666m, an annual increase of 5%.

The performance also slightly outpaced the 4% growth at Allen & Overy, and compares favourably with Linklaters, which last week confirmed that its revenue for 2019/20 was up 0.7% to £1.64bn.

Freshfields pointed to a particularly strong year for its antitrust, litigation, arbitration and investigations teams, which it said had achieved ‘record revenues’, thanks in part to defending Volkswagen in civil, regulatory and criminal claims brought globally in response to the emissions case.

Other highlight matters for the year saw Freshfields act on Aon’s merger with Willis Towers Watson, the London Stock Exchange Group’s acquisition of Refinitiv and Paypal’s participation in a fundraising by GoPay.

Financial sponsor-led standouts drove double-digit growth and included advising on the Cinven, KKR and Providence consortium’s takeover of MásMóvil Ibercom.

The technology sector has also fuelled business, with Freshfields advising Google on its $4.5bn investment in Reliance Jio and Hewlett Packard Enterprise on its acquisition of Silver Peak. A significant investment in the firm’s own technology was also cited as a key move as it transitioned to remote-working during the Covid-19 lockdown.

The year also saw a number of reversals that management will be keen to put behind it. Unsavoury headlines last year around the SRA’s prosecution of former London restructuring partner Ryan Beckwith are unlikely to be forgotten in a hurry. The firm also suffered several blows in the form of departures, not least when the well-respected M&A partner Sam Newhouse decamped to Latham & Watkins earlier this year.

Alan Mason, global client partner, said: ‘Technology and life science businesses are increasingly shaping the global economy, and this is being accelerated by Covid-19. Our continued US expansion means we are ideally placed to help these companies achieve their ambitions. Top-tier US talent is critical.’

nathalie.tidman@legalease.co.uk

Legal Business

‘Making Freshfields an American brand’ – Inside the Silicon Valley launch handing the City giant a rare opportunity

‘Making Freshfields an American brand’ – Inside the Silicon Valley launch handing the City giant a rare opportunity

Roughly 30 seconds into conversation with Boris Feldman it becomes apparent why the charismatic litigator is regarded as a local legend in California’s legal community. Spitting out colourful quotes with the confidence that comes from having acted for pretty much every Bay Area brand name going, the bow-tied Feldman has nonetheless chosen an odd time in his lengthy career to change firm, let alone quit a local bellwether like Wilson Sonsini for the uncertain embrace of London’s oldest elite law firm.

But then Feldman’s move alongside four other senior lawyers to set up a Silicon Valley arm for Freshfields Bruckhaus Deringer speaks to two key issues of huge strategic importance for the storied London firm. The first point is that for the first time in its 43-year history in the US, Freshfields is attracting the kind of star power widely accepted as a prerequisite of success stateside. The second point is directly related: the acquisition of said talent has dramatically changed perceptions of the London firm in the US in just eight months after years of mixed opportunities and bad PR.

‘When you write an article in 2025 about Freshfields in Silicon Valley, there’s two metrics I’d like to judge us by,’ notes Feldman. ‘Firstly, the quality of talent [we’re hiring] and second, that we’ve helped to make Freshfields an American brand as well as a global one.’

To an extent that would have seemed unthinkable a year ago, such sentiments are no longer dismissed as hyperbole by peers, even if Freshfields has a long way to go on this journey. But consider the names signing up to help light the way.

As one of the leading securities litigators on the West Coast, Feldman has acted for many of the top names among California’s fêted technology giants, including Google, Facebook, Netflix, Salesforce, LinkedIn, Snap and Hewlett-Packard.

On the transactional side, Feldman is supported by a figure of comparable stature, Davis Polk & Wardwell veteran Sarah Solum, who oversaw the Wall Street firm’s launch and transformation into a serious presence in the West Coast securities market.

Solum, who is running the new, seven-partner operation, is touted as a ‘superstar’ by Freshfields partners, with one noting: ‘You can’t get better than that. She seems to have mentored everyone in Silicon Valley.’

The team is fleshed out by John Fisher, an M&A partner from Sidley Austin, Latham & Watkins executive comp partner Maj Vaseghi and Wilson Sonsini litigation associate Doru Gavril, who joined as a partner. The seven-partner outpost includes Freshfields partners Pamela Marcogliese (capital markets) and Alan Ryan (antitrust), transferring respectively from New York and Brussels.

Freshfields gets additional props for having pulled off such an audacious move remotely, given that serious discussions with the group did not begin until just before coronavirus-driven lockdowns. ‘I’ve done this whole thing from my closet,’ jokes Solum, decrying the limits of home-office space.

Aside from the undoubted quality of the two senior individuals in the group, the practice mix is astute. The team includes Fisher as an up-and-coming deal hand in the key technology and life sciences sectors, and in Gavril provides a protégé to Feldman, now in his 60s, to build in succession.

Shipping in a trusted operator like Ryan on antitrust is likewise a no-brainer at a time when America’s technology giants are spending half their time squaring up to European agencies on business-critical issues of competition, tax and data security. Marcogliese, likewise, has an admirable CV having in 2019 advised on the high-profile float of Pinterest and Google’s 2015 corporate reorganisation.

Aside from a well-regarded move in itself, Freshfields’ Silicon Valley adventure builds upon on its recruitment in October of a four-partner M&A and securities team in New York from Cleary Gottlieb Steen & Hamilton, which brought in Marcogliese.

While Freshfields’ previous moves in New York’s transactional space had generated at best mixed reviews, the Cleary team led by deal heavyweight Ethan Klingsberg has garnered grudging but undiluted admiration, not least for the circa-$10m package it took to bring him in.

Aside from shipping in the kind of deal lawyers that had until now proven beyond the grasp of the London elite, the Cleary team brought additional benefits given its impeccable West Coast connections. Aside from major work with clients like Google, Pinterest and Hewlett Packard Enterprise, Klingsberg is hugely prominent in California’s legal community, having hosted a well-attended annual M&A conference in San Francisco with the Berkeley Center for Law and Business. Certainly, Feldman and Solum make it clear that Klingsberg’s presence was material to their taking Freshfields’ call, going as far as to call the former Cleary partner ‘the most important M&A lawyer in the West Coast’.

And eye-catching team moves in Silicon Valley and New York have been followed by other notable recruitment, with Freshfields shipping in ten Cleary associates since October. The firm also in July hired well-regarded securities litigator, Willkie Farr & Gallagher partner Mary Eaton, reinforcing a key strategic discipline in the US market.

All in, even the most sceptical of peers are impressed. ‘That’s the most interesting thing that’s happened in the market, in terms of what the Magic Circle firms are doing, for quite a while,’ observes one managing partner of a major US firm of Freshfields’ West Coast move. ‘That’s really playing at the top of the market.’

‘CC ringing in our ears’

Before this piece turns into a love letter to Freshfields’ US operation, it must be remembered that Freshfields’ US strategy has had more false starts than a vintage Jag. So persuading US peers and potential recruits that it is serious this time is no done deal, however impressive its recent efforts.

On top of which, the Magic Circle’s collective chequered history in New York looks like a triumph of execution compared to London leaders’ efforts in California so far. Freshfields had previously flirted with launching locally – including considering taking a productive M&A team led by Richard Climan from the imploding Dewey & LeBoeuf.

The Climan team ultimately went to Weil, Gotshal & Manges before becoming a highly-profitable fixture at Hogan Lovells’ West Coast practice.

Previously, Freshfields’ nerve usually faltered at persuading its conservative partners, particularly in Germany, why it should make such investments. One partner concedes the move had previously been seen as an ‘add-on’ or ‘distraction’ before the growth of California’s corporate champions led to the conclusion that this was fundamental to Freshfields’ global aspirations.

Another Freshfields partner concedes that ‘CC is ringing in our ears’ in wariness of avoiding the fate of Clifford Chance’s disastrous foray into California nearly two decades ago. Having hired a large team from Brobeck, Phleger & Harrison in 2002, CC shut its local operation several years later amid much acrimony.

However, there are many reasons to believe that the London giant can proceed far more quickly in California now than in the war of attrition it inevitably faces on Wall Street, even with expensive soldiers to bolster its campaign.

For one, the days in which the Bay Area was a graveyard for out-of-towners are long gone. Sure, Cooley and Wilson Sonsini remain potent forces in the local technology community, as do smaller outfits like Fenwick & West and boutique Gunderson Dettmer Stough Villeneuve Franklin & Hachigian.

But even if emerging company work remains largely the preserve of local leaders, for mature-stage capital markets, M&A, disputes and private equity the last 20 years have seen huge inroads from East Coast rivals. Likewise, office head Solum has a proven track record of selling old-money institutions to California’s youthful executive class. Recalling her experiences launching her Wall Street firm’s local operation, Solum makes light of the challenge of pitching a 300-year-old London outfit to the locals: ‘I am used to it, they used to call us, “David Polk”.’

Among the firms to have carved strong local positions are Davis Polk for securities, Skadden, Arps, Slate, Meagher & Flom and Hogan Lovells for general M&A, with Simpson Thacher & Bartlett and Kirkland & Ellis established for private equity matters.

This is the client base of core concern to Freshfields with the London firm obviously looking to put an added global spin on its proposition to marquee clients. ‘All my clients, all their problems now have global dimensions,’ reflects Feldman. ‘It would be great for them to have a unified global team.’

Moreover, as Freshfields corporate partner Alan Mason, acknowledged as the architect behind the Silicon Valley move, notes, the economic case for the launch is compelling. ‘There’s been a huge amount of analysis focused on growth. This is where we see the growth of the legal market.’

Given the dramatic rise of California’s technology giants to global dominance over the last 20 years, who can argue with such sentiments? As the US’s most populous state, California’s economy is often touted as being the fifth largest in the world if it was an independent country (edging out the UK on most metrics).

Moreover, the current Covid-19-induced crisis has if anything strengthened the relative hand of the West Coast’s global technology champions, given the increasing demand for their services as remote working booms amid the pandemic. With stock market valuations of marquee West Coast companies shrugging off the global economic crisis, technology clients have been raising capital like it’s going out of style.

The bullish mood among local lawyers, particularly in capital-drenched North California, speaks also to the opportunities in a market that is still far from London/New York levels of saturation for commercial lawyers.

Huge progress can be made with far smaller teams than demanded in Wall Street or the City – Skadden became a major force locally fielding around 70 lawyers in California, one of the largest from an East Coast player. And despite the rocketing costs of Bay Area real estate, investing is still cheaper than cracking Manhattan; against the $10m package for Klingsberg – roughly double the top of Freshfields’ mainstream equity ladder – the highest package offered for a transferring partner was under $7m, according to one insider.

Aside from the words, Clifford and Chance, the only mystery around Freshfields’ move is not why but why the firm and its peers waited so long given the rich strategic pickings on offer.

As one London rainmaker remarks, ‘If we get this right this could be the inflexion point we have all been hoping for in the US.’

When stars align

Such an inflexion point won’t quite be enough to finish the job in the US for Freshfields. Bringing in the Cleary team will break a few eggs as some of the previously shipped in deal partners are expected to move on. An earlier sign of this occurred with the departure of US M&A head Mitchell Presser for Morrison & Foerster in April. This kind of turnover is largely priced in already. But with credible US positions in antitrust, investigations, securities litigation and corporate, Freshfields is rapidly putting together the pieces to position it as a strategic boardroom adviser to major corporates stateside. Obvious next moves would be to bulk out its US private equity practice and expand out the mid-level associate ranks – with under 250 lawyers stateside, Freshfields is still going to need considerable growth to fulfill its ambitions.

There will be much attention on its leadership elections this year to see if Freshfields has the stomach to sustain such audacious and expensive investment, particularly in the face of a conservative German partnership. As one former partner notes of its US hires, ‘Europe should be trimmed to pay for this but that’s hard to do in an election year.’

The Silicon Valley move suggests Freshfields’ progressive wing is winning the argument on future direction but the replacement for senior partner Edward Braham will settle the point. While there has been much talk of a team forming around German partner Helmut Bergmann, possibly including partners David Sonter and Jennifer Bethlehem, other potential figures to watch include Mason and Asia head Georgia Dawson.

By all accounts, Freshfields’ deal team has remained on solid form through the crisis, securing a number-two ranking in Mergermarket’s global tables for the first half of 2020. Recent US deals have included acting on the merger of Stagwell Media and MDC Partners, while Klingsberg has just advised Hewlett Packard Enterprise on its pending $925m acquisition of Silver Peak. If the stars are not only joining but aligning now for Freshfields in the US, they never will.

As Legal Business argued recently, the current crisis will likely be the best opportunity the London elite will get to reassert themselves on the global stage before they are effectively pushed into second tier status by a group of US rivals. And seizing this moment to revive their faltering US strategies – which have always been far more self-imposed failures than the inevitability of market dynamics – would be the most powerful expression of that rebirth.

Having worked through repeated torturous setbacks to be in a position to persuade star names of the likes of Solum, Feldman and Klingsberg to sign up, this is surely Freshfields’ moment. For the sake of City law as a global force and tradable brand, let’s hope they don’t squander it.

alex.novarese@legalease.co.uk

For more analysis, see our Deal View column on Freshfields in Wall Street

Legal Business

Signs of intent – Freshfields shrugs off US caution to secure high-stakes West Coast launch

Signs of intent – Freshfields shrugs off US caution to secure high-stakes West Coast launch

Observers of Freshfields Bruckhaus Deringer have grown used to the City giant undercutting bold claims for its US strategy with half-hearted execution but the London leader has belied that image to announce an audacious launch in the key West Coast legal market.

The announcement today (1 July), sees the Magic Circle firm recruit five senior lawyers from major US firms to launch a practice in Silicon Valley, under the leadership of Davis Polk & Wardwell securities partner Sarah Solum.

The team is rounded out by Sidley Austin partner John Fisher, who specialises in technology and life sciences M&A, Latham & Watkins tax partner Maj Vaseghi and Wilson Sonsini Goodrich & Rosati disputes partner Boris Feldman. Wilson Sonsini litigation associate Doru Gavril joins as a partner.

The seven-partner outpost will include Freshfields partners Pamela Marcogliese (capital markets) and Alan Ryan (antitrust), who are transferring from the firm’s respective arms in New York and Brussels. Freshfields’ other US practice is in Washington DC.

The move is only the second time that a Magic Circle firm has dared to venture into the key West Coast legal market since Clifford Chance made its ill-fated move in the region with a team from Brobeck, Phleger & Harrison nearly 20 years ago.

The move will be seen as a doubling down on Freshfields’ headline-grabbing recruitment of a four-partner M&A team from Cleary Gottlieb Steen & Hamilton led by highly-rated deal veteran Ethan Klingsberg (pictured) at the end of 2019.

Commenting on the move as US corporate head, Klingsberg put out a suitably bullish spin: ‘Combining this dream team of talent with our global platform and our high-powered teams in New York and DC enables us to respond to the needs of Bay Area clients. These needs are global, complex and demanding of constant focus and creativity. Just as Bay Area clients are fearless in their approach, so is Freshfields. We are committed to serving our clients with the broad and deep resources that their strategic plans merit.’

Such sentiments would until recently have been dismissed as laughable by US rivals but Freshfields’ recent moves have attracted plenty of grudging respect.

While California’s technology-heavy sector has become one of the more lucrative legal markets in the world after 20 years of exponential growth from iconic Silicon Valley companies, it has also proven a very tough market for out-of-town law firms to crack.

Freshfields was known to have previously flirted with taking on a productive West Coast team years ago from the collapsing Dewey & LeBoeuf but the group ultimately went to Weil, Gotshal & Manges.

The latest two team hires in New York and Silicon Valley will be seen as evidence that Freshfields is finally moving to make the kind of sustained investments in the US that a camp of its key corporate partners have long championed.

US strategy is also due to be a key issue in this year’s looming leadership election to replace senior partner Edward Braham. The latest move at least suggests that the progressive wing of the firm is winning the argument.

While there has been much talk of a team forming around German partner Helmut Bergmann, possibly including partners David Sonter and Jennifer Bethlehem, other potential figures to watch include corporate partner Alan Mason and Asia head Georgia Dawson.

alex.novarese@legalease.co.uk

For more analysis on Freshfields’ direction and leadership see last year’s cover feature, The devil you know

For our take on its recent New York M&A push, see our recent Deal View column

Legal Business

Corporate losses continue for Freshfields as Latham makes public M&A play in London

Corporate losses continue for Freshfields as Latham makes public M&A play in London

Kirkland & Ellis topped M&A rankings for Europe last year, bringing in a total of $224.2bn in deals, while Freshfields Bruckhaus Deringer came in second at $221.7bn. Little wonder then that rival Latham & Watkins has targeted Freshfields for its most significant London lateral hire in some time, bringing in public M&A rising star Sam Newhouse.

It is inevitable that public M&A work in London – long-considered the preserve of the Magic Circle – has become the latest hunting ground for ambitious US players as an alternative to private equity and funds-driven corporate work. White & Case is well-established in the area and Weil, Gotshal & Manges has made no secret of its desire to find talented company for veteran Mike Francies, as it did with the hire of David Avery-Gee from Linklaters last year.

Legal Business

Freshfields and Slaughters drafted as Government reveals details of Covid-19 business support package

Freshfields and Slaughters drafted as Government reveals details of Covid-19 business support package

The UK Treasury and Bank of England (BoE) have called in their go-to counsel Slaughter and May and Freshfields Bruckhaus Deringer as they iron out details of the multibillion-pound support scheme to underwrite British business through the coronavirus crisis.

The UK Government announced last week the Covid-19 Corporate Financing Facility to help companies with cash flow as the rapid spread of the virus has forced governments to put a third of the world’s population in shutdown.

Under the scheme, the BoE will buy short-term bonds to ensure businesses making a material contribution to the UK economy can continue to pay staff and suppliers, upon the condition that they demonstrate they were financially-healthy before the crisis. The facility will operate for an initial period of 12 months.

Slaughters’ finance partners Matthew Tobin, Oliver Storey and Guy O’Keefe are advising the Treasury alongside corporate partner Nilufer von Bismarck (pictured) and state aid partner Isabel Taylor. Slaughters’ core role to Whitehall echoes its high-profile mandate during the financial crisis when it advised the Treasury on a wide-ranging bank bailout.

A Freshfields team led by financial services chief Michael Raffan is acting for the BoE, the Magic Circle firm’s most celebrated client.

The scheme is one of several unprecedented economic measures disclosed by the Government in response to the unfolding crisis. UK Chancellor Rishi Sunak announced on Friday (20 March) a coronavirus job retention scheme to offer all employers access to a grant covering up to 80% of the average wage to prevent widespread layoffs.

Businesses will not be expected to pay VAT for a quarter until the end of June and will not be liable for VAT deferred during that period until the end of the 2020/21 financial year.

Speaking to Legal Business about the measures, Hogan Lovells head of public law and policy Charles Brasted said they were ‘directly feeding into what our clients are thinking about in terms of how they can maximise what they retain over the next few months’.

‘It’s almost inevitably not the end of it, it’s not a one-off package,’ he added, saying that new measures will be likely to address the self-employed: ‘A lot of the measures at the moment work easily if you are on pay as you earn but not so easily if you are self-employed, and the government is looking closely about what it can do [on that front].’

marco.cillario@legalease.co.uk

Click here for all our latest coverage on the on-going coronavirus crisis

Legal Business

More gloom for Freshfields as another disputes partner exits after internal investigation

More gloom for Freshfields as another disputes partner exits after internal investigation

Freshfields Bruckhaus Deringer has suffered yet another setback after disputes partner Tom Snelling was dismissed from the partnership following an internal investigation.

The move will be an unwelcome addition to the City giant’s woes as the legal industry and the world at large grapples with unparalleled reversals wrought by the ever-escalating coronavirus pandemic.

A Freshfields spokesperson would not give full details of Snelling’s departure, only commenting: ‘We can confirm that following the conclusion of an internal investigation, it has been agreed with Tom Snelling that it’s in the interests of both him and the firm that he leave the partnership. His last day was 19 March (Thursday).’

Snelling, who made partner in 2010, is the second disputes partner to be ousted from Freshfields in the space of three months after Nicholas Williams, a partner since 2017, left the firm on 11 December after the firm launched an internal probe into personal misconduct allegations.

That dismissal came in the same week the Freshfields partnership voted in new enforcement protocols that meant partners who receive a final warning for personal behaviour issues could face an automatic fine equal to 20% of their profit share for 12 months.

The reforms were aimed at curbing harassment of staff and came in the wake of the public embarrassment Freshfields faced in October when the Solicitors Disciplinary Tribunal (SDT) fined former partner Ryan Beckwith £35,000 and ordered him to pay £200,000 in legal costs following a high-profile hearing concerning sexual activity with a junior lawyer in his team.

While the Solicitors Regulation Authority decided against appealing a decision many deemed lenient, Beckwith in February filed a High Court appeal against the SDT’s finding against him.

A firm-wide programme to improve culture and behaviour has also resulted in a set of principles – ‘Show respect, be there for one another, be positive role models, and be open with one another’ – as a means of tackling these problems.

While this latest exit could be seen as an affirmative move in clamping down on unacceptable working practices, it also shines an unfortunate light on a firm now with a succession of partner terminations for misconduct.

Nathalie.tidman@legalease.co.uk

 

 

Legal Business

‘Smarts and experience’: Freshfields adds more NY firepower with Latham tax hire

‘Smarts and experience’: Freshfields adds more NY firepower with Latham tax hire

Freshfields Bruckhaus Deringer has built on the momentum of its recent Manhattan hiring spree with the addition of tax partner Lori Goodman from Latham & Watkins.

The move is another boon for the City giant’s lofty US aspirations after the much vaunted acquisition last October of a four-partner Cleary Gottlieb Steen & Hamilton team, led by prominent M&A veteran Ethan Klingsberg.

Goodman, whose practice focuses on compensation and benefits aspects of M&A, private equity, disclosure, and corporate governance, will be joining Freshfields’ US executive compensation and employee benefits practice. She was made up to partner in 2015.

She has advised public company clients such as Spotify Technology and The Container Store Group and financial sponsor clients including Leonard Green & Partners, Odyssey Investment Partners and Energy Capital Partners. She also advised on the 2019 Peloton IPO.

Matthew Herman, Freshfields US managing partner, said Goodman’s hire would build on the firm’s increasing M&A, activism defense, shareholder litigation and corporate governance work since its recent hires: ‘Adding Lori to the equation is critical to delivering to our clients the sophisticated legal skill and judgment they demand.’

Ethan Klingsberg, Freshfields US head of M&A, added: ‘I’m impressed by Lori’s smarts and experience. I’m further thrilled that she provides innovative structuring advice on handling of awards and incentive plans in the full spectrum of M&A transactions, whether it’s a public company merger, a takeover of a start-up, or a financial sponsor transaction.’

The hire of Goodman also sees something of a revolving door between Freshfields and Latham, the Magic Circle firm having sustained a significant blow in the City last week after influential rising star Sam Newhouse quit for the US powerhouse. It was viewed as Latham’s most significant move into the UK public company M&A space since the hire of Allen & Overy’s well-liked M&A partner Ed Barnett in 2017.

nathalie.tidman@legalease.co.uk