Legal Business

Lead partner: The year the United Kingdom becomes a globally leading life sciences hub?

As part of its ambition for the United Kingdom to become a tech and science superpower by 2030, in 2023, the government announced a range of initiatives aimed at boosting investment and innovation in the life sciences sector. Innovators will have welcomed the R&D tax relief reforms whilst the Mansion House Compact (the largest UK pension providers committing 5% of their assets to unlisted equities by 2030) announced in July has provided some hope of alternative pools of capital to unlisted UK life sciences companies.

Whilst the impact of those initiatives remains to be seen (and of course with a general election looming) the UK life sciences industry is being positioned to play an integral part in the growth of the country’s economy with many recent legal and regulatory developments also seeking to enhance the attractiveness of the UK as a leading life sciences hub. The UK’s offer to prospective investors will be centred around access to innovation, the financial firepower of the City, the introduction of progressive and pragmatic regulation and a robust advisory ecosystem, which it hopes will allow it to differentiate itself from the EU.

Legal Business

Sponsored briefing: Gender equity becomes key focus

Herbert Smith Freehills (HSF) has quadrupled the number of female partners in its London corporate team since 2017, with women comprising 45% of all new partners joining the team since then.

‘We knew we had a problem and we knew it was business critical to fix it,’ says Mike Flockhart, HSF’s London-based global co-head of corporate. Mike credits his fellow global co-head, Melbourne-based Carolyn Pugsley, as an important catalyst for change. ‘Carolyn brought different perspectives to the global leadership team, and was inspirational to a generation of female talent who were looking for leadership. Here we had a successful female partner, managing a career and family and being very authentic about her experience.’ Mike also notes the role that senior male leaders like James Palmer and Stephen Wilkinson played: ‘They were uncompromising about the need to change, and the need to prioritise the development and support of female talent.’

Legal Business

‘Improving growth has not been an easy task’: HSF posts record financials amid challenging conditions

Herbert Smith Freehills has marked a decade of consecutive annual growth with its latest financial results, posting the highest revenue, profit and PEP in the firm’s history.

Revenue has increased by 8% from £1.103bn to £1.186bn, while net profit and PEP are up by a more modest 2% and 1% respectively. PEP moved from £1,163,000 to £1,173,000 for 2022/23.

Speaking with Legal Business, CEO Justin D’Agostino (pictured), said: ‘We are particularly proud of the results this year, especially because there were some significant challenges in all of our markets, including rising costs and tougher trading conditions.’

D’Agostino explained why the firm has fared so well despite the less-than-ideal market conditions: ‘Our clients come from  strong sectors, such as energy, infrastructure, technology and banking. We are also focused on the twin engines of our contentious and transactional practices. That mix results in a very well-hedged global business.’

On the firm’s strategy, D’Agostino elaborated: ‘We launched our new strategy in November 2021, which has been having a positive impact. When we set out our strategy, we set out our choices on the areas we were going to focus on winning market share and grow: private capital, energy transition and ESG. We are seeing significant growth in these areas, and we will see sustainable growth for the next few years.’

Asked which were the firm’s best-performing  jurisdictions, D’Agostino responded: ‘London had an outstanding year, as well as strong, double-digit growth coming from New York. EMEA saw good growth too, with double digits from Milan, Dubai, Germany and Johannesburg.’

He added: ‘The market was tougher than previous years in Asia and Australia. Despite this we still saw double digit growth in Japan and South-East Asia too.

‘On the practice side, our contentious practice did particularly well. We saw increased client demand in class actions, competition and disputes deals. The largest class actions we are seeing are with our biggest clients, such as Google and Meta.’

Probed further on the firm’s US strategy, D’Agostino commented: ‘We have been growing our New York office and we will continue to grow organically there. We are very focused on the US market and real attention will be placed on it by us over the next period.’

HSF’s chief financial officer, Steve Bowers, contextualised the discrepancy between the acceleration in the rate of revenue increase and the reduction of the rate of PEP and profit growth since this time last year: ‘Compensation costs are high because of the intense demand for talent, which remains an issue. We continue to invest and ensure that our employees are rewarded and that we have the right standing in the market for talent compensation.

‘Macro factors such as high interest rates, as well as our investment into digital technology, our core systems, and further investment in our people is the right thing to do with long-term benefits. That means that sometimes there will be a disconnect between profit and revenue growth. You won’t see many firms of our size and scale this year having their best-ever results on those three key metrics.’

He added: ‘The context is important here. If we look at the performance for FY23, you do see client demand soften in a few places, but we are still doing really well. Improving growth has not been an easy task.’

Legal Business

HSF launches Riyadh office in the wake of Saudi legal reforms

Herbert Smith Freehills has announced the launch of its new multi-disciplinary practice in Riyadh following the reforms made to the Saudi Code of Law Practice last year. Managing partner, Joza AlRasheed, will be joined by energy and infrastructure lawyer Alexander Currie and projects and project finance specialist Phil Hanson. They will work in union with HSF’s regional team, consisting of eight partners and 30 associates.

Before last year’s changes to the code, non-Saudi law firms were required to enter into a contract with Saudi-licensed lawyers in order to advise on Saudi law. However, under the newly reformed code, HSF was able to end its alliance with The Law Office of Mohammad Altammami (LOMAT) and reopen as HSF Riyadh.

Qualified to practise law in Saudi Arabia and New York, AlRasheed is a corporate lawyer who provides advice on M&A, joint ventures and regulatory compliance. She is sought by a range of clients including private entities, governments and other public bodies in the energy, mining and infrastructure sectors. Previously an associate at both White & Case and Baker McKenzie from 2014 to 2021, AlRasheed joined LOMAT as a partner in May 2022.

During his 18 years working as a partner at HSF, Currie has been based in offices all over the world, including Moscow, Dubai, London and Sydney. He advises his clients on project development and financing, disposals of energy and natural resource assets, and restructuring distressed projects. His experience includes representing First Ammonia in its unprecedented agreement to purchase 500MW of solid oxide electrolyser cells from Danish decarbonisation-solutions company Haldore Topsoe in September 2022.

Hanson joined HSF’s Dubai office as an associate in 2014, making partner in May 2022. He acts on behalf of sponsors, lenders and procurers across a spectrum of international project finance and projects matters. Hanson is active in the energy and infrastructure sectors with expertise in water, wastewater, power and transport. Key work includes advising the lenders to a joint venture which reached financial close in April this year between utilities company Engie and EDF on the Noor 2 street-lighting project in the UAE.

In conversation with Legal Business, HSF managing partner of the Middle East region, Stuart Paterson, explained the rationale for setting up in Saudi Arabia: ‘The decision to build a regional practice in Riyadh is an evolution of our strategy to support our international clients in the Kingdom.

‘The Saudi vision of diversification also brings a whole host of opportunities in energy and other key sectors for investors and advisory firms like us to get involved in.’

AlRasheed added: ‘Like other international firms, we already had a presence in the Kingdom but had contractual obligations to regional firms as we couldn’t have a direct presence under the previous law. Some firms were fully integrated in the shell of local firms, but now the new law has opened the market, a lot of firms are following suit.’

Paterson added: ‘Up until last year, we were not licensed to open as HSF Riyadh. When the new regulations came out, we planned and implemented a very careful strategy to open our own office. We hired Joza last year to lead what would become HSF Riyadh in due course. We applied for our licence completely separately from the old team.’

When probed about how practising in Saudi, a country not necessarily recognised for its prioritisation of human rights, resonates with HSF’s ESG commitments, Paterson responded: ‘We are a business that takes these matters seriously and responsibly, with policies in place to make sure we are taking on the right clients and mandates in Saudi.

‘We have policies specifically on human rights and how to manage our supply chains to ensure that any ESG concerns are assessed. The ESG challenge in Saudi is different to other jurisdictions which we are astute to, as well as flexible and proactive in our approach.’

AlRasheed summarised the impact of the new legal regulations: ‘The key driver of this law from the Kingdom’s perspective is to transfer knowledge so that the Saudi legal framework is on par with international legal standards.

‘The government is putting a lot of effort into making it easier for international big players to invest and give them the comfort that their investment is protected.’

Legal Business

HSF alliance firm Prolegis launches Singapore disputes practice with Morgan Lewis team

Prolegis, the boutique which struck a formal law alliance (FLA) with Herbert Smith Freehills in 2015, has launched a disputes practice in its Singapore heartland with the hire of a team led by Daniel Chia (pictured) from Morgan Lewis.

Chia, who led the Asia disputes practice at Morgan Lewis, will take on the role of director and head of litigation and will bring with him three other lawyers. Jonathan Tang and Yanguang Ker will join Prolegis as directors, along with associate Charlene Wee.

Prolegis’ new disputes team will work closely through the FLA with HSF’s Southeast Asia disputes practice, led by Alastair Henderson, particularly with the firm’s 14-lawyer disputes team in Singapore.

Chia regularly appears before the Singapore High Court, the Court of Appeal and the Singapore International Commercial Court in major commercial disputes, arbitration-linked cases and restructuring and insolvency proceedings.

The team has experience representing multinational and Singapore companies, private capital funds and technology companies in payments and cryptocurrency services, as well as high-net-worth individuals.

Simon Chapman KC, Asia head of dispute resolution at Herbert Smith Freehills, said: ‘This major investment in the Prolegis practice provides our clients with seamless access to Singapore law disputes advice through the FLA. Daniel and his team’s eminent reputation in the Singapore courts is the perfect complement to our own market-leading Asia disputes practice.’

‘This is a major milestone in our investment plans for this region,’ said HSF Singapore managing partner Fatim Jumabhoy. ‘To meet growing client demand, we will continue to target the best lateral hires, nurture our longstanding alliance relationships and develop our existing talent.’

Legal Business

HSF, Davis Polk and Eversheds act on collapse as market expects FTX fallout

Partners from Herbert Smith Freehills (HSF), Davis Polk and Eversheds Sutherland have secured advisory roles on the administration and £3.4m sale of online furniture retailer to Next.

In early November, filed notice of its intention to appoint administrators, advised by a HSF team led by London restructuring partner John Chetwood and including City corporate partners Ben Ward and Caroline Rae. Since the administration, 320 jobs have been axed as the company collapsed.

Legal Business

HSF names London partner Flockhart as new corporate co-head

Herbert Smith Freehills (HSF) has appointed London partner Mike Flockhart as its new joint managing partner for corporate, succeeding the veteran deals guru Stephen Wilkinson.

Flockhart (pictured), who will assume the role on 1 December, will work alongside fellow co-head and Australian partner Carolyn Pugsley. Wilkinson, well regarded as the firm’s relationship partner for key client Sky, will return to full-time practice after four years in the leadership position.

An HSF lifer and a partner since 2013, Flockhart is an M&A and equity capital markets specialist, recently advising easyJet on its £1.2bn rights issue.

Speaking to Legal Business, Flockhart said: ‘I’ve been here for 20 years and love it. We’ve made great progress under Stephen and Carolyn, and I’m eager to take over and build on the great platform they have established. I’m enthusiastic about the future.’

By all accounts Flockhart assumes the position at a good time for HSF’s corporate division. Refinitiv data for 2021 had HSF ranked number one in the UK, Australia and Asia-Pacific respectively, and third in Europe, for announced M&A deals by value. And in Legal Business’s analysis of HSF from February, disputes managing partner Damien Byrne Hill claimed the corporate team had outperformed the firm’s much-vaunted contentious division that year.

Flockhart added: ‘After back-to-back record years, we have continued in that vein with a strong first half of the year. Markets are now less robust than they were, but we are still seeing a lot of opportunities, particularly in the energy transition.’

In terms of recent highlights for the deals team, Flockhart pointed to HSF advising Capital & Counties Properties in June on its merger with Shaftesbury. The two companies have a combined £5bn real estate portfolio, with assets in many of the capital’s most famous locations including Covent Garden, Carnaby Street, Chinatown and Soho.

HSF fielded a team from the London M&A and equity capital markets groups, including Wilkinson, Alex Kay, Heidi Gallagher and Michael Jacobs.

For more on HSF’s recent fortunes, read our analysis from this year: ‘Between Two Peaks’. 

Legal Business

Hat-trick heroes: HSF hails international impact for steady financial growth

Herbert Smith Freehills (HSF) has recorded its ninth consecutive year of growth, with across-the-board increases in revenue and profit.

Global turnover saw a respectable 6% uptick from just over £1bn to £1.1bn, while overall profit increased 4% from £366.9m to £381.2m. Profit per equity partner (PEP), rose 6% from £1.099m to £1.163m.

Chief executive Justin D’Agostino hailed the ‘hat-trick’ of positive financial metrics, telling Legal Business: ‘The main story this year is strong client demand across the board, but particularly in our corporate and transactional teams. They have advised on transformative deals and are playing in the top league.

‘The other key contributor was our Asia-Pacific practice – we saw phenomenal results coming out of Australia, which has seen an M&A boom, as well as China and Hong Kong.’

The results were particularly pleasing for D’Agostino, who unveiled his ‘Ambition 2025’ strategy earlier this year, which placed a focus on boosting the firm’s transactional firepower as well as leveraging HSF’s historic presence in Asia. According to D’Agostino, the region was up by ‘double-digits’.

As outlined in our recent  ‘HSF: Between two peaks’ long read, an underweight private capital offering has long been the elephant in the room for the firm. But HSF is certainly on the right track, boasting an impressive mandate from London, with partners Mark Bardell and Gavin Davies advising Evergreen Coast Capital Corporation on its $16bn acquisition of Nielsen Holdings.

And in terms of mainstream M&A, a team led by Australian M&A partners Tony Damian and Andrew Rich assisted Sydney Aviation Alliance with its A$32bn buyout of Sydney Airport – the largest cash and infrastructure takeover in Australia’s history.

The performance of New York was also eye-catching, with the firm also reporting double-digit growth. Commentators have long been touting HSF as a potential US merger suitor, but the slow and steady approach appears to be paying off. HSF made major lateral partner investment in the region last year, attracting financial litigation partners Marc Gottridge and Lisa Fried from Hogan Lovells.

Other international jurisdictions posting significant growth this year were Australia, Hong Kong, Belfast, the Middle East, Paris and Madrid, while London was highlighted as performing ‘strongly’.

HSF’s profit increase is even more flattering when considering its 34 global partner promotions last year, the largest promotion round in the firm’s history. Alongside 14 lateral partner hires, the firm’s partner headcount swelled by roughly 1 to 2%, according to chief financial officer Steve Bowers.

The firm is clearly serious about the war for talent – it attracted headlines earlier this month when it announced a bold 14% uptick in newly-qualified (NQ) salaries from £105,000 to £120,000. It did not take a shrewd observer to note the timing of HSF’s announcement, just a day after Allen & Overy declared it was freezing its NQ rates at £107,500.

D’Agostino played down any opportunism however: ‘There’s intense competition for talent in the international legal sector. We took steps to make sure our remuneration was competitive. We are making investments very deliberately – the firm is ambitious.’

As for the upcoming year and potential economic headwinds, D’Agostino is upbeat: ‘We are confident with the strategy that we have in place. Will we see the same M&A activity in the next 12 months? Probably not, but the market remains buoyant. We are keeping the momentum for the first few months of this year and in some senses, we are exceeding it.’

Legal Business

Game on: HSF eclipses A&O with bumper £120k NQ salary

Just a day after Allen & Overy (A&O) revealed it was standing firm with its £107,500 newly-qualified (NQ) salary, Herbert Smith Freehills (HSF) has announced an eye-catching 14% uptick in NQ pay from £105,000 to £120,000.

The remuneration jump became effective today (Friday 1 July), with scope for further payouts as it does not include bonuses. While this spike in NQ pay has attracted immediate attention, the firm has also vowed to make ‘significant investment’ throughout its associate salary bands.

Alison Brown, HSF’s executive partner, said: ‘It is key that we continue to attract the very best talent. We also want to recognise high-performing lawyers at all levels, so prioritising fairness and equity across the whole associate population is key for us. These new salary increases reflect the real depth of talent we hold in our NQ and entire associate population and demonstrate that we value their contribution, as next generation leaders of our firm.’

It is an early indication that firms are split on investment appetite as a market shift potentially looms: A&O took a gamble yesterday by freezing its associate salaries, citing a ‘more challenging business environment.’

All eyes now are on the remainder of the Magic Circle, and their own conclusions on associate pay due to be announced this year. As things stand, Clifford Chance and Freshfields Bruckhaus Deringer have only a slight edge on HSF, with the pair offering novice lawyers £125,000.

Linklaters meanwhile currently matches A&O’s £107,500 payout, while Slaughter and May offers its NQs £115,000.

The timing of HSF’s move, one day after A&O’s own announcement, suggests that firms nipping at the heels of the Magic Circle have spotted an opportunity in the war for talent. While boosting pay is often a reductive approach to swaying junior talent, resting on the assumption that budding lawyers are overwhelmingly motivated by money, the £12,500 disparity between HSF’s and A&O’s rates is not an insignificant one.

Legal Business

Deals Yearbook 2022: Caroline Rae, Herbert Smith Freehills – partner since 2016

Why did you decide to become an M&A lawyer? Was there anyone in particular who inspired you early on in your career?
Once I had decided to become a lawyer there was never a doubt that I would specialise in M&A. When I was younger, I wanted to be in the cCty and to work on deals on the front page of the FT. For me, that meant M&A and it never crossed my mind that I would do anything else. It was a great source of disappointment when I realised that lawyers never get mentioned in the FT of course… but by then it was too late. When I interview graduates, I do encourage them to have an open mind about different areas of law, but I confess for me it was only ever M&A.