Legal Business

‘Common sense’: Herbert Smith follows Linklaters’ lead in personal relationship disclosure and whistleblowing network

‘Common sense’: Herbert Smith follows Linklaters’ lead in personal relationship disclosure and whistleblowing network

Herbert Smith Freehills (HSF) has become the second leading law firm to instruct partners and staff to disclose personal relationships with colleagues, while also introducing a third-party whistleblowing platform.

As part of a shake-up of its global policies and guidelines, HSF has introduced a new policy entitled ‘Personal Relationships in the Workplace.’ The firm stated that it is intended to ‘provide a framework to deal sensitively, consistently and fairly with personal relationships which may affect the business.’

However an HSF statement insisted: ‘it is not intended to prohibit partners or staff from having a personal relationship with a work colleague, client or supplier.’ Notably, the guideline also asserts: ‘all partners and staff are asked to use common sense in assessing whether or not this policy is relevant to their circumstances.’

Such initiatives can be seen as a response to the #MeToo movement – from which the legal industry has been far from exempt – and the firm’s decision to introduce a third-party whistleblowing service compounds that.

The service, called Faircall, is independently monitored by Big Four accountancy firm KPMG and is able to be contacted by phone or email to report professional wrongdoing, harassment or other misconduct.

HSF will be eager to be seen cracking down on harassment and misconduct, after an Australian partner was suspended in March following claims of sexual harassment.

HSF chief executive Mark Rigotti told Legal Business however that plans to make such policy changes had been in place since before Christmas. On the Australian incident, Rigotti said: ‘It’s not a reaction to that circumstance but that situation certainly sped things up a bit.’

Rigotti added: ‘There’s no doubt there’s a focus on the themes represented in the #MeToo movement at the moment. What it has done is make us think about what best practice is everywhere. People should feel comfortable coming forward and speaking up and seeking help, whether that’s in the UK, Australia or anywhere.’

It is too early to say whether such procedural revamps are the start of a trend, but HSF has followed closely in Linklaters’ footsteps. The Magic Circle firm announced earlier this month that it was to introduce similar rules on personal relationships, and also ushered in an independent whistleblowing service called SpeakUp.

Just last week, disputes leader Quinn Emanuel Urquhart & Sullivan became the latest firm to sack a partner after what the firm described as ‘inappropriate behaviour.’

Legal Business

Revolving Doors: Herbert Smith Freehills raids Watson Farley as firms strengthen in the City and abroad

Revolving Doors: Herbert Smith Freehills raids Watson Farley as firms strengthen in the City and abroad

Four Watson Farley & Williams (WFW) partners have decamped to Herbert Smith Freehills (HSF) – including aviation specialist Rex Rosales – while lateral hires in the City and abroad continue.

The four-partner hire for HSF sees two moves to London and Singapore respectively. WFW’s aviation sector head Rosales will be joined by asset finance group specialist Jahnavi Ramachandran in London, while finance expert Siva Subramaniam and aviation partner Samuel Kolehmainen leave WFW to join HSF’s Singapore office.

In a statement, HSF global head of finance, real estates and projects Jason Ricketts said: ‘With unprecedented investment levels in aviation and other transport, infrastructure and projects across the globe, strengthening our asset finance practice makes good business sense’.

Meanwhile Hogan Lovells has launched a trade practice in London with a partner hire from Squire Patton Boggs. Aline Doussin will be the firm’s first dedicated trade partner in the City. She had been a partner at Squire Patton Boggs since 2014.

Global head of Hogan Lovells government regulatory practice Alice Valder said: ‘Hiring additional experienced trade partners in Europe has been a strategic priority for us.’.’

Elsewhere in the City, Stephenson Harwood has hired Catriona Berman to the firm’s real estate group. Berman joins from Goodwin Procter, which she joined in 2015.

Arnold & Porter also strengthened in London, with the hire of Jane Wessel from Crowell & Moring. Wessel holds experience in competition damages litigation and will enhance Arnold & Porter’s antitrust litigation practice.

John Schmidt, who leads Arnold & Porter’s London competition team, said: ‘Jane brings broad experience to our firm, enhancing our existing multijurisdictional and multilingual London team, and further bolstering our ability to serve clients globally’.

International hires last week included the arrivals of Jacques-Philippe Gunther and Adrien Giraud at Latham & Watkins in Paris and Brussels from Willkie Farr & Gallagher as the firm strengthened its antitrust practice on the continent.

Gunther brings experience advising clients on complex disputes before the European and French competition authorities, the European Court of Justice and the French courts. Giraud has experience practising in New York, Paris and Brussels, advising on an array of competition matters.

In Spain, Pinsent Masons further expanded with the appointment of public law specialist Pablo Dorronsoro. Joining from Baker Mackenzie, where he spearheaded the public law and infrastructure department, Dorronsoro will head up Pinsents public law office in Madrid.

Further afield, the standout hire in the US was Kirkland & Ellis bringing over experienced litigation partner Sandra Goldstein to its New York office from Cravath, Swaine & Moore.

DAC Beachcroft has also appointed a partner to its disputes group. Pedro Claros will co-head the department’s international arbitration practicee and joins from leading Spanish independent Cuatrecasas. DAC completed two senior partner hires in the same week, also adding Graeme Bell from the London office of Irish heavyweight Mason Hayes & Curran.

In the Asia Pacific, Clyde & Co appointed insurance and cybersecurity practitioner John Moran to its Sydney office. Moran joins from Norton Rose Fulbright, and his addition will deepen Clyde & Co’s insurance footprint in Australia.

Clyde & Co senior partner, Simon Konsta said: ‘John has a standout reputation in the insurance industry and a practice that runs across the core of our insurance business in Australia.’

Legal Business

Corporate trumps disputes again as Palmer wins second term as HSF senior partner

Corporate trumps disputes again as Palmer wins second term as HSF senior partner

Herbert Smith Freehills (HSF) lifer and incumbent James Palmer has seen off a challenge from disputes partner Mark Shillito to be re-elected as senior partner and chair of the firm.

After successfully winning approval from over 50% of the partnership  – although the firm could not confirm how many votes he received – Palmer will begin his second term of three years on 1 May. 

Palmer said: ‘I am delighted and greatly honoured to be taking on a second term as senior partner…I look forward to working with all our colleagues and our leadership team in pursuing our strategy and ambitions. The firm continues to perform well in our markets globally and remains superbly placed to strengthen still further.’

The result will come as little surprise after both internal and external observers roundly backed Palmer as the safe bet. One HSF partner told Legal Business when the nominees were announced: ‘our current senior partner is a very good person to be in the role.’

Shillito was billed as a symbolic challenger when news that he was running for leadership came last month. As head of disputes, his standing against corporate partner Palmer further fanned the flames of a persistent and long-running rift between HSF’s heavyweight transactional and contentious branches.

Palmer has been with HSF since joining as a trainee in 1986. After being made partner in 1994, he acted as the firm’s global head of corporate between 2010 and 2012.

In November 2014, Palmer triumphed over Sydney-based partner Mark Crean, London litigation head Tim Parkes and EMEA managing partner Allen Hanen to win the senior partner role.

Going forward, Palmer will continue fee-earning. Major clients on his books include BP, BAT, National Grid and the Weir Group.

HSF chief executive Mark Rigotti said: ‘The re-election of James will bring a degree of stability and continuity to the implementation of our strategy.’


Legal Business

#MeToo: HSF latest firm to axe partner after sexual harassment allegations

#MeToo: HSF latest firm to axe partner after sexual harassment allegations

The string of sexual harassment scandals that are blighting the legal profession shows no sign of stopping, with Herbert Smith Freehills (HSF) becoming the latest firm to fire a partner following claims of workplace misconduct.

An unnamed male partner based in Australia was suspended from the partnership on 9 March, after an internal investigation discovered evidence of misconduct. The investigation came after a number of female employees of the firm made claims of sexual harassment. HSF will remove the partner from the partnership on 23 March.

HSF said in a statement: ‘In the past two weeks several people have come forward to make a number of allegations about the partner’s behaviour. Herbert Smith Freehills is taking them very seriously and has acted promptly. The misconduct is behaviour for which Herbert Smith Freehills has no tolerance.’

Mark Rigotti, HSF chief executive, commented: ‘We will not accept behaviour that violates a person’s dignity or erodes their self-respect. As custodians of the business, the partnership in particular must live and breathe our values and do all they can to ensure that all our team members enjoy an open, inclusive and supportive working environment that encourages them to thrive and enables them to be their whole, true selves at work and outside work.

‘On a personal level, I am deeply disappointed to hear how the behaviour of this person has impacted others at our firm. Every one of our people deserves to be treated with respect and dignity and the action we are taking should highlight the importance of this.’

The news comes in the same week as the Solicitors Regulation Authority (SRA) issued a warning to firms to combat the misuse of non-disclosure agreements (NDAs). The SRA stipulated that NDAs are improperly used if they seek to prevent a person from reporting misconduct to the police or other prosecution or regulatory body.

In recent months, multiple firms have been caught up in sexual harassment controversies. Baker McKenzie last month issued a review of complaints handling, following a historic allegation of sexual assault against a high-ranking partner at the firm. In Germany, former Linklaters partner Thomas Elser was sentenced to three years and three months in prison by a court in Munich for assaulting a student at a firm party several years ago. While a former Scottish partner left Dentons in February after the firm launched an internal investigation into allegations of past inappropriate sexual behaviour.

Legal Business

Corporate v litigation: Palmer to contest HSF senior partner election against disputes head Shillito

Corporate v litigation: Palmer to contest HSF senior partner election against disputes head Shillito

In an announcement that will do little to bridge the long-running divide between the firm’s transactional and contentious branches, Herbert Smith Freehills’ (HSF) senior partner election will see incumbent corporate partner James Palmer go head to head against dispute resolution chief Mark Shillito.

Nominations for the election closed today (23 February), with the vote slated to take place during the second week of March. There will be just one round of voting as there are just two candidates, with the winner requiring over 50% of the vote to be successful.

The safe money is on Palmer (pictured) to be re-elected who, despite ruffling a few feathers internally, carries significant respect both within and outside the firm. One external peer described Palmer as ‘a good leader, a nice chap and he speaks well. He’s outward-looking and collegiate, he’s supportive of those around him.’ A HSF partner added: ‘our current senior partner is a very good person to be in the role.’

Palmer also has experience on his side. He saw off three other contenders for the HSF senior partner role in 2014, with London litigation head Tim Parkes, EMEA managing partner Allen Hanen and Sydney-based M&A partner Mark Crean losing out. According to Palmer at the time, the partnership did not vote along geographic lines and he had ‘a lot of support in Australia.’

Shillito has pedigree, having been with HSF since he was a trainee, becoming a partner in 1996. He became head of disputes for the UK & US when legacy Herbert Smith merged with Freehills in 2012, and has overseen high-value disputes in sectors such as life sciences, media and telecoms.

But one former partner is doubtful that Shillito has what it takes: ‘I can see that the litigation side of the practice might be flexing its muscles but I don’t really think that Mark is likely to cause any change in the strategy of the firm. It needs someone who is going to improve the transactional side – someone with clear thinking and with the courage and leadership to make changes.’

There had been speculation that widely respected arbitration head Paul Hodges QC would also be in the running for senior partner and, as one HSF insider insisted: ‘If Paula Hodges were to put herself forward she would win.’

Shillito’s decision to stand provides clarity to this week’s revelation that he was stepping aside from his role as head of disputes. As of 1 May, much-touted banking litigator Damien Byrne Hill will assume Shillito’s old role .

Rather than the geographic focus of HSF’s last senior partner election, this election will be defined by the ongoing turf war between the firm’s pre-eminent disputes arm and its comparatively weaker corporate division. One ex-partner commented: ‘For many years there was a tension between corporate and litigation with litigation being the stronger part of the firm. But the firm’s strategy has been built on the demands of the corporate side of the practice.  It would take a very strong leader to change that.’

HSF declined to comment.

(£) For more on HSF, read this month’s interview with the firm’s chief executive Mark Rigotti.

Legal Business

‘There’s scope for growth’: Damien Byrne Hill on taking over HSF’s disputes team

‘There’s scope for growth’: Damien Byrne Hill on taking over HSF’s disputes team

Herbert Smith Freehills (HSF) today (21 February) announced that much-touted banking litigator Damien Byrne Hill will be replacing Mark Shillito as head of disputes for the UK and US on 1 May.

Unsurprisingly as one of the key names in what remains the City’s bellwether ComLit shop, Byrne Hill has acted on a string of marquee matters in his 27 years at HSF (by way of legacy Herbert Smith), including defending Goldman Sachs in a $1.2bn claim brought by the Libyan Investment Authority. Shillito, who had run the practice for ten years, including steering it through a turbulent period in the wake of its 2012 union with Australian leader Freehills, returns to full time fee earning.

Legal Business caught up with Byrne Hill to discuss his new role:

LB: How does it feel as a HSF-lifer to become head of disputes?

Truthfully it is not what I had ever planned to do. But now that I’ve agreed to do it I am genuinely excited about what I can bring to the role and continue the things that have started under Mark.

LB: How would you describe the job your predecessor has done?

I hadn’t realised that he had done it for so long. He’s a very level-headed partner who fully understands the value of the thing he is charged with looking after. He listens fairly to new ideas and it’s enabled us to respond to change over time.

LB: Do you think you’ve just taken over the most difficult job at the firm? Disputes remains the core brand for HSF.

Managing a practice that is very successful has challenges, but it’s not as difficult as trying to build a new practice or run a practice that needs to be transformed. There’s scope for growth and development, but against the backdrop of a very successful practice.

LB: What are your ambitions for the US disputes practice?

I don’t take over until 1 May so my view is currently parochial rather than the one I’ll develop over time. That said, we need to build in relation to the areas which we originally set the offices up to do: arbitration, corporate crime and investigations and the US aspect of international litigation.

LB: How does this appointment compare to some of the other highlights of your career?

The closest comparison is being made a partner in 2000. That marks the recognition of one’s partners, which is difficult to beat.

LB: What attracted you to HSF in the first place then?

One was disputes, which I knew I wanted to do. The other was shipping, which I thought I wanted to do. As it turned out, I never did any shipping. When studying law, shipping had some of the most interesting disputes so I thought it was the pinnacle of litigation. I’m not sure it is now.

(£) For more on HSF, read this month’s interview with the firm’s chief executive Mark Rigotti.

Legal Business

LLP accounts: HSF records ‘exceptional’ revenue growth in Europe as profit holds steady

LLP accounts: HSF records ‘exceptional’ revenue growth in Europe as profit holds steady

A standout performance in Europe helped Herbert Smith Freehills (HSF) boost global revenues by 11% in 2016/17, according to the firm’s latest filings with Companies House, although increased overhead saw operating profit barely move.

Global revenues rose from £832.2m to £920.8m, with the firm claiming that its EMEA region ‘generated exceptional revenue growth’. The accounts cited in particular ‘excellent performances in Paris, Moscow and Madrid’ as well as a robust showing from its Asia practices. Mark Rigotti (pictured), chief executive of HSF, commented: ‘It is very encouraging to see another year of growth as our brand continues to strengthen across markets and regions.’

While often overshadowed by its disputes practice, the accounts also highlighted the performance of HSF’s corporate arm. The firm reportedly advised on over 120 cross-border deals throughout the financial year, with a combined value of around $160bn. Among the major mandates was advising Sky on its proposed £18bn buyout by 21st Century Fox.

At the end of last year HSF shook-up its remuneration system, hiking plateau equity shares from 100 to 130 points. The move, which came weeks after Freshfields Bruckhaus Deringer pushed through similar reforms, has given HSF the freedom to extend its core pay ladder and allow top earners to take home well over £1.5m.

But the changes have not come into play in time to affect the most-recent accounts, with the firm’s highest-earning partner receiving the exact amount as in the previous financial year: £1.6m. The number of partners at the firm was essentially static, increasing from 373 to 374. The number of fee-earners at the firm rose 5% from 2,317 to 2,444, with overall headcount numbers increasing from 4,073 to 4,248.

HSF’s key management personnel, which consists of members of the firm’s global executive committee, took home a smaller share of profits in 2016/17. In 2015/16, the group took home a total of £8.7m, compared to £8.5m this year.

The muted payouts most likely reflect the fact that HSF’s operating profit also barely grew, rising less than 1% from £245.7m to £247.9m. The accounts also detailed payments made out to former members, totalling £3.9m, compared to £1.1m the year previous. The firm said the figure represents payment of profit entitlements to partners after they retired.

Legal Business

Being great at one thing is not enough – remaking a City leader for the times

Being great at one thing is not enough – remaking a City leader for the times

LB: What have been the big wins for Herbert Smith Freehills [HSF] over the last two years?

Mark Rigotti (MR): It has been the shift from integration. That’s by definition backwards-looking so it’s good to move on. We’ve been strengthening some of the smaller offices. We’re different from the Magic Circle that have long-established European practices. We’ve grown about 50% in five years in mainland Europe. The German, Madrid and Paris offices are all significantly bigger. There are more European clients and more leadership positions going to Europeans. That’s a big cultural shift.

Legal Business

The edge of the cliff – Brexit response for worried GCs

The edge of the cliff – Brexit response for worried GCs

For UK business, 2018 will be dominated by one question: when do we push the button on Brexit? Months of scenario planning have given a sense of the possible outcomes, but there is little confidence that a decision will be taken in full possession of the facts.

‘We are 500 or so days on from the referendum, and it is still not clear what the arrangements between the UK and the EU will be,’ notes Kirsty Cooper, group general counsel (GC) and company secretary at Aviva. ‘As GCs we are being asked to give our best guess, but the scale of the conjecture with Brexit is unusual.’

Legal Business

Goodbye lockstep – HSF latest City leader to give richer rewards for rainmakers

Goodbye lockstep – HSF latest City leader to give richer rewards for rainmakers

Herbert Smith Freehills (HSF) has backed a shake-up of its partnership that will boost top performers’ earnings by a third, hiking plateau equity shares from 100 to 130 points.

The move substantially lengthens its core pay ‘ladder’ and paves the way for top City earners to take home well over £1.5m with bonuses. The overhaul comes just weeks after Freshfields Bruckhaus Deringer voted through similar reforms.

HSF’s package, which was voted through this week after proposals were put to partners late last month, means top earners will receive more than three times that of entry-level equity partners, who remain on 43 points.

Core remuneration can already be topped up via a bonus scheme that reserves 5% of profits to reward exceptional short-term contribution. With the bonus scheme, which is unchanged, partners can get annual awards of up to 30 points, potentially now giving top performers 160 points firm-wide.

The reforms build on a broader shake-up of HSF’s partnership model in 2013, which followed the 2012 union of Herbert Smith and Australian leader Freehills. The earlier reforms introduced considerable flexibility to Herbert Smith’s eight-year lockstep, though it maintained some differences between the partnership in Australia and the rest of the firm.

The new model will see the 43-100-point equity scale continue with a ‘presumption of progression’ for eight years. Beyond 100 points, seniority will be largely discarded as a factor in remuneration in favour of a more substantially ‘contribution-driven’ assessment.

The changes leave HSF’s partnership in Australia unaffected. There is a ‘presumption of progression’ up to around 78 points for Australia partners. Past that, high performers could already receive up to 130 points, reflecting the wider spread in earnings at Freehills historically.

While the firm maintains a lower equity entry point in Australia and South Africa, believed to be around 35 points, HSF will now implement the 130-point ceiling firm-wide, with the 43-point entry used in all other markets after proposals for a lower entry point in some other markets were rejected.

HSF said that the latest reforms, which will take effect in May 2018, are designed to improve flexibility. ‘The changes ensure that our remuneration system continues to support the business as we implement our global strategies, improves flexibility to reflect the different markets in which we operate and incentivises teams to deliver the best service from the whole firm to our clients,’ according to a firm statement.

While the reforms are a further step from Herbert Smith’s legacy pay model, one partner argued that the model remains a ‘modified lockstep’, stressing that HSF still avoids sharp annual changes in earnings in favour of a medium-term view of partner contribution. He commented: ‘Four years ago was the big change. This is useful additional flexibility but if you compare us to some US firms, this is still a lockstep.’

HSF’s most recent LLP accounts show its highest-paid partner took home £1.6m in 2015/16, a drop of 12% on the previous year, when this was £1.8m. The firm generated profit per equity partner of £760,000 in 2016/17 against revenues of £920.5m. HSF currently has 337 full equity partners, with 141 fixed-share partners, referred to internally as ‘below point’ partners.

The development certainly reflects the growing pressure on City-bred law firms to compete with US rivals frequently offering huge paydays for high-billing partners. London’s big four Magic Circle firms have all modified their partnerships in recent years to make it easier to retain and attract star individuals.