Legal Business

Real estate round up: Macfarlanes, HSF, Slaughter and May and Hengeler Mueller each win key commercial property mandates

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Property Herbert Smith FreehillsMacfarlanesSlaughter and May
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It’s been a week for the traditional corporate bluebloods to shine in real estate-related work, with Macfarlanes, Slaughter and May and German royalty Hengeler Mueller individually winning significant transactions.

Macfarlanes secured a key role advising CBRE Britannica on the sale of its shopping centre portfolio for £250m to US investor Kennedy Wilson, advised by Herbert Smith Freehills.

The firm directly advised Malcolm Shierson and Daniel Smith of Grant Thornton – who were appointed as administrators when CBRE Retail Property Fund became insolvent – as well as ING, Deutsche Hypothekenbank and Hypothekenbank Frankfurt, the lenders to the shopping centre fund.

The team, led by partners Jat Bains and Dominic Cunliffe, the firm first acted for ING over the financing of the Britannica retail property investment fund in 2004, having been called to advise the lenders when it fell into covenant breach. Once Britannica went into administration, the firm was further called upon by the administrators to assist with the sale of the property portfolio.

The Herbert Smith team for Kennedy Wilson comprised real estate partners James Barnes and Jeremy Walden, finance partner Simon Chadney and tax partner Will Arrenberg.

Macfarlanes real estate partner Cunliffe said: ‘The asset sale required a phenomenal effort from our team, particularly given the vast amount of information which had to be pulled together and disseminated in a very short space of time as part of the due diligence process. Given the constant threat of further tenant insolvencies potentially disrupting the sale process, we had to move quickly. We are pleased to have met the challenges presented by this particular transaction.’

The 312-lawyer firm has made efforts to boost its commercial real estate practice of late, recently hiring Ashurst’s head of construction Ann Minogue, who moved after 20 years at the top 15 rival firm, as well as commercial real estate partner Clare Breeze, who joined from Shearman & Sterling in June.

Herbert Smith Freehills, meanwhile, has also added the UK’s largest supplier to the building and construction market, Travis Perkins, as a client and was recently instructed on the sale and leaseback of its new 630,000 square foot regional distribution centre located at the Omega North in Warrington, Cheshire from Standard Life Investments Long Lease Property Fund in a deal worth £52.8m.

The team was led by real estate partner Shelagh McKibbin alongside Arrenberg.

Slaughter and May advised Legal & General Property on its £200m purchase of a City of London office and retail building of over 200,000 square feet, structured through the acquisition of the entire issued share capital of the undisclosed holding company of the property-owning vehicle. The team was led by a four-partner team including Jane Edwarde, Robert Chaplin, Jeanette Zaman and Marc Hutchinson specialised in real estate, corporate, tax and finance respectively.

Finally, in a market-leading corporate deal in the German real estate market, Hengeler Mueller is advising Berlin’s largest residential landlord by market value, GSW Immobilien, over rival Deutsche Wohnen’s public tender offer of €1.75bn to acquire the company.

Deutsche Wohnen is being advised by Sullivan & Cromwell’s Frankfurt office, with a team comprising partners Carsten Berrar, York Schnorbus, Konstantin Technau and Krystian Czerniecki.

The Hengeler Mueller team includes partners Maximilian Schiessl (corporate), Dirk Busch (capital markets), Christof Jackle (M&A), Gerd Krieger (corporate), and Christoph Stadler (antitrust) from the firm’s Duesseldorf and Frankfurt offices.

In another impressive win under Schiessl’s leadership, the German firm also scored a significant role this summer when it was appointed to advise Kabel Deutschland over Vodafone’s acquisition of the company, which offered Kabel shareholders €87 per share in cash.

sarah.downey@legalease.co.uk

Legal Business

Revolving Doors: Linklaters hires former Herbert Smith Asia head as Clayton Utz and Norton Rose make key hires

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Strategic recruitment Clayton UtzHerbert Smith FreehillsLinklatersNorton Rose Fulbright
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Herbert Smith Freehills recent internal confidence that its run of post-merger exits had come to an end has been dashed after Friday (16 August) saw former Asia disputes head Gavin Lewis leave to join Linklaters.

A ‘solid and experienced litigator’, Lewis is ‘among the best in Hong Kong’ according to The Legal 500 and his departure is a blow to the firm in the wake of the exodus of other high profile litigators such as Ted Greeno to Quinn Emanuel Urquhart & Sullivan earlier this year and Kevin Lloyd to Debevoise & Plimpton last year.

Lewis joined Herbert Smith in 1996 and after spending two years as managing director at UBS in Hong Kong, returned to the firm in 2008, becoming head of the firm’s first-tier Asia disputes practice in 2011.

His departure follows that of Hong Kong colleague and financial services regulatory partner Tim Mak, who left for Freshfields Bruckhaus Deringer in April this year. Meanwhile, Lewis is Linklaters’ third raid on Herbert Smith in less than a year, after contentious financial regulation partners Martyn Hopper and Nikunj Kiri joined in September and January respectively.

A spokesman for Herbert Smith said: ‘We’re grateful for Gavin’s contribution and wish him all the best for the future.’

The fallout of largely legacy Herbert Smith partners have been attributed to a number of factors, all related to its merger with Australia’s Freehills, including the resistance of many of Herbert Smith’s more conservative partners to operating as a global merit driven business.

Elsewhere, the ink had only just dried on SJ Berwin’s market changing tie-up with Asia-Pacific firm King & Wood Mallesons (KWM) when Clayton Utz last week announced the hire of KWM Australia real estate partner Andrew Norman.

Norman had been with legacy Mallesons for 22 years and has been involved in projects including the leasing and development of National Australia Bank’s Commercial office headquarters in Docklands, Melbourne, and the sale of GE Real Estate’s Australian property portfolio to Mirvac, valued at over Aus$1.4bn.

Clayton Utz, one of the big six Australian firms which has made clear its strategy to remain independent, is looking to boost its property practice as the country suffers from a dip in transactional activity.

A spokesperson for the firm told Legal Business: ‘It’s a strategic lateral hire in an area where we’re anticipating strong future growth.’

Meanwhile, Norton Rose Fulbright has boosted its dispute resolution practice with the hire of Elisabeth Bremner from DLA Piper in London.

Bremner’s broad ranging practice includes investigating allegations of insider dealing, market abuse and trader mis-marking in the investment banking and hedge fund sectors.

‘Our litigation team continues to grow with the appointment of Elisabeth and recent hires including Kirsty Hick. In addition, through our recent combination we have expanded our global offering to include over 1000 dispute resolution lawyers,’ said Deirdre Walker, head of dispute resolution and litigation for Europe, Middle East and Asia.

Legal Business

Benchmarking global law firms is getting harder – HSF issues partial post-merger results suggesting PEP down to £750k

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Pity the reporters covering the legal industry as the rash of international mergers and differing profit structures has seen law firms increasingly attempt an ad hoc approach to disclosing their financial performance.

Very much in this spirit, Herbert Smith Freehills (HSF) today (17 July) took the unusual step of releasing its financial performance for just seven months – the period since the union between Herbert Smith and Australian leader Freehills went live on 1 October – but refused to disclose the proceeding five months of the legacy City firm’s financial year.

The issued seven-month figures appear to support claims that the firm has seen an effective 10% fall in its profitability, at least judged by the rough ‘n’ ready formula of a pro-rata reading of the results over a 12-month period.

The seven-month results show revenues of £471.2m, with net profits of £137.2m, to be shared across 316 equity partners. On a 12-month extrapolation – admittedly a very rough guide – this equates to a profit per equity partner (PEP) of £753,000, against a legacy figure for Herbert Smith of £840,000 for the 2011/12 year. The legacy Herbert Smith PEP figure is on the basis of 131 equity partners.

The same calculation would give the combined 450-partner firm an income of £812m, though that is likely a modest over-statement given the pronounced weakness most corporate law firms saw in the market during the summer of 2012. Herbert Smith generated revenues of £480m during the 2011/12 financial year. Legacy financial results for Freehills for 2012 equate to roughly £360m – suggesting HSF has seen a modest contraction in revenue since the union went live.

David Willis, managing partner of HSF, told Legal Business that a straight financial comparison is not realistic. ‘You’re not really comparing like-for-like with the old firm. We’ve bought together two firms,’ he said.

Announcing the results, Willis highlighted the firm’s post-merger achievements, including office launches in New York, Seoul, Frankfurt and Berlin.

HSF UK managing partner Ian Cox commented: ‘We haven’t been able to fully take advantage of the merged firms because we are still in the process of the merger. The achievement we’ll look back on most favourably is putting the two firms together as seamlessly as we have done.’

The post-merger performance of HSF is being watched closely by rivals, in part due to the number of senior departures that have been seen in the UK since the deal was agreed.

General sensitivity about the yardstick by which law firms are judged has been increasingly notable over the last five years thanks to a run of international mergers, which has made comparisons more difficult, and the sustained pressure on the global economy.

A number of law firms have attempted to resist providing standardised measures of financial performance in favour of partial or selective disclosure, a development that has arguably put transparency in the legal industry backwards.

David.stevenson@legalease.co.uk

Legal Business

Revolving Doors: HSF and SJ Berwin hire finance management team as Covington and Cleary bring in litigation partners

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Herbert Smith Freehills (HSF) has filled its two most senior finance slots with the hire of Kirkland and Ellis finance chief Nick Willmott as its new chief financial officer (CFO) and Paul Roberts from BDO as its finance director.

Wilmott, who will join HSF in September, will be responsible for overseeing integration at the recently merged firm from the perspective of the global business finance function. He has been at Chicago-based Kirkland since 2004, before which he held senior finance positions at Pepsi and real estate services firm Jones Lang LaSalle, where much of his work was focused on merger integration.

Joint CEO David Willis said: ‘We are very pleased to have secured someone of Nick’s calibre to this important position. He has the skill set and experience we are looking for and will play a critical role in the firm’s on-going integration work.’

Roberts, meanwhile, will be finance director for the UK, EMEA and Asia regions. He previously held the same role at BDO and will start at HSF’s London office later in the month.

The appointments follow the hire last week by SJ Berwin of Rick Baumgartner from global management consultants McKinsey & Company as its first-ever chief operating officer.

As litigation practices thrive in the current market, Covington & Burling notably took on CMS Cameron McKenna London energy disputes partners Ben Holland and Jeremy Wilson following an increase in demand from energy clients.

London-based co-chair of the firm’s global arbitration practice, Gaëtan Verhoosel, said: ‘Ben and Jeremy are two extremely talented arbitration practitioners who will add deep energy industry expertise to our global arbitration practice. Their integration into our existing senior capability in London, which has seen a steady increase in instructions from energy clients over the years, will significantly expand our diverse and multi-jurisdictional offering.’

Wilson started at the firm on 1 July while Holland will begin later in the month.

Also boosting its litigation capability is US Cleary Gottlieb Steen & Hamilton, which has hired Frankfurt litigation partner Richard Kreindler from Shearman & Sterling; the latest German exit after Shearman announced in April this year that it was closing its Dusseldorf and Munich offices in order to refocus its German strategyon Frankfurt.

Cleary Gottlieb’s managing partner Mark Leddy said; ‘Richard brings nearly three decades of arbitration experience as an advocate and arbitrator in some of the world’s most significant commercial and investment treaty disputes, including extensive experience in German and German-language matters.’

Other recent exits have seen Shearman’s German partners leave for firms including Allen & Overy, Skadden Arps, Slate Meagher & Flom and Glade Michel Wirtz. Latham and Watkins also took a team from Shearman to launch an office in Dusseldorf in May this year.

Meanwhile in neighbouring France, Birmingham-based Wragge & Co has seen the departure of a seven-strong team from their Paris office to French law firm Franklin.

Real estate partner Henry Ranchon and finance partner David Blondelbring with them of counsel Juliette Bril and associates Charles Amar, Nadia Genisio, Suzy Lasro and Sébastien Séhili.

The appointment of Blondel comes a year after the firm recruited a five-lawyer real estate team from legacy Salans, including partner François Verdot.

According to a statement by the firm, Blondel’s hire ‘signals the firm’s commitment to the establishment of a fully-fledged bank finance capability to meet the substantial increase in demand from clients for top flight acquisition, real estate and project finance advice as well as in the key area of restructuring.’

 

francesca.fanshawe@legalease.co.uk

Legal Business

All or nothing: Only a handful of DBAs entered into as confusion reigns over hybrid model

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Litigation Calunius CapitalHerbert Smith Freehills
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‘It’s an extraordinary thing – hundreds of lawyers should have entered into Damages-Based Agreements (DBAs) by now.’

So says Leslie Perrin, former managing partner and senior partner of Osborne Clarke who is now chairman of litigation funding group Calnius Capital, with around £40m of capital to invest in litigation.

Instead, DBAs, which came into force under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and entitle a lawyer to claim a percentage of their client’s damages by way of fees, have failed to take off at all and Perrin adds: ‘The confusion around the regulations has been such that I don’t think more than a handful of DBAs have been entered into all across the country.

‘There’s so much ambiguity and grief for the first people going down that road and I think disputes lawyers are unanimous in holding this position.’

DBAs, brought in as the government banned the recoverability of success fees, have been plagued since their inception with concerns over whether the existing rules permit a hybrid, reduced fee model or are straight no-win-no-fee.

Law firms including Herbert Smith Freehills and a number of the Magic Circle have submitted lengthy submissions to the Ministry of Justice calling for a hybrid version of the DBA to be brought in, including the option to blend fixed fees or hourly billing with a DBA.

Law firms say that without some means of generating revenue along the way the current model is unworkable, as firms will face serious cash flow issues.

According to Professor Dominic Regan, a solicitor and special adviser to Lord Justice Jackson, changes are already underway and hybrid DBAs can be expected by April 2014.

The situation is an embarrassment for the government, which according to one insider was aware of the need to provide for hybrids and failed to do so in error. Immediately after LASPO came into force a spokesperson for the MoJ confirmed that it was looking at ways to improve the system.

‘There is no doubt they have completely screwed up. They know that hybrid DBAs were absolutely central to the whole concept of DBAs that was consulted on and subject to the Civil Justice Council working party chaired by Michael Napier QC. They knew they were supposed to produce regulations that would permit hybrid DBAs,’ one City litigator comments.

Meanwhile, law firms continue to explain to clients that they are waiting for the issue to be cleared up, as Lewis Silkin explains in its DBA marketing material: ‘As an alternative to receiving no fee, it may be possible for us to agree terms of a DBA with you which allow us to charge a discounted fee in the event of a loss (possibly in conjunction with third party funding). However, the regulations governing DBAs are currently unclear as to whether lawyers are permitted to charge a discounted fee, or whether the DBA must be ‘no-win-no-fee’. It is hoped that this grey area will be cleared up soon.’

sarah.downey@legalease.co.uk

Legal Business

Hogan Lovells hires rated HSF tax partner in another post merger exit for the firm

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Rated Herbert Smith Freehills (HSF) City tax disputes lawyer Rupert Shiers is set to join Hogan Lovells to head its direct tax disputes practice.

Shiers will start in his new role on Monday (24 June), working alongside indirect tax disputes head Michael Conlon QC. He focuses on disputes with HM Revenue & Customs and has led appeals to the First-tier tribunal, Upper Tribunal, Court of Appeal and Supreme Court, as well as references to the European Court of Justice. His clients have included Cadbury Schweppes and BMW Holding.

HSF is a first-tier tax litigation firm, according to Legal 500, where Shiers is said to be ‘very intelligent with a wide-ranging knowledge of tax law, whilst also being a rigorous litigator’.

Commenting on Rupert’s arrival, Fulvia Astolfi, global co-head of Hogan Lovells tax group said: ‘Hiring Rupert reflects our continuing commitment to grow and strengthen this team. Rupert’s skills and experience in conducting tax disputes speaks for themselves and he is a great fit with our practice, complementing perfectly our indirect tax disputes practice led by Michael Conlon QC.

‘With the high level of scrutiny of tax arrangements in the UK, the demand for tax disputes advice is set to increase. In addition, the ever-growing legal structure to tribunal appeals means the role played by tax disputes lawyers is increasingly significant.’

Shiers added: ‘Hogan Lovells offers both a top performing global litigation practice and first class tax advisory practice which, combined, make the firm a perfect fit for my tax disputes expertise and provide an excellent global platform to really develop a direct tax disputes practice.’

His departure is the latest in a series of high profile exits from HSF, including co-head of global arbitration Charles Kaplan to Orrick, Herrington & Sutcliffe in May, and veteran litigator Ted Greeno to Quinn Emanuel Urquhart & Sullivan in March.

sarah.downey@legalease.co.uk

Legal Business

Global Expansion: Bingham continues recruitment drive with hire of HSF London funds partner

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Strategic recruitment Bingham McCutchenHerbert Smith Freehills
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Bingham McCutchen has expanded its transatlantic offering to European fund managers with the hire of Herbert Smith Freehills (HSF) rated partner Thiha Tun, only weeks after seven White & Case funds lawyers joined in Tokyo.

Tun, who works with private equity, real estate, infrastructure and hedge funds, will join Bingham’s investment management practice in September, in line with the top 30 Legal Business Global 100’s firm’s stated ambition to bolster its international funds and financial regulatory capabilities.Tun will work closely with partner John Holton, who relocated his international funds practice to the London office from Boston in 2011, as well as partners John Clark in listed funds, Helen Marshall in UK regulation and enforcement and Chris Leonard in UK regulation and funds.

London managing partner James Roome said: ‘Thiha’s arrival will bolster our capabilities to offer the combined US and UK funds and regulatory advice that many European fund managers require.’

Tun will also work alongside the firm’s investment management team in the US and Asia and, according to Roome, his Asian and emerging market funds practice meshes well with Bingham’s global financial regulatory practice.

Tun’s move comes within weeks of the firm adding seven White & Case lawyers  to its investment funds team in Tokyo, led by partners Christopher Wells and Tomoko Fuminaga. 

Furthermore, both expansions come within a year of Bingham adding 13 lawyers to its Washington investment funds team, after Thomas Harman, John McGuire and Christopher Menconi joined from Morgan Lewis & Bockius last July.

For HSF, meanwhile, the departure is the latest of a series of exits, including co-head of global arbitration Charles Kaplan to Orrick, Herrington & Sutcliffe in May, and veteran litigator Ted Greeno to Quinn Emanuel Urquhart & Sullivan in March, as the firm beds down its recent merger.

jaishree.kalia@legalease.co.uk

Legal Business

HSF merger throws up partnership issues as Herbert Smith issues cash call

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Global giant raises capital and shakes up corporate as HSF moves through merger integration

The merger between Herbert Smith and Freehills continues to give rise to growing pains as last month saw the UK half of the firm issue a multimillion pound cash call to its equity partners in preparation for financial integration.

The cash call was issued in a memo sent earlier this year to all equity partners. It is understood that they have been asked to contribute £2,000 per equity point. Herbert Smith’s lockstep ladder runs from 43 to 100, meaning those at the top of equity, around 65 individuals, are liable to pay around £200,000 each.

Legal Business

Cinven gifts Freshfields with IPO while HSF defends Severn Trent

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Corporate CinvenFreshfields Bruckhaus DeringerHerbert Smith FreehillsSevern Trent
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A handful of major corporate mandates were unveiled last month as private equity house Cinven kicked off its £1.4bn proposed initial public offering (IPO) of annuity provider Partnership Assurance Group and Severn Trent rejected a preliminary takeover offer by an international consortium.

Amid signs of renewed confidence in the IPO market, Cinven instructed Freshfields Bruckhaus Deringer – led by corporate partners Mark Austin and Adrian Maguire – to advise on the float of Partnership, which Cinven acquired for €200m in 2008.

Legal Business

Corporate stirrings: Cinven gifts Freshfields with IPO while HSF defends Severn Trent

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Corporate Freshfields Bruckhaus DeringerHerbert Smith Freehills
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A handful of major corporate mandates were unveiled this week as private equity house Cinven kicked off its £1.4bn proposed initial public offering (IPO) of annuity provider Partnership Assurance Group and Severn Trent rejected a preliminary takeover offer by an international consortium.

Amidst signs of renewed confidence in the IPO market, Cinven has instructed Freshfields Bruckhaus Deringer – led by corporate partners Mark Austin and Adrian Maguire – to advise on the float of Partnership Assurance, which Cinven acquired for €200m in 2008.

Corporate partners Sarah Murphy and David Higgins are also advising on the deal, together with employment and benefits partner Simon Evans. The Magic Circle firm is acting as US and English counsel.

Freshfields has instructed offshore firm Ogier to advise Partnership Assurance on matters in Jersey, while Magic Circle rival Clifford Chance is advising the co-ordinators Bank of America, Merrill Lynch and Morgan Stanley, led by equity capital markets partner Adrian Cartwright and City-based US securities partner John Connolly. Travers Smith has scored a role advising Partnership Assurance led by private equity partner Edmund Reed and tax partner Kathleen Russ.

Freshfields has been acting for Cinven for the last two decades so the firm was an obvious selection for the private equity house, Maguire told Legal Business. Earlier this year, Freshfields advised Cinven and Spire Healthcare on the partial refinancing of its loan facilities through a sale of 12 of its 38 hospital properties, raising approximately £700m.

Austin said: ‘This IPO demonstrates the increasing trend of the financial sponsor community to look to the equity capital markets, which have been more stable recently, as a route to exit.’

Maguire added: ‘With the reduced M&A activity, our financial sponsor clients with assets close to maturity are now seeing an IPO exit as a very viable alternative to a traditional sale process.’

The firm has been working on the deal since the end of last year and expects it to be completed by June this year.

Elsewhere, Herbert Smith Freehills (HSF) led by City corporate partners Stephen Wilkinson and Robert Moore has taken the lead role for longstanding client Severn Trent on a potential bid from a Canadian, Kuwaiti and UK consortium, reportedly valuing the target at £5bn.

Allen & Overy led by corporate partner Richard Evans is advising the consortium, made up of Borealis Infrastructure Management, the Kuwait Investment Office and Universities Superannuation Scheme.

The deal was confirmed on 14 May by Severn Trent and following a meeting with the consortium yesterday (16 May), the FTSE 100 water and waste company announced its rejection, commenting: ‘The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent. Accordingly the board has informed the consortium that it has rejected the proposal.’

 

jaishree.kalia@legalease.co.uk