Legal Business

Shearman and Hogan Lovells – better the devil you don’t

This comment piece has been updated to reflect an announcement late on Thursday (2 March) that merger talks between Shearman & Sterling and Hogan Lovells have been called off. In a joint statement, the firms said: ‘As has been widely reported, our firms have been in preliminary and exploratory conversations regarding a possible combination. After careful consideration, we have mutually agreed that a combination at this time is not in the best interest of either firm. We have been deeply impressed with each other’s business, practices and people and wish each other continued success.’

It’s funny how the market gets about law firm mergers. Ringing around various senior lawyers for a hot take on what they thought of a Shearman & Sterling and Hogan Lovells tie-up, most were pretty scathing.

‘A merger of losers’ and ‘a combination of mediocre and mediocre’ were just two pejorative remarks being flung around the Square Mile. Few were kind. Now that the dust has settled on the idea, and I hold my hand up to playing devil’s advocate on this one, these initial reactions strike me as a little churlish.

Legal Business

A not-so-equal footing: rankings data highlights Hogan-Shearman contrasts

An analysis of The Legal 500 rankings underlines some of the key factors driving the Hogan Lovells-Shearman merger talks

From a Legal 500 perspective, Hogan Lovells dwarfs Shearman & Sterling in terms of total rankings, with three times as many spots across the UK, US, EMEA, Asia-Pacific and Latin America – 343 to 113.

Legal Business

No personal best this year for Hogan Lovells as turnover and profits decline

As the financial reporting season kicks off once more, Hogan Lovells has today (22 February) reported a 7% drop in revenue to $2.43bn as PEP fell 8% to $2.28m.

This represents a $174m reduction to the firm’s top line and looks likely to set the mood for many Global 100 players as market forces continue to take their toll. The results mark a disruption to Hogan Lovells’ purple patch, following on from last year’s 13% revenue increase to $2.61bn and eye-catching 26% hike in PEP to $2.48m, as well as a solid showing on a three-year track.

UK revenue was $464m, down 13%, from $534m last year. Of this, $449m was generated out of London and $15m from Birmingham. The UK accounted for 19% of the firm’s total revenue compared to 21% last year.

The breakdown of revenues by region held steady, with the Americas accounting for 48% of income this year, compared with 49% in 2021/22, while EMEA’s share of turnover increased from 45% to 46%. Asia-Pacific, meanwhile, accounted for the remaining 6%, on a par with last year.

Despite widespread talk of an overall slowdown in transactions, the proportion of revenue generated by corporate and finance work dropped by only 2%, to 40%. The disputes practice was stable at 28%, while global regulatory and intellectual property, media and technology (IPMT) increased from 30% to 32%.

Speaking to Legal Business, chief executive Miguel Zaldivar (pictured) maintained that this performance was still strong: ‘This was actually our second-best year ever. Last year was a record year for us. Every star aligned, and we pushed forward and had great opportunities. This year is better than 2020 in terms of both revenue and profits.’

Deputy chief executive Michael Davison added: ‘It’s a bit like saying, sure, you hit your personal best last time, but on this race you missed it. Is that a problem? It’s still a very good result.’

Zaldivar noted that headwinds were particularly fierce in corporate work. ‘There was a slowdown in M&A and capital markets, that hit all firms in similar ways,’ he said.

Global financial instability also saw revenues when reported in Sterling increase from £1.9bn to nearly £2bn. ‘The main driver was currency’,’Zaldivar explained. ‘The British pound suffered a correction during the fiscal year.’

In the face of these external shocks, Zaldivar and Davison argued that the results show resilience, as well as stability in headcount. Said Zaldivar: ‘Some firms saw partner attrition. We didn’t.’ In fact, the firm announced the promotion of 38 new partners and 77 new counsel, which Zaldivar said was the largest class of partners ever promoted, up 40% from the 27 announced in 2022. These included the largest proportion of female partner promotions in the firm’s history, at 58%.

A list of standout mandates included advising Duke Realty Corporation on its combination with logistics real estate company Prologis, valued at $23bn. In UK M&A, the firm advised Shaftesbury in its all-share merger with Capital & Counties Properties, creating a combined portfolio valued at $5bn.

Davison said that the firm intends to continue with its sector-focused strategy: ‘When we’re looking to expand, we need to think about where our clients want us to be through the prism of our industry focus.’

‘Energy is going to really carry the day for us in 2023’, added Zaldivar, pointing to the increasing prominence of the sector in the context of both the ongoing energy transition and heightened concerns about energy security raised by Russia’s invasion of Ukraine.

Commenting on the US strategy, Zaldivar said: ‘We have what we call four engines. One is in Washington DC, and the others are in the EMEA market. But there are three markets where we’re working very hard to grow, and those are Texas, New York, and California. Our desire is to achieve greater scale, particularly in New York, where we aim to build a fifth engine. In New York, our main focus is financial institutions. In California it’s tech. And then in Texas it’s a combination of energy and life sciences.’

Neither Zaldivar nor Davison would be drawn on the rumours of an upcoming merger with Shearman & Sterling that persist in the market.

alexander.ryan@legalbusiness.co.uk

Legal Business

Hogan Lovells hails ‘record’ financial results as revenues and profits soar

In what it calls the ‘most successful year in the firm’s history’, Hogan Lovells has added $300m to its top line as revenue increased 13% from $2.3bn to $2.6bn.

It posted an even more striking profit result, with PEP shooting upwards 26% from $2m to $2.5m. Revenue per lawyer also saw a healthy 17% increase from $884,000 to just over $1m.

The 13% revenue hike far outstrips last year’s 3% increase in global fee income. Remarkably, the 26% jump in PEP is lower than last year’s startling 31% rate, although this was caveated by the introduction of a compensation floor for some partners in response to the pandemic.

Chief executive Miguel Zaldivar (pictured) hailed a stringent ‘financial discipline’ driving profitability: ‘There was no significant change to the partnership structure in the last year – we got invoices out early and converted WIP into revenues.’

Embodying the firm’s transatlantic focus, 47% of Hogan Lovells’ business originated from the Americas, with an equal 47% being generated from its EMEA business. The remaining 6% was derived from Asia. The UK specifically made up $534m of the firm’s overall revenue, representing 21% of the business.

Zaldivar said the results were a reflection of his ‘balance, balance, balance’ mantra: ‘We’ve had record years in every market. The economy in the US is booming, and we saw record performances in London, Germany and France. In our business, that geographical balance used to be a hedge, but it has now become a driver of success.’

In terms of practice groups, Hogan Lovells’ corporate and finance group represented 42% of turnover, with global regulatory and intellectual property, media and technology at 30%, and litigation, arbitration and employment at 28%.

Headline mandates for the period included the firm’s US practice, led by Silicon Valley M&A partner Keith Flaum, advising Oracle Corporation on its $28.3bn acquisition of Cerner Corporation. And in a notable disputes matter, Hogan Lovells is representing ENRC in its high-profile claims against the UK Serious Fraud Office following the conclusion of a long-running fraud and bribery probe.

Deputy chief executive Michael Davison told Legal Business: ‘Usually when there’s an M&A boom, there’s a slowdown in contentious work, but we’ve had both. It’s been a record year for our litigators.’

Hogan Lovells also announced this week plans to relocate to a new London headquarters in 2026, swapping Atlantic House for soon-to-be built premises at Holborn Viaduct. The firm will occupy all 12 floors of the building, which will comprise 266,000 square feet.

For an in-depth look at Hogan Lovells’ track record since its 2010 transatlantic merger, see ‘Winning Hartson minds’.

Tom.baker@legalease.co.uk

Legal Business

Global 100: Hogan Lovells – Winning Hartson minds

The champagne corks had long-since popped when the great and the good of legacy British firm Lovells and Washington DC powerhouse Hogan & Hartson met at a practice area retreat in Barcelona in 2013. While there was cause for cheer at the bedding in of their union, there was also business to attend to.

Adrian Walker, now a global board member and head of Hogan Lovells’ ESG practice, was then a couple of years into his role as global co-head of infrastructure, energy, resources and projects, a role he shared with Hogan Lovells’ current chief executive, Miguel Zaldivar. He recalls the odd mix of levity and gravity: ‘I interviewed a load of people at the firm for a video we did at the retreat for a bit of fun. I spoke to Miguel about values, and how the world will look in 50 years. He mentioned green energy and autonomous cars but noted that core values will always remain the same. We learn them from our predecessors and pass them on to the next generation.

Legal Business

Baptism of fire: New Hogan Lovells chiefs unveil record results as PEP nudges $2m

Taking the helm of a global law firm is no small feat at the best of times, much less so amid a global pandemic. However Hogan Lovells’ chief executive Miguel Zaldivar and his deputy Michael Davison, who assumed their roles last summer, had cause for cheer as the pair revealed a solid set of financial results, including a 31% surge in profit per equity partner (PEP) to $1.97m from $1.5m in 2019.

Global revenue grew a more sedate 3% to $2.3bn in 2020 compared with $2.25bn the previous year and revenue per lawyer (RPL) rose 4% to $884,000 from $850,000.  Geographical performance has been broadly in line with last year’s output, with the Americas accounting for roughly 49% of total billings, EMEA 45% and Asia-Pacific 6%.
Practice-wise, corporate and finance brought in 41% of total billings; global regulatory and intellectual property, media and technology (IPMT) generated 31%; and litigation, arbitration and employment 28%.

Speaking to Legal Business, Zaldivar (pictured) noted: ‘The highlight of the year for me has been the new management team transitioning in the middle of the pandemic. We have hit the ground running and the firm has had its highest revenue and profit in history. The credit for that goes to the partnership.’

Explaining the substantial PEP increase, he said: ‘We are not an outlier in achieving double-digit PEP growth, many other firms have done this too. The main contributor was not a drop in equity partners. In 2020 we introduced a floor on compensation for some partners to act as protection to them without a financial risk to the firm. We decided that would be prudent, given the fluctuation in the market, and that has had the effect of increasing PEP.’

He praised Davison and teams around the world for their impressive financial discipline. ‘Our lawyers are doing timesheets daily and sending bills out every month. Clients have paid and cashflows have been positive and healthy. Michael has been the enforcer of the rules!’

But it has not all been plain sailing, as Davison admits. ‘We will look back on this as a uniquely challenging situation. We continued to operate but in a very different way and supported each other through, but it has not been easy.’ He pointed to a voluntary redundancy scheme that saw business services staff cut in the US and UK as a cost-saving measure.

The pair provided a long list of standout matters for the year, including in corporate and finance, advising Marvell Technology on its $9bn acquisition of Inphi and acting for Arm, the UK-headquartered multinational semiconductor and software design company of SoftBank , in its $40bn acquisition by NVIDIA.

The firm acted for ENRC on high-profile claims against the Serious Fraud Office and its former legal advisers and secured a major win for Uber on regaining its London licence and right to continue operating in London.
Looking ahead, Zaldivar insists the firm will continue to invest in the engines of London, Washington DC and Germany, as well as in the Paris office.

It is clear that, under new leadership, The US and Asia businesses will remain at the forefront of the firm’s ambitions. Concluded Zaldivar: ‘In the US we are challenging the partnership to be more successful in New York, California and Texas. We have to grow in the US. We plan to grow organically in Shanghai, Beijing and Hong Kong, adding more corporate lawyers. We want to be stronger in China. That is the future of Hogan Lovells.’

nathalie.tidman@legalease.co.uk

Legal Business

Latham and Hogan Lovells move to remote working globally amid alarming coronavirus spread

Latham & Watkins and Hogan Lovells have become the latest law firms to ramp up their response to the increasingly global spread of COVID-19 by sending all their staff home.

The news comes as the number of casualties continues to rise around the world, with the latest figures reporting over 200,000 confirmed cases while the death toll has passed 8,000. 

Latham confirmed today (18 March) that its staff is working remotely across all the 2,270-lawyer firm’s 30 global offices.

Chief operating officer LeeAnn Black said in a statement: ‘Except where a jurisdiction has moved to a lockdown, our offices around the world remain physically open although the vast majority of our lawyers and professional staff are working remotely.’

Hogan Lovells also confirmed that the firm has moved to remote working globally.

The 2,642-lawyer transatlantic firm extended yesterday the measure to its UK, American and Australian offices, while its continental European outposts had already been working remotely since earlier in the month.

A spokesperson for the firm said in a statement: ‘We tested our remote working capabilities in the US last week and the UK and Europe this week, and had successful results.’ They added that the firm was ‘confident that we have the tools in place to conduct our business as usual’.

A number of firms have moved to similar arrangements over the last few days, including City firms Linklaters, Clifford Chance, Slaughter and May and Allen & Overy as well as transatlantic firm Eversheds Sutherland.

marco.cillario@legalease.co.uk

Legal Business

Pretty, pretty, pretty good: outgoing Hogan Lovells chief lauds best-ever financials as PEP surpasses $1.5m

Hogan Lovells has posted its strongest financial performance since its transatlantic union a decade ago, with turnover rising 6% and solid year-on-year growth in all key metrics.

Revenue in 2019 came in at $2.246bn, profits per equity partner (PEP) was up 9% to just over $1.5m despite the firm growing its equity ranks by 13 to 536, while revenue per lawyer (RPL) rose 6% to $850,000 as total headcount grew marginally to 2,642.

The results announced today (21 February) make for a nice farewell gift for chief executive Steve Immelt (pictured) and his deputy David Hudd as the duo prepare to step down at the end of June after six years.

Speaking to Legal Business, Immelt described the performance as ‘The result of what we have been working on since we came on in 2014: get our business running better, focus on profits, go to market with a view to be working on our clients’ most complex matters.’

Turnover at the firm’s 500-lawyer London office also made a big jump in 2019, growing 10% to £332.6m compared to a much slower 3% rise the previous year and accounting for a fifth of Hogan Lovells’ total billings.

‘The performance comes from consistency across the piece – strong corporate transactions, busy period for our litigation practices – and strong discipline in getting our bills out and collecting,’ said UK and Africa managing partner Susan Bright, pointing to strong performances in financial services, TMT and life sciences.

Under Immelt and Hudd’s watch, Hogan Lovells has hiked global revenue 26% and PEP 24%, a notable improvement on the firm’s previous run, when turnover and partner profits rose by just 7% and 9% between the 2010 merger and 2014.

While performance remained sluggish in 2014 and 2015, turnover has increased its pace of growth since 2016. But it wasn’t until 2019 that partner profits caught up, although the 8% rise in PEP to $1.38m in 2018 was largely due to a 6% drop in the number of equity partners.

‘There was not one thing in 2019 that suddenly moved the needle, there was a lot of good business across the entire platform,’ Immelt said. ‘I feel pretty good about 2019 as an indicator of what our direction is now and what we can do moving forward.’

He spoke of a challenging start to 2019 on the corporate side, with ‘a lot of stop and starting as everybody was trying to figure out when a recession was going to hit or expansion was going to stop’. But the second half was much better as the year ‘ended with a sense that the sail may be continuing for a while’.

Among the mandates handled by the corporate practice, which accounted for 29% of the firm’s billings in 2019 compared to 31% the previous year, Immelt noted the $4bn merger between Industrial Property Trust and Prologis: ‘It reflects a cross-border collaboration where the relationship began in the US and ended up with a very significant mandate executed in Europe.’

The firm’s flagship contentious practices matched corporate this year at 29% of billings, with cases including a Court of Appeal victory for PrivatBank in a $1.9bn fraud case against its former shareholders. Immelt also pointed to the firm’s work for Equifax, handling ‘one of the largest data breaches in US history’: ‘We were brought in for both the regulatory aspects and the following litigation.’

The regulatory practice increased its weight within the firm, accounting for 19% of turnover compared to 16% in 2018, while finance brought in 13% and IP, media and technology the remaining 10%.

The firm continued to bill around half of its revenue out of America, with Europe contributing 43% and Asia 7%.

Hogan Lovells’ strong financial results come despite a three-partner private equity team moving to Paul Hastings, including City practice head Ed Harris and despite its South African merger partner splitting from the firm]. The firm responded with 40 lateral hires in 2019, and Bright said it was now looking to rebuild its London PE practice and grow its UK corporate ranks.

As they prepare to hand over to US-based Miguel Zaldivar and London’s Michael Davison respectively, Immelt and Hudd described a more integrated firm better known for cross-border activity than in 2014. ‘There is a very strong platform, both Miguel and Michael have been part of that story and will take the firm to the next level,’ Hudd said.

Immelt admitted that the firm still needs to build a stronger practice in New York, where it only fields 150 lawyers, and revealed Zaldivar was relocating to Manhattan to lead the efforts. California was also a priority, he added, and the firm needs to ‘figure out what’s going to happen in Asia’: ‘China is going to have a leading role in the world, and law firms need to have a strong China practice – and that’s not just Hong Kong.’

marco.cillario@legalease.co.uk

For more on the challenges ahead for Hogan Lovells’ new chief, see ‘Miguel who?

Legal Business

Revolving doors: City laterals bounce back with Milbank, Weightmans and Lewis Silkin

City lateral recruitment regained momentum following a slow Christmas holiday break, with Milbank, Weightmans, and Lewis Silkin all making hires in London.

Milbank hired M&A partner Lisa O’Neill from McDermott Will & Emery in London. O’Neill has experience in corporate and energy transactions with clients including FTSE 250 companies, international and independent oil & gas companies, financial institutions, global investment firms and private equity funds.

Global head of corporate group Norbert Rieger commented: ‘The addition of Lisa underscores our commitment to growing our global M&A practice at the highest levels in the market. She is well respected and knowledgeable in a range of industries, and her depth of experience advising corporates on sophisticated M&A transactions will be invaluable to our clients.’

Also in the City, Weightmans doubled up with the hires of healthcare partner Kiran Sekhon and criminal regulatory partner Lili Oliver.

Sekhon joins the firm as a healthcare partner from Capsticks and has over 17 years’ experience in medical defence litigation. Oliver, meanwhile, joins from Clyde & Co where she was head of corporate risk in the safety, health and environmental department.

Partner and head of Weightmans’ London office Tim Lang told Legal Business: ‘Lili and Kiran are true leaders in their fields and great additions to our fast-growing London offering. [We have] almost 20 new partners across the firm this year alone, and we are looking forward to continuing this momentum into next year.’

Elsewhere, Lewis Silkin hired planning partner Sara Hanrahan to its real estate practice group as head of the planning team from Blake Morgan, where she was also head of planning.

Hanrahan has experience in advising clients in the public and private sector on contentious and non-contentious planning matters and has advised private developers, infrastructure and utilities firms, retails and leisure operators and high net worth investors.

Managing partner Giles Crown told Legal Business: ‘We were looking to deepen our offering and fill in gaps in certain key areas and one aspect of that was a fairly long standing search to replace planning expertise. There are a number of aspects of what we were looking for that Sara very ably fulfills.’

The team focuses on four core areas, corporate occupiers, retail including luxury and leisure, development work and investor work including family and high net worth individuals.

Hanrahan told Legal Business: ‘I do have experience in the four areas of real estate that the firm is looking to develop. I think therefore the synergy with the experience I have and the vision that the firm has for the next few years goes together very well.’

In Birmingham, Hogan Lovells office head Michael Gallimore left the firm to join boutique planning law firm Town Legal as partner.

Gallimore joined Hogan Lovells as partner in 1988 and was head of planning between 1998 and 2016 before becoming head of the firm’s Birmingham office in 2017.

Gallimore told Legal Business: ‘I had come to the end of my period heading up the office in Birmingham, so it was a natural point for me to consider what I wanted to do going forward and the opportunity arose to join Town Legal. I was very keen to get back into client facing work and I knew a number of partners from Town Legal.

‘The big advantage of the firm is that it’s absolutely focused on planning work and therefore the level of investment that they’re able to make, the strong commitment and the depth of experience that they’ve got in the planning field was a real attraction. They’re not diverted by other practice areas.’

In December, Hogan Lovells also lost its planning team head Claire Dutch to Ashurst.

Finally, Dentons added partner Robert Weber from White & Case to its corporate practice in Germany.

Weber has more than 20 years’ experience in stock corporation law and related capital markets law. Managing partner of the German office Andreas Ziegenhagen said: ‘The fact that we are investing both in classic fields of advice such as stock corporation law, and in future-oriented, technology-supported legal advice reflects the dynamic development of our German practice.’

muna.abdi@legalease.co.uk

Legal Business

Hogan Lovells ramps up London partner promotions in 29-strong round

Hogan Lovells has increased partnership promotions in the City for the fourth successive year, minting eight in London amid a slightly scaled back round.

The firm announced today (6 January) it has promoted 29 of its lawyer to the partnership in the last round overseen by chief executive Steve Immelt (pictured), who will hand over to Miguel Zaldivar in June following a confirmatory vote by partnership in late December last year. The firm made 30 promotions last year.

London was the office with the highest number of partners promoted globally this year, ahead of Washington DC’s seven. New York only saw one promotion, while no lawyers were promoted in the firm’s West Coast offices.

Overall, Hogan Lovells promoted the same number of partners in Europe and the Americas, 14, with six lawyers promoted in continental Europe. One lawyer was promoted in its Tokyo office.

Speaking to Legal Business, UK and Africa head Susan Bright said she was ‘particularly pleased’ with the gender split of the London intake, which saw four women and four men promoted.

Women accounted for 44% of the cohort globally, meaning they now make up 26% of the firm’s 822 partners. The firm looks unlikely to reach its target of 30% female representation at partner level by 2022, however.

Bright pointed to a higher female representation in London, where women make up 29% of the partnership, and said the firm was still ‘absolutely confident’ it would reach its global 30% target over the next two years: ‘It’s the top priority for us, we are absolutely on it. Internal promotions are only one aspect of the overall constitution of our partnership: the other two are laterals coming in, and retirement and departures. It’s all those things that contribute to it.’

Hogan Lovells’ flagship regulatory practice took the lion share of promotions globally, with nine lawyers promoted including James Black and Jane Summerfield in London. Corporate was second, with eight minted including tax lawyer Fiona Bantock, real estate specialist Hannah Quarterman and transactional lawyer Jonathan Russell in the City.

The seven lawyers promoted in the firm’s litigation practice, headed by deputy chief executive-elect Michael Davison, included London-based Jennifer Dickey and Liam Naidoo. UK resident James Maltby was one of two finance lawyers promoted, with three others minted in the firm’s IP, media and tech group.

marco.cillario@legalease.co.uk

Hogan Lovells’ partner promotions in full:

• Andrea Atteritano, LAE (Litigation), Rome

• Fiona Bantock, Corporate (Tax), London

• James Black, Global Regulatory (Financial Services Regulatory), London

• Carrie A. DeLone, LAE (Litigation), Washington D.C.

• Jennifer Dickey, LAE (Litigation), London

• Ana Maria Gutiérrez, Global Regulatory (Environment and Natural Resources), Denver

• Margaux J. Hall, Global Regulatory (Health Care), Washington, D.C.

• Sabrina Handke, Corporate (Real Estate), Munich

• George W. Ingham, LAE (Employment), Northern Virginia

• Alexander Koch, Corporate (Transactional), Luxembourg

• Lina R. Kontos, Global Regulatory (Medical Devices and Technology), Washington, D.C.

• Tony Lin, Global Regulatory (Communications, Internet and Media), Washington, D.C.

• James Maltby, Finance (Business Restructuring and Insolvency), London

• Liam Naidoo, LAE (Investigations, White Collar and Fraud), London

• Aaron Oakley, Intellectual Property, Media, and Technology, Denver

• George O’Brien, Global Regulatory (Pharmaceuticals and Biotechnology), Washington, D.C.

• Luis Ernesto Peón Barriga, LAE (International Arbitration), Mexico City

• Hannah Quarterman, Corporate (Real Estate – Planning), London

• Alexander Stefan Rieger, Finance (Infrastructure, Energy, Resources and Projects), Frankfurt

• Christian Ritz, Global Regulatory (Antitrust, Competition and Economic Regulation), Munich

• Jonathan Russell, Corporate (Transactional), London

• Ignacio Sánchez, LAE (Investigations, White Collar and Fraud), Madrid

• Abigail C. Smith, Corporate (Transactional), Washington, D.C.

• Jane Summerfield, Global Regulatory (Pharmaceuticals and Biotechnology), London

• Tomoe Takahashi, Intellectual Property, Media, and Technology, Tokyo

• Adriana V. Tibbitts, Corporate (Transactional), Baltimore

• Jared R. Wessel – Global Regulatory (International Trade and Investment), Washington D.C.

• Gabrielle (Gabi) M. Witt, Corporate (Transactional), Northern Virginia

• Ernest Yakob, Intellectual Property, Media, and Technology, New York