Legal Business

Revolving doors: McDermott hires Hogan Lovells private equity head as Dechert loses partners in London and Paris

The lateral market maintained momentum last week as McDermott Will & Emery hired from Hogan Lovells with both Addleshaw Goddard and Paul Hastings targeting Dechert.

McDermott added Hogan Lovells’ global private equity head Tom Whelan. Whelan, who is experienced in private equity life cycle, has worked with private equity sponsors, multi strategy funds and corporates. His work includes advising on buyouts, M&A, bolt-ons, restructurings and refinancings through to exits.

Hamid Yunis, McDermott’s London managing partner told Legal Business: ‘We are always looking to build upon the strong practices which we have in London and to add top quality lawyers who are equally focused on providing world class client service.’

Addleshaws has hired restructuring partner Paul Fleming who joins the London business support and restructuring insolvency practice from Dechert.

Fleming has been involved in cross-border work, both in restructuring and contentious insolvency matters and advises creditors including institutional lenders and bondholders, stakeholders, insolvency practitioners and directors.

Partner and head of business support and restructuring, Ged Barnes commented: ‘This is the start of an ambitious strategy for the team which will help us to capitalise on our international offices.  Paul’s expertise in cross border insolvencies, funds recovery work and complex, high value insolvency litigation is a great fit with our existing practice.’

Meanwhile, Burges Salmon hired partner Stuart McMillan to its banking team from DLA Piper. He has worked in energy and infrastructure finance and advised banks and borrowers on project finance, acquisition finance and real estate finance deals involving cross-border financing. He will help develop the general Scottish banking practice as well as the firm’s infrastructure, real estate and energy offering.

Burges Salmon managing partner, Roger Bull told Legal Business: ‘Stuart is extremely high quality with a great reputation in the market. From our perspective, he’s got great experience in relation to finance and projects along with some of the other sectors that we’ve been focusing on like energy and renewables. He has those particular skills that will assist and drive our client offer forward in Edinburgh.

‘Banking is performing well. We’re having strong performance across the firm so far this financial year. The banking team are ever expanding their remit, expertise and focus which is very much aligned with Stuart’s appointment,’ added Bull.

Elsewhere, Fieldfisher has hired Paul Stockley as its new co-head of oil and gas. He joins the energy and natural resources group in London from Womble Bond Dickinson where he was head of oil and gas.

Stockley said: ‘The firm’s reputation for all forms of energy and natural resources work is already well-established across the industry and I am encouraged by its ambitious plans for future growth. I look forward to being a part of those plans, leveraging off a tremendous brand and platform.’

Paul Hastings has added to its Paris office with the hire of corporate partner Charles Cardon from Dechert. He has a focus on takeovers, M&A, private equity, and capital markets transactions.

Cardon advises public companies in their takeover bids, issuance of securities, governance matters, disclosure requirements and relationship with shareholders, as well as corporate law matters.

Meanwhile, in Brussels, Alston & Bird has added senior privacy and cybersecurity partner Wim Nauwelaerts from Sidley Austin.

Privacy and cybersecurity co-chair Jim Harvey commented: ‘Privacy and cybersecurity continue to be increasingly critical issues for CEOs and boards, especially among US-based multinationals that view data protection as a global issue.

‘Wim is an internationally recognised attorney in the EU privacy and cybersecurity arena with a well-earned reputation as a trusted voice in advising senior executives in the US, Europe, and elsewhere on strategic business decisions and initiatives involving their companies’ most valuable data assets,’ Harvey added.

Legal Business

Hogan Lovells’ International business slims down headcount amid 8% revenue growth

Profits at Hogan Lovells’ non-US business rose 11% to £281m last year as it slimmed down lawyer headcount by 37 in 2018, the firm’s LLP accounts have shown.

The accounts published today (2 October) show revenue from the firm’s offices in 21 countries outside the States grew 8% to £860m in the year to December 2018, up from £798m the previous year.

The turnover growth came as fee-earner average headcount during the year reduced to 1,632 from 1,669, while support staff numbers were down by 12 to 1,639. Total staff was down to 3,259 from 3,308.

Despite the headcount reduction, staff costs rose 2% to £335m. The firm said in summer 2018 it would cut more than 50 City business support roles in a bid to improve efficiency.

The average number of equity partners also shrank slightly to 320 compared with 329 in 2017.

This combined with the profit increase meant average profit per equity partner (PEP) shot up 17% to £1.07m from £913,000.

UK revenue rose 8% to £324m, while in continental Europe it grew 11% to £421m, but turnover in Asia Pacific and the Middle East was down 3% to £115m.

A spokesperson for the firm said it continued to have ‘a robust balance sheet with no net debt outstanding at year end’.

The LLP books show that the non-US offices, which account for 49% of turnover, outpaced the firm’s overall revenue growth.

In February Hogan Lovells posted revenue of $2.12bn, up 4% on $2.04bn in 2017, a less pacey rate of growth than the 6% achieved in each of the previous two years. In sterling terms this translated as a 1% rise to £1.6bn.

But global PEP rose 8% to $1.38m, or 4% to £1.04m, after the firm reduced equity partner headcount 6% to 523 in 2018.

Chief executive Steve Immelt told Legal Business last February that the firm had to be ‘very careful not to be overstaffed, and we were very focused on that’. He added: ‘Notwithstanding those changes, revenue went up and revenue per lawyer is considerably up.’

Legal Business

Hogan Lovells losing bulk of South African practice as merger partner breaks away

Hogan Lovells’ South African headcount is being slashed as its merger partner splits from the firm following a troubled six-year tie-up.

The firm confirmed today (1 August) that it is undergoing a ‘restructuring’ of its South African practice that will see 71 of its lawyers set up an independent law firm, while Hogan Lovells will re-launch a 20-lawyer office in the country under its UK LLP.

The move, approved by the partnership last night, brings to an end the troubled tie-up with South African firm Routledge Modise, launched in December 2013, which saw its local branch operate as a financially and operationally separate entity under the Hogan Lovells logo.

The office met several hurdles along its way, seeing its headcount shrink from 120 to 91 and recently attracting criticism for its work for the South African Revenue Service (SARS). At the beginning of last year, Labour peer and former cabinet minister Peter Hain accused the firm of being complicit with corruption and money laundering in the country and called on the Solicitors Regulation Authority (SRA) to withdraw its authorisation as a recognised body.

In summer 2018 the SRA confirmed it would not take any action against the firm, and the South African Law Society found no evidence of misconduct by the firm.

The office also saw the departure of one of its partners amid allegations of sexual misconduct between the end of 2017 and the beginning of 2018. Hogan Lovells declined to provide details of the episode, nor specify whether it had been reported to local authorities at the time.

As a result of last night’s decision, five of Hogan Lovells’ South Africa partners and 15 other lawyers will form a fully-integrated office focused on corporate, finance and natural resources work.

Meanwhile, 21 other partners – including South African chairman Nkonzo Hlatshwayo – will launch an independent firm under a different name alongside 50 other lawyers following a two-month transition period.

A spokesperson for Hogan Lovells told Legal Business that while the sexual misconduct episode was unrelated to yesterday’s decision, the issues involving the work for the SARS had been a factor, as they arose from work that the firm did not necessarily wish to continue carrying out in the country.

‘One year ago we were looking at a position where the office was coming under severe criticism,’ the spokesperson said. ‘We made sure we went through the appropriate process in terms of giving evidence to Parliament and supporting the independent investigation by the Law Society.’

They added that once all claims against the firm had been dismissed, ‘we looked at the relationship we had with Hogan Lovells South Africa: this is the only office that is not fully integrated’. After a conversation with the South African partnership the firm concluded that ‘the best way forward was to have a smaller, focused office’ while Hogan Lovells South Africa pursued its own strategy with a wider range of clients in the South African market, ‘for example the government sector which is not necessarily a sector we want to pursue in South Africa.’

Hogan Lovells’ Johannesburg-based services center, which hosts around 200 employees, is unaffected by this decision.

Legal Business

Inflection point – Ashurst steps back from the brink but can the revival last?

It was not all plain sailing,’ reflects Ben Tidswell, Ashurst’s chair, on the aftermath of its 2013 merger with Australia’s Blake Dawson. ‘But partners saw what we were trying to achieve and most wanted to be part of that. Now the firm is enjoying the success of that.’

Tidswell speaks with the palpable relief of one whose darkest days are behind him. The merged firm is now on the brink of revealing its best financial showing to date after years of indifferent or poor performance. Tidswell may well celebrate given the upheaval that preceded this inflection point, dwarfing any woes suffered by City rival Lovells following its 2010 union with Washington DC’s Hogan & Hartson.

Legal Business

Legal 500 Data: Behind the story

The Legal 500 2019 London rankings

Ashurst and Hogan Lovells are the subject of this month’s cover feature – both firms that underwent large mergers in the last few years. Here we look at the firms’ London rankings in The Legal 500. For further information see ‘Inflection point’.


Legal Business

Tightening of ranks at Hogan Lovells sees PEP approach $1.4m as turnover rises 4%

Hogan Lovells has posted an 8% increase in profit per equity partner (PEP) to $1.38m after reducing equity partner headcount 6% to 523 in 2018.

The firm today (25 February) posted revenue of $2.12bn, up 4% on $2.04bn in 2017, a less pacey rate of growth than the 6% achieved in each of the previous two years. Revenue per lawyer (RPL) grew at a faster 6% pace to $804,000 as the firm cut its legal workforce 2% to 2,637 while total partner headcount, including non-equity partners, was down 4% to 803.

‘In today’s market having a strong handle on capacity is critical to achieve profitable growth,’ chief executive Steve Immelt (pictured) told Legal Business. ‘We have to be lean, we have to have adequate staffing but we have to be very careful not to be overstaffed, and we were very focused on that. Notwithstanding those changes, revenue went up and RLP is considerably up.’

The numbers are less flattering in sterling teams, with revenue rising by less than 1% to £1.6bn while PEP passed the £1m mark growing 4% to £1.035m.

London revenue meanwhile broke the £300m barrier rising 3% to £301.9m.

While the firm made 31 partner promotions and 18 lateral hires, losses in 2018 included London litigation duo Jon Holland and Andrea Monks to Latham & Watkins in January and private equity partner Robert Darwin to Dechert in August, as well as a five-strong California team to Baker McKenzie.

The firm also cut 54 of its around 500 business support roles in London, moving most of them to its low cost centres in Johannesburg, Louisville and Birmingham.

The majority of revenue came once again from America, which accounted for 51% of the firm’s billings. Europe was second at 42%, with Asia Pacific and the Middle East contributing the remaining 7%.

Key mandates for the corporate practice, which accounted for 31% of turnover, included Walmart’s $16bn acquisition of a 77% stake in Flipkart. The firm’s contentious and employment practice, which was busy with key client Uber on a number of cases, brought in 28% of billings.

Immelt said that the regulatory practice, accounting for 18% of turnover, had a ‘very strong year’. ‘That’s not surprising. We have a leading trade practice and there are trade issues happening all over the place.’

The remaining turnover came from finance (14%) and intellectual property, media and technology (9%).

Looking to the future, Immelt said that work levels had been healthy at the start of 2019 and concluded: ‘Brexit is typical of the type of volatility that we see today, but that’s the benefit of being in a very well hedged firm like Hogan Lovells. We have a strong US practice, a strong practice in London and a strong practice in Europe.’

Legal Business

Hogan Lovells partner leaves firm after watching pornography at work

A Hogan Lovells partner has agreed to leave the firm after being caught viewing pornographic images on a work computer.

The firm suspended the partner in November last year and launched an investigation after the partner in question was caught by a lawyer from a window in Irwin Mitchell’s offices, which are next to Hogan Lovells’ base on Holborn Viaduct.

According to RollOnFriday, the Irwin Mitchell lawyer used a mobile phone to film the partner and sent the footage to lawyers at Hogan Lovells, who reported the incident to the firm’s HR team.

A spokesperson for the firm said:  ‘After our investigation we agreed that the partner would not return after their suspension period and they are no longer with the firm. This incident is not a reflection of who we are and the culture and inclusive values we stand for.’

Following the incident the firm has also ‘tightened’ its policy on the websites that can be accessed at work: ‘We didn’t block access to websites unless they represented a cyber security risk (e.g. they have malware on them). The nature of our work for clients sometimes means we need to carry out investigations in areas which require us to have flexible access. We have reviewed and tightened this policy.’

Law firms have in recent months been subject to increasing scrutiny on partners’ misbehaviour after several reports of sexual misconduct emerged in the wake of the #MeToo movement.

Firms to see partners leave following complaints of sexual harassment include Reed Smith, Quinn Emanuel Urquhart & Sullivan, Latham & Watkins, Herbert Smith Freehills and Dentons.

Meanwhile, the Solicitors Regulation Authority is investigating Baker McKenzie after accusations that one of its London partners sexually assaulted an associate in 2012. After news of the incident came to light in February last year, the firm announced the partner would leave and acknowledged it should have handled the incident better.

Legal Business

Hogan Lovells cuts 54 City jobs as law firms keep slashing London biz service roles

Hogan Lovells is to cut 54 business support jobs from its City arm as the firm moves to expand its low-cost hubs around the world.

The Anglo-American law firm announced today (20 June) that most of the roles have been moved to its low cost centres in Johannesburg and Louisville, and a new business support team established in Birmingham.

The announcement follows a review of 90 non-legal City jobs launched in September last year. A spokesperson said 17 staff members remain under consultation, with further updates expected later this summer. Hogan Lovells counts around 500 business support roles in London.

The firm said in a statement this was ‘a carefully considered step focused on improving our business performance and sustainability in a rapidly evolving and competitive legal market’.

Some of the 54 roles were on short-term contracts and a handful of staff have transferred their roles to Birmingham, though the move represents a substantial reduction in the size of its City staffing.

Regional managing partner Susan Bright told Legal Business: ‘It is about efficiency – there are obviously cost savings in having people in Johannesburg, Louisville and Birmingham – but it’s also about creating teams of people doing specialist roles working together.’

This move is the latest in a series of comparable initiatives by City law firms. Last month Ashurst launched a redundancy review which could result in 80% of its 100-strong secretarial team in London being axed, while Pinsent Masons started a consultation on cutting 100 non-legal jobs last year . Most recently Ince & Co this month announced it was to cut 30 roles, primarily impacting its business service ranks.

As law firms keep slashing back workforces in expensive City-based locations, north or near-shoring hubs are expanding rapidly. It is an astute nod to client calls for efficiency but cynics will note that this trend is occurring at a period of rising partner profits and fresh hikes to associate salaries, two very well paid groups that are largely untouched by such brutal calculations.

Legal Business

Partnership Perspectives

‘The Dickensian management role of closed doors is a thing of the past.’

Jonathan Kewley, partner and co-head of Clifford Chance’s tech group. Made up in 2017

What attracted you to partnership?

I’m working in tech, a space that didn’t exist 30 years ago. There are challenges facing clients that didn’t exist five years ago. The tech environment fits with the character traits of partnership. You have to be entrepreneurial, and it’s more exciting to be that way. It maintains interest.

Legal Business

Momentum at last for Hogan Lovells as global turnover passes $2bn mark

Eight years into its transatlantic union Hogan Lovells is finally gaining some momentum, posting another solid financial performance and passing the $2bn revenue mark in 2017.

Global turnover rose 6% to $2.036bn while profit per equity partner (PEP) returned to growth, rising 2% to $1.28m. The weak pound meant the firm experienced an 11% top line uptick to £1.58bn in sterling terms.

Revenue per lawyer grew 3% to $758,500 and headcount rose 3% to 2,685 in a year marked by a merger in Boston and 37 lateral hires.

This follows a mixed 2016, where the firm boosted turnover by 6% after years of lacklustre performance but PEP remained flat.

Chief executive Steve Immelt (pictured) said he was ‘very pleased’ with the firm’s latest results but told Legal Business of a challenging year as the uncertainty surrounding the start of Donald Trump’s administration in the US, Brexit and the UK general election had a ‘restraining effect on what people do and are planning to do’.

‘We had a lot of up and downs in work over the course of the year but the last few months were very strong,’ added Immelt, whose term was recently extended by a further two years until June 2020. ‘We go into 2018 with momentum and the macroeconomic outlook is more positive.’

Corporate and regulatory, which accounted for 32% and 16% of revenues respectively, had a ‘very strong year’ according to Immelt. The litigation, arbitration and employment group was the second largest contributor at 28%, while the finance team and intellectual property, media and technology group contributed 14% and 10% each.

Growth was slightly more subdued in London, where turnover rose 4% to £292.6m, although the London team led on one of the leading corporate mandates for the firm worldwide, the £3bn takeover of Paysafe by Blackstone and CVC, and saw the arrival of Freshfields investment funds veteran Jonathan Baird.

Most of the revenue came from the Americas, which brought in 52% of fee income followed by Europe at 41%. The firm was in expansion mode throughout the year in the US. In September it merged with Boston-based litigation and investigation firm Collora, taking on all of its 15 partners, while last spring it made a major Silicon Valley play with four corporate partners from Weil, Gotshal & Manges.

‘We do a tremendous amount of work in life sciences, so not having an office in Boston seemed like a gap,’ said Immelt. ‘So far it’s been terrific. We are working together on matters they brought with them.’

The firm also ventured into non-legal advice in London, launching a financial services regulatory consulting practice led by former PwC director Steve Murphy. Immelt said the practice was still ‘at an early stage but we continue to see opportunities to offer clients non-legal advice’.