Legal Business

US financial results 2013: Latham sees moderate growth in PEP and revenue

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US firms Latham & Watkins
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Still basking in London in the news that it has hired leading Clifford Chance (CC) private equity partner Kem Ihenacho, Latham & Watkins yesterday (19 February) released moderate US growth figures for 2013, with revenue up by 2.7% to $2.29bn.

Profit per partner has increased by almost 2% to $2,490,000, up from $2,443,000 the previous financial year. Revenue per lawyer has also increased by a modest 1.4% to $1,110,000 from a 2012 figure of $1,095,000.

While the firm continues to make significant inroads in its key markets, speaking to Legal Business yesterday, outgoing managing partner Bob Dell said that the global economy continues to be a challenge. ‘We’ve been dealing with an anaemic economy around the globe for 6 years now,’ he said.

‘We keep waiting for the recovery to kick in fully. For a very large firm with offices around the world, the global economy makes a difference.’

However, over a five-year period, the Los Angeles-originated firm’s revenue has increased by 14%, and in a statement yesterday the firm attributed its sustained growth to its industry focus, integrated practice and culture.

In London, Ihenacho is the firm’s third private equity lateral hire from CC after David Walker and Tom Evans, and Nick Cline, London managing partner, said: ‘The significant investments we made last year have helped generate strong momentum in the London market and give us good reason to be optimistic about the year ahead. There is renewed confidence in Europe, capital markets are performing strongly and our ability to switch debt financing work across different product areas and between top-tier practices in London and New York continues to stand us apart.’

Ihenacho’s hire is the sixth London lateral since May last year, with the others being Dean Naumowicz from Norton Rose Fulbright; Simon Bushell from Herbert Smith Freehills; and Nick Benson from Weil Gotshal & Manges. The office now has 250 fee-earners including over 60 partners.

In the past year, Latham has opened an office in Dusseldorf with three top-ranked partners from Shearman & Sterling. A fourth partner in the group joined Latham in Munich and the firm has also made senior hires to its office in Brussels.

Dell told Legal Business: ‘Our culture is to keep innovative and entreprenurial but at the same time collegiate; that balance is an important one to strike and I think we’ll continue in that way.’

Latham’s results come after other early 2013 results from Dechert and Sidley Austin revealed a growth in turnover of 6.6% and 7% respectively.

david.stevenson@legalease.co.uk

For further in depth analysis of the US market see Taking Manhattan – can the Wall Street elite hold out in the age of the $5bn law firm?

Legal Business

Taking London – Latham on the offensive in the Square Mile with hire of third private equity partner from CC

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Strategic recruitment Clifford ChanceLatham & Watkins
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As our Taking Manhattan cover feature underlines, the Los Angeles-bred Latham & Watkins continues to make major inroads in the key global hubs of New York and increasingly London. Making the point again, the global giant has today (18 February), announced the recruitment of high-profile Clifford Chance (CC) partner Kem Ihenacho, the third private equity partner to join Latham’s City arm from CC in the last 12 months.

The move follows the departure of former CC global head of private equity David Walker in April last year and another CC partner Tom Evans in October.

Ihenacho was the co-head of CC’s Africa practice and a key relationship partner for the Carlyle Group. Walker was also a key Carlyle contact and the loss of Ihenacho will raise fresh questions over CC’s grip on the client. Former Latham associate, Jeffrey Ferguson, is general counsel at Carlyle and sits on the management board.

Latham recently advised Carlyle on the acquisitions of Addison Lee and Chesapeake Packaging. The Addison Lee deal was led by Michael Bond, who handles the firm’s relationship with Carlyle in London. The US law firm’s private equity clients also include KKR, EQT, Advent International, BC Partners, Charterhouse, Nordic Capital and PAI Partners.

Despite CC’s historic reputation as Europe’s top private equity practice there is no doubt that such predatory recruitment has impacted on its competitive position in the leveraged buyout market, with US advisers increasingly on the offensive in London.

‘We are now the only firm in the UK market to have top-ranked bank and bond practices and are building a market-leading private equity team to capitalise on this strength. Kem is a rising star with a great reputation and a broad range of experience that makes him an excellent addition to our private equity team,’ said Nick Cline (pictured), managing partner of Latham’s London office.

‘Having market-leading capability on both sides of the Atlantic stands us apart from many of our competitors. Kem’s arrival further strengthens our reputation in the European PE market,’ added Dan Lennon, global chair of the firm’s corporate department.

The firm has already been bulking up its private equity practice this year, with the hire of former Weil, Gotshal & Manges funds partner Nick Benson in January. The London office now has 250 fee-earners and 60 partners.

david.stevenson@legalease.co.uk

For more analysis on US firms moving into the City private equity market, see Back at the gate: US invaders raise fresh questions over private equity status of CC and Linklaters

Legal Business

M&A: Davis Polk and Latham advise on Smith & Nephew’s $1.7bn acquisition of Arthrocare

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Corporate Davis Polk & WardwellLatham & Watkins
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In the third largest M&A deal in the UK this year after Liberty Global’s $10bn takeover of Ziggo and Amec’s $2.7bn acquisition of Foster Wheeler, Davis Polk & Wardwell is advising Smith & Nephew on its $1.7bn acquisition of Texas-based medical device company ArthroCare opposite Latham & Watkins.

The Davis Polk team includes corporate partners George Bason and Michael Davis, along with Jeffrey Crandall who is providing executive compensation advice. Partners Ronan Harty and Kathleen Ferrell are providing antitrust and tax advice respectively. Davis Polk is advising from its New York and Washington offices.

London Stock Exchange-listed Smith & Nephew, with a market capitalisation of £7.9bn, has in the past used firms including Ashurst and Magic Circle giant Freshfields Bruckhaus Deringer for corporate work, with Freshfields also having recently advised the corporate on employment and pensions matters.

Latham’s corporate team for Arthrocare is being led by Silicon Valley partners Michael Hall and Josh Dobofsky, along with Orange County corporate partners Charles Ruck and David Lee and Washington D.C-based antitrust partners Michael Egge and Amanda Reeves.

Compensation and benefits advice is being provided by Silicon Valley-based James Metz; intellectual property advice by partner JD Marple; health care regulatory matters by Washington-based partners John Manthei Stuart Kurlander; and securities and finance advice by Washington-based partner Joel Trotter and New York partner Wesley Holmes.

ArthroCare is based in Austin, Texas and employs around 1,800 people. In January the company and the U.S Department of Justice (DOJ) entered into a deferred prosecution agreement resolving an investigation by the DOJ into allegations of securities and related fraud going back to 2008.

david.stevenson@legalease.co.uk

Legal Business

Revolving doors – Weil, Latham, Freshfields and Dentons among the firms opening 2014 with senior recruits

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Strategic recruitment DentonsFreshfields Bruckhaus DeringerLatham & WatkinsWeil, Gotshal & Manges
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Increasing confidence in the transactional market has contributed to a rash of senior partner moves at the start of 2014, with the UK’s leading firms bolstering both their London and international practices.

In the City, upwardly mobile US practices continued to boost their capability with Weil, Gotshal & Manges hiring Hogan Lovells banking and finance partner Chris McLaughlin, who has extensive experience of cross-border private equity buyouts and European real estate acquisitions and restructuring. His hire came a week after Latham & Watkins hired Weil Gotshal funds partner Nick Benson, its fifth City hire within the past 12 months.

Legal Business

Latham sets pace for 2014 as expansive City arm hires Weil private equity partner

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Strategic recruitment Latham & Watkins
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For many watchers of the upper reaches of City law, Latham & Watkins has in recent years established a profile as one of the most upwardly mobile players in London, a reputation the US-based giant has moved to underline early in 2014 with the recruitment of Weil, Gotshal & Manges funds partner Nick Benson.

The move is the fifth partner hire for Latham’s City arm within the last 12 months and a further high-profile addition to the 600-partner firm’s UK buyout practice after the recruitment last April of Clifford Chance’s (CC) private equity head David Walker, which was followed up in October with the appointment of fellow CC partner Tom Evans.

Benson joins Latham from Weil Gotshal’s private funds group, where he advised sponsors and investors on the establishment and operation of private equity, infrastructure and real estate funds. He had joined the City office of Weil in 2011 as part of a four-partner team hire from CC’s funds practice.

‘Adding a private funds lawyer of Nick’s calibre is a natural extension for our private equity practice and will also be a significant addition to our global funds team,’ said Latham London managing partner Nick Cline (pictured).

‘We are one of a select group of firms to offer market-leading private equity and finance teams in all major jurisdictions. Nick’s arrival further strengthens our credentials in London, a key market for our global private equity practice,’ said Daniel Lennon, global chair of Latham & Watkins’ corporate department.

Aside from private equity, Latham made two senior laterals last year, bringing in Dean Naumowicz, former head of derivatives at Norton Rose in May; and Simon Bushell, former co-chair of corporate fraud at Herbert Smith Freehills.

Weil in contrast has seen several recent UK departures in private equity including Mark Soundy and Simon Burrows last year moving to Shearman & Sterling, though the New York-based firm remains one of the leading players in the City buyout scene. While Weil retains a large UK funds practice, there is no doubt that US advisers including Simpson Thacher & Bartlett and Kirkland & Ellis have made substantial inroads in the lucrative area at the expense of UK rivals over the last five years.

Latham’s London office now numbers 250 fee-earners and 60 partners giving the Los Angeles-bred firm one of the largest City operations built by a foreign adviser.

david.stevenson@legalease.co.uk

For analysis on the battle between US and UK firms to dominate the City private equity market see Back at the gate: US invaders raise fresh questions over private equity status of CC and Linklaters

Legal Business

Some eye watering growth statistics later and its goodbye from Latham’s Bob Dell

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Leadership Latham & Watkins
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When the ordinarily press-shy chair and managing partner of Latham & Watkins, Robert Dell, gave Legal Business his first-ever in depth interview in 2005, the interview began by reminding the reader that ‘Latham & Watkins used to be little more than a Los Angeles-based tax firm with ideas above its station.’

At the time of that interview Dell, who is widely recognised as one of the greatest law firm leaders of his time, had already been at the helm for ten years, since when revenues had grown an eye watering billion dollars, from $260m to $1.2bn in 2004, with profits per equity partner (PEP) having doubled from $550,000 to $1.4m.

Scroll forward almost another decade to last week’s announcement that Dell is retiring, and the most up to date comparative data again serves as a stark reminder of just how far the firm has come.

After nearly two decades and four consecutive terms in the role, revenue is up by yet another billion dollars since 2005 to $2.2bn in 2012. Profit per equity partner during that period has jumped by another million to $2.44m. The firm is right to remind us that ‘this has been achieved without mergers’.

Despite this largely organic approach Latham’s number of offices has risen from 11 at the start of Dell’s term to 31 today and headcount under his watch has increased from 586 on 31 December 1994 – the day before he took over aged just 42 – to over 2100.

And yet in spite of this rapid growth Latham has remained one of the most cohesive and consensual of the global firms, with its famously lengthy lateral hiring process entailing a potential recruit meeting around 100 Latham lawyers and visiting numerous offices before they are signed up.

Latham was also one of the first US firms to introduce a meaningful corporate governance structure and top down strategy and the culture that Dell inherited from his equally long term predecessor Clint Stevenson and fostered to this day is famously transparent and with no head office or profit centre.

Dell will retire in December 2014 at the end of his final term, allowing even a firm that is known not to rush these decisions plenty of time to find a successor. A succession committee has been appointed to ‘oversee the identification and election of a new chair and managing partner for the firm’. The committee is chaired by New York litigation partner Miles Ruthberg, with the remainder of the group drawn from across it different offices and practices.

Latham plans to conduct the election in July 2014, with the new chair working alongside Dell throughout the second half of 2014 before officially starting his or her term on 1 January 2015, when Dell is retiring completely in order to afford his successor space.

As a final matter of curiousity, how did Dell – often described as visionary – predict Latham’s future back in 2005?

‘Next is moving from a strong US firm to be one of the strong global firms, and we are in the middle of that effort.’ He added that the next five years will be about growth in London and New York, before filling out Latham’s European presence in Italy, then Spain, maybe Northern Europe and long term, maybe even after he’s gone, Latin America.

 

caroline.hill@chillmedia.co.uk

Legal Business

Deal watch: drugs are working as Covington and Latham lead on $2.6bn pharma acquisition

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Corporate Covington & BurlingLatham & Watkins
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The lucrative pharmaceutical sector continues to provide a corporate boon to Global 100 firms, with Covington & Burling and Latham & Watkins winning key roles on Salix Pharmaceutical’s $2.6bn acquisition of specialty pharmaceutical company Santarus, announced yesterday (7 November).

With the firm’s longstanding reputation as a leading adviser on both corporate and regulatory matters to life sciences clients a key factor behind its 44% increase in revenues over the last five years to $731m, the Covington team advising Salix is being led by corporate partners Edward Britton and Catherine Dargan out of Washington.Meanwhile, the acquisition finance team is led by finance and capital markets partners Mike Lefever and Kerry Burke. Completing the Covington partner line-up are life sciences partner Amy Toro; co-chair of the firm’s securities practice David Martin; employee benefits partner Mike Francese; food and drug regulatory co-chair Peter Safir and regulatory specialist Scott Cunningham.

Latham – itself no slouch in financial terms, increasing turnover 11% over five years to $2.2bn in 2012 – is advising Santarus, led by corporate partner and San Diego office head Scott Wolfe. The team includes employee benefits and compensation partner Jim Barrall, intellectual property partner John Wehrli, Laurence Stein in tax, finance specialist Christopher Plaut and Washington based life sciences regulatory partner Ben Haas.

Salix is financing the transaction with a combination of approximately $800m cash and $1.95bn in financing from investment bank Jefferies, with the bank committing an additional $150m in a revolving credit facility. The deal is expected to close in the first quarter of 2014.

Salix said the acquisition is driven by the company’s desire to cement its position as the number one pharmaceutical provider in the gastrointestinal market as the deal includes Santarus’s portfolio of drugs aimed at battling gastrointestinal disorders such as acid reflux.

According to data recently compiled by Bloomberg, there have been 44 acquisitions of speciality drug companies for more than $500m in the last three years. As such, the sector has kept leading M&A practices well fed recently, with Linklaters and Hengeler Mueller advising on California drugs wholesale group McKesson Corporation’s $8.3bn acquisition of German counterpart Celesio from holding company Franz Haniel & Cie last month.

david.stevenson@legalease.co.uk

Legal Business

Rising star: Latham hires Clifford Chance private equity partner Tom Evans

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Strategic recruitment Clifford ChanceLatham & Watkins
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Latham & Watkins has secured another heavyweight hire in London with the announcement that Tom Evans, a newly made up partner in Clifford Chance’s (CC) private equity group, is joining the firm’s corporate department.

Evans, who has been tipped as a rising star in the private equity field, follows David Walker, former global head of private equity at CC, who left to join Latham in May. The 2033-lawyer US firm has also made a series of other high profile lateral hires this year, including Dean Naumowicz, former head of derivatives at Norton Rose Fulbright, and Simon Bushell, former co-chair of corporate fraud at Herbert Smith Freehills.The London office now has 250 lawyers including 60 partners.

Nick Cline (pictured), Latham’s London managing partner, said: ‘Tom is widely regarded as a rising star and has a broad range of experience that will make him an excellent addition to the firm and particularly our private equity practice.

‘While we have seen improvements in liquidity in European leveraged finance bank lending, accessing the high yield and US bank finance markets is increasingly attractive for European private equity deals. We have a very strong global platform and a leading financing practice that presents exciting opportunities for us to grow our top tier private equity practice.’

‘Tom’s arrival will further strengthen our presence in London, a key market for our global private equity and corporate practice,’ added Daniel Lennon, global chair of Latham’s corporate department.

Latham’s private equity clients include The Carlyle Group, Advent International, BC Partners, KKR, Charterhouse, Nordic Capital and PAI Partners. Walker’s hire was widely believed to be part of Latham’s drive to cement its relationship with the Carlyle Group in Europe, as the fund is a major client of the veteran CC lawyer.

Recent private equity deals for Latham’s London office include The Carlyle Group’s acquisitions of Addison Lee and Chesapeake Packaging, BC Partners’ acquisition of Allflex Holdings and Leonard Green & Partners’ acquisition of Topshop.

david.stevenson@legalease.co.uk

Legal Business

Trainee retention: Macfarlanes & Latham reveal numbers

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Trainee retention FieldfisherLatham & WatkinsMacfarlanes
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Macfarlanes has become the latest City firm to decide on its trainee retention rates, with 18 out of 24 trainees – equating to 75% – being offered a permanent position at the firm.

The figure, which represents a dip on last year’s near full house of 92%, comes after three trainees were not offered a position, however two trainees did not apply for a job with the firm and one declined the permanent newly-qualified (NQ) role on offer.

According to senior partner Charles Martin, the drop in retention this year is due to a number of factors, including the preferences of those qualifying not matching the opportunities on offer, which are in turn driven by client demand and strategic priorities.

Martin said: ‘Recruiting, training and retaining the very best legal talent is fundamental to giving our clients the excellence which they expect of us. Graduate recruitment is the cornerstone of the firm. Unlike others, we have not reduced our trainee numbers materially nor do we intend to do so.

‘We are always very mindful of our wider responsibilities when we recruit for our trainee scheme. We aim for as high a level of retention as possible. The investment that is made on both sides also creates a strong incentive to make this work. Poor retention is bad business.’

The news comes as Latham & Watkins yesterday reported a retention rate of 93% after offering 13 of its 14 trainees a permanent position. The world’s third largest firm by revenue has said it will increase its trainee intake numbers, in contrast with firms including the Magic Circle’s Allen & Overy (A&O) and Clifford Chance.

Retention rates among the City’s leading firms have been largely respectable to good this round, with Linklaters, Clifford Chance and Freshfields Bruckhaus Deringer all unveiling a rate of over 80% and Slaughter and May topping the chart at 90%, although Allen & Overy trailed its rivals on 72% and announced it is to cut its trainee intake by 15% in 2015.

However, the validity of this round’s rates are being called into question following the revelation that firms including Field Fisher Waterhouse have within their so-called retention rate offered a number of NQs only a 12-month fixed term contract.

 

caroline.hill@legalease.co.uk

sarah.downey@legalease.co.uk

Legal Business

Latham, Sidley and Skadden lead the US pack in Legal 500 research

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The Legal 500 Latham & WatkinsSidley AustinSkadden, Arps, Slate, Meagher & Flom
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Often hailed as one of the greatest US success stories of the last 25 years, new research underlines the elevated position Latham & Watkins has attained in the world’s largest legal market.

The Legal 500 United States 2013 edition shows Latham as the highest ranked law firm judged by the total number of recommendations, putting the Los Angeles-bred giant ahead of a string of top Wall Street firms.

The 600-partner firm received recommendations in 55 practice areas. Recommendations are calculated by the research team of The Legal 500 based on client and peer feedback and the submissions of the firms themselves, and take into account multiple factors including track record in winning cases, the complexity of deals and innovation. Latham received 20 top-tier recommendations, including listings in areas such as capital markets (equity offerings and high-yield debt offerings), project finance (lenders and sponsors), energy (renewable and transactions) and telecoms and broadcast (regulatory and transactional).