Legal Business

‘Slightly alarming’ – Clifford Chance, Linklaters, A&O Shearman match Freshfields’ NQ pay hike

Clifford Chance and A&O Shearman joined Linklaters this week in matching Freshfields’ NQ pay hike from £125,000 to £150,000, leaving Slaughter and May the sole Magic Circle firm still on the lower rate.

Following the pattern set by Freshfields earlier this month, all three firms are also increasing trainee pay. First-year trainee salaries at each firm will rise from £50,000 to £56,000, while second-year trainee salaries will increase from £55,000 to £61,000.

Commenting on the pay rises, Linklaters firmwide managing partner Paul Lewis said in a statement: ‘We are committed to rewarding our people competitively in our market. Our salary changes reflect this and enable us to attract and retain exceptional lawyers to provide the highest quality service to our clients.’

A&O Shearman’s statement, meanwhile, quoted new London managing partner Denise Gibson: ‘Our compensation structure gives us flexibility to reward expertise, performance and wider contribution and is designed to be highly competitive to reflect the markets in which we operate.’

The move also means that legacy Shearman lawyers at the now-merged firm will avoid taking the pay cut they faced when it was reported in April that A&O Shearman would stick with the legacy A&O NQ salary of £125,000 rather than matching Shearman’s £145,000.

However, some recruiters are warning that this latest round of NQ and trainee salary hikes will raise concerns among mid to senior-level lawyers.

Speaking to Legal Business, David von Dadelszen, director at James Legal, said: ‘This is a slightly alarming continuing trend that isn’t reflecting of increasing salaries for more senior lawyers where it may create retention issues. Clients must question getting advice from junior lawyers who are paid so highly.’

In a similar vein, Hannah Benger, business manager at Montresor Legal told LB: ‘Magic Circle salaries usually level out at the mid to senior level, which may create some issues, particularly given the consistent increases at leading US firms.’

She continued: ‘The other Magic Circle firms may find it harder to retain their top talent if they do not match the £150,000 NQ salary level. Although there has been some disparity in NQ pay between the Magic Circle in recent years, this is harder to justify given the significant and uniform increase at Freshfields, Linklaters and Clifford Chance.’

The increases will pile pressure to up salaries on other London firms. Slaughter and May last raised NQ salaries in November, with no further increase after its most recently six-monthly pay review in April.

However, many US firms continue to offer pay packets still more generous than even the increased Magic Circle rates. In Benger’s words: ‘The client base of Magic Circle firms is different to US firm clients who are used to paying a lot more.’

With NQ bonuses to be paid out in the coming months, Benger added: ‘It will be interesting to see what the Magic Circle firms do with bonuses. It is coming up to bonus season, and there is likely to be renewed interest in making a move to premium US firms if Magic Circle firms cannot compete with Cravath bonuses.’

Legal Business

‘A transformational step’: Links defies US strategy critics to hire Shearman New York M&A team

In a move that may come as a surprise to detractors of the Magic Circle firm’s US ambitions, Linklaters today (8 January) announced it has expanded its New York M&A offering with the hire of a six-lawyer team from Shearman & Sterling.

The team is led by George Casey, a global managing partner at Shearman since 2018 and a Legal 500 Hall of Famer for $1bn-plus M&A deals. He joins Linklaters as global co-chair of corporate. His career has seen him advise on mega-mergers in chemicals and pharmaceuticals, including Celanese’s $11bn all-cash acquisition of the majority of DuPont’s mobility and materials business in 2022, and DuPont and Dow Chemical’s $130bn merger in 2015.

Casey moved alongside partner Heiko Schiwek, who comes to Linklaters as one of the firm’s chemicals sector global leaders. Meanwhile, Greg Gewirtz was counsel at Shearman and joins Linklaters as a partner, while the team is rounded out by counsel Yiting Du, senior associate Wendy Suh, and associate Michael Lomtevas.

‘Growing our M&A capacity in the US is a strategic priority for us and George and his team joining is a transformational step’, said Linklaters managing partner Aedamar Comiskey in a statement. ‘Adding a market-leading M&A practice in New York to our preeminent global M&A offering means we can support our clients in all core markets.’

A Shearman spokesperson said in a statement: ‘Our market-leading M&A team had a stellar year in 2023, with rankings in the top 15 globally for both deal value and deal volume, as reported by The American Lawyer earlier this week, driven by exceptional partners across the platform. Upon the imminent completion of our transformative merger with Allen & Overy, A&O Shearman is expected to have more than 180 M&A partners who, together, will provide unparalleled capability to global businesses. We thank George and Heiko for their contributions and wish them well.’

Linklaters has argued that its approach to the US is one defined by caution. It has made some notable US hires in regulation, litigation, and energy, but has nonetheless been seen as a slower mover than comparable firms. It has lagged behind its Magic Circle peers on both revenue and headcount. As of August 2023, it had just 39 partners in the US, compared to 77 at Freshfields, 87 at Allen & Overy, and 100 at Clifford Chance. Its Americas revenue for 2022 was £101.2m (6% of its firm-wide turnover), compared to £252.4m (13%) for A&O. CC and Freshfields, meanwhile, each made 13% of their revenue in the US in 2022: £224.5m for Freshfields and £259m for CC.

UK firms have long struggled to break into New York M&A – often viewed as the jewel in the crown of the super-profitable US market. Freshfields sought to win work with a clutch of key strategic hires – and paid top dollar to do so.

A&O, for its part, placed its bets on a merger with Shearman, with the two firms set to combine as A&O Shearman from May of this year. Shearman faced a slew of departures both before and after the merger was announced in May, and has been bedevilled by declines in revenue and profitability (as Legal Business noted in this year’s Global 100 report, it has the dubious distinction of being the only firm to post a decrease in revenue for the period 2018-23).

The New York firm’s reputation suffered, but few would dispute that it remained strong in New York M&A, with the access it would provide to that work often viewed as a core part of the rationale for the merger on A&O’s side. These departures to Linklaters mark the first from the firm’s key practice since the merger was announced: former real estate investment trusts group co-head Malcolm Montgomery was the only partner to leave the firm in New York since last May, while its bigger losses occurred overseas. It is far from depleted – its website still shows 12 partners in M&A in New York. But the moves nonetheless leave a dent in the firm’s armour in a core practice – and will be seen as a clear statement of intent from Linklaters.

Legal Business

Linklaters sees 2% profit decline as revenue falls short of the £2bn milestone

With financial reporting season in full swing, Linklaters is the latest Magic Circle firm to drop its financial results, reporting a 7% revenue increase from £1.8bn to £1.9bn, seeing it fall just short of the $2bn turnover barrier passed by both Allen & Overy and Clifford Chance recently.

Pre-tax profit is down by 2% to £854m from last year’s £872m, translating to a 5% decline in PEP from £1.87m to £1.78m.

Linklaters managing partner Paul Lewis said in a statement: ‘We’re pleased to have delivered a strong financial performance, despite a challenging high-inflation environment and ongoing geopolitical instability.’

He added: ‘Entering the new financial year we have seen a strong deal flow, particularly across energy & infrastructure, high-end M&A and from financial sponsors, notwithstanding the wider slowing of the global M&A market. The challenging economic environment has led to an increase in restructuring and insolvency matters and we have also seen an uptick in regulatory and criminal investigations as well as a rise in class actions, particularly in the tech sector.’

Linklaters reports that it has seen ‘significant growth’ in revenue from high-end M&A with top mandates that include advising Carrier Global Corporation on its acquisition of Viessmann Climate Solutions and HSBC on the sale of its Canadian banking business to Royal Bank of Canada.

Similarly, the firm also gives credit to the performance of its energy sector, with a particular focus on energy transition mandates that made up the majority of energy-related work over the last financial year. Whilst it is public knowledge that Links has struggled to make an impression on the US market, the addition of its energy and infrastructure team in the US has resulted in some mid-tier US mandates, including advising Actis on its new $500m Japanese renewables platform.

Beyond financials, the firm also reported that it had elected 41 new partners and 53 counsel in its latest promotion round, while meeting its 40% global gender diversity target for female partner promotions, and its 15% target for under-represented minority ethnic partners in new partner elections annually in the UK and US.

In the legal tech arena, the firm also reported that CreateIQ, its document automation and contract management platform, ‘grew at a rate of nearly 100% during FY2023 with over 100 digitised templates added, attracting over 300 institutions including major banks, asset managers, insurers and governments. ReportiQ, the firm’s next-generation due diligence reporting platform, ‘has now been used by Linklaters lawyers across 17 offices and external counsel in 21 countries to generate reports on €18bn worth of deals’.

Links is the third member of the Magic Circle to publish its financial results so far, with both A&O and Clifford Chance officially breaking the £2bn barrier. A&O’s revenue grew by 8% from £1.94bn to £2.1bn, while CC recorded a revenue increase of 5% from £1.969bn to £2.062bn.

With Freshfields the last of the four UK elite international firms to post its results, the picture so far is clearly one of modest revenue increases matched by a decline in profitability this year, as firms across the globe driven by transactional work struggle with the downturn in deals.


Legal Business

KPMG names Linklaters deals guru Bedford as new UK law chief

While traditional law firm leaders have to date largely scoffed at the progress made by the Big Four, today’s (20 December) news of KPMG appointing a Magic Circle corporate veteran as its new UK legal head will have turned heads.  

The accountancy firm revealed that Linklaters deals partner Stuart Bedford will become its head of law for the UK in April 2023, replacing the longstanding Nick Roome. Roome, who has held the post since 2015, is being promoted to a new role where he will concentrate ‘on growing KPMG’s global legal solutions.’ 

Bedford will bring with him a notable track record, having been named Linklaters’ London corporate head in 2014 and boasting several high-profile advisory mandates. During his career, Bedford has advised on the IPOs of Bumi, Fresnillo, Hochschild Mining, Xchanging, Britvic and Investec, and in 2015 he assisted Brait on its £1.9bn acquisition of New Look and its £1.3bn acquisition of Virgin Active.  

He also has considerable in-house experience, thanks to stints at BAE Systems, Grosvenor and an 18-month spell at private equity house Leapfrog Investments. 

Bedford said of his appointment: ‘I am excited to be taking on this new challenge and aim to build on the impressive strides KPMG Law has made in the past few years. We have a huge opportunity to build on the great work we are already doing at a time of accelerated change within the legal sector. I am very much looking forward to working with the team as we help our clients and the firm to achieve their ambition.’ 

Established in the UK in 2014, KPMG Law has made significant progress in the last couple of years. According to the firm, revenues have expanded by over 80% in that two-year period. 

This is on top of an ambitious growth strategy which was announced earlier this year. In May, KPMG Law revealed an eye-catching £300m investment programme designed to supercharge growth. Speaking to Legal Business in October, Roome said the programme gave him a mandate to hire over 200 new lawyers and nearly triple KPMG’s partner headcount, from 35 to 90, by 2024. He added this would largely be done via lateral hiring.  

For a comprehensive review of KPMG Law’s evolution since 2014, as well as the thoughts of law firm leaders on the rise of the Big Four, read our interview piece with Roome from October.  

Legal Business

‘People are our biggest asset’: Linklaters’ incoming Paris head Maigrot outlines strategy

Linklaters has elected its head of real estate in France, Françoise Maigrot, as its new managing partner in Paris. Taking over from banking, energy and infrastructure head Bertrand Andriani, Maigrot will begin her four-year term on 1 January 2023.

Speaking to Legal Business, Maigrot outlined her priorities on assuming the role: ‘One is having a Paris office that is really outward facing and growing at the top of the market, making sure we are taking advantage of all our strengths, including our cross-practice nature. There are very few firms based in Paris that have our breadth of expertise or our European network.

‘The second is people. People are our biggest asset, and we are committed to attracting and retaining the right people. We have the best talent joining us and believe in organic growth by investing in them as associates, then counsel, and then partners.’

Practice area-wise, she highlighted corporate as an area of immediate focus: ‘Today we have seven [corporate] partners but we have an ambitious growth plan for the team. We are also very strong on everything that relates to energy, projects and infrastructure. We are very well equipped, but as the market grows we want to ensure we continue to deliver excellent client service.’

In pursuing that growth strategy, Maigrot, a Linklaters lifer herself having joined in 1999, noted: ‘Our priority has always been to give preference to internal growth’, but acknowledged that ‘when there’s a need in a specific practice area or specific area of law, we will be looking outside the firm.’

It may be seen as an inopportune moment to be taking the reins, given the economic headwinds currently buffeting much of Europe. Nevertheless, Maigrot is confident the coming months will be positive: ‘The war for talent is a really challenging issue, but it’s the same for all of us, not just Linklaters. We are also watching the economic situation, which could become a challenge but when I look back at 2008, 2011 or even the way we’ve responded after Covid, the business community is quite resilient.’

She also confirmed that her new role will not prevent her from maintaining her practice, which focuses on advising investors, funds and end users on real estate transactions across Europe. ‘That has been my clients’ first question! I told them: “Sleep well, it’s business as usual and I’ll continue to always be there for you”.’

Legal Business

‘Bold and decisive’: Linklaters sees 6.5% revenue rise as £1.87m PEP lags Magic Circle

As financial results season continues apace, Linklaters today (9 August) joined Magic Circle peers in showing its hand, posting a 6.5% uptick in revenue to £1.783bn.

Pre-tax profit also saw a comparable increase of 7% to £871.7m. That translated to a 5.4% rise in profit per equity partner (PEP), which reached £1.87m, and a 4.5% rise in profit per all partners, which now stands at £1.78m.

The results are the first set overseen by managing partner Paul Lewis after the finance head was elected in July 2021 to take the helm from illustrious leader Gideon Moore.

The turnover numbers will be seen as a fillip for the firm after muted 2% growth to £1.67bn for the 2020/21 financial year. However, last year’s double-digit profit boost could not be maintained, with the latest pre-tax profit figure a more muted showing than the 12% jump last year.

Lewis said: ‘We are pleased to report a strong set of financial results, largely driven by increased revenues from robust markets and sustained deal activity over the past financial year.

‘Our strategy is built on the premise that we will deliver profitable growth by excelling for clients. We are able to achieve this due to the quality, hard work and client-centric approach of our people.

‘In a post-pandemic world with growing political and economic uncertainty, our clients require complex legal solutions. The investments we have made over the year have ensured that we are able to provide the right combination of global coverage and high-quality cross practice expertise. To excel for our clients we need to be nimble, bold and decisive in our approach, which we will continue to be as we look ahead to the next financial year.’

When compared to the rest of the Magic Circle, the results make for interesting reading. Clifford Chance and A&O both recorded larger revenue increases of 8% and 10% respectively, in addition to higher profit rises of 9%. The pair also had higher absolute revenues, with both edging closer to the £2bn mark. For its part, Freshfields grew revenue 10% to £1.7bn.

Linklaters also came up slightly short when it comes to PEP. Freshfields led the pack, with a PEP increase of 8% to £2.07m from £1.91m last year. CC also passed £2m for the first time after a 10% increase, while A&O, though only managing a 3% increase, hit £1.95m.

Legal Business

Deals Yearbook 2022: Fionnghuala (Finn) Griggs, Linklaters – partner since 2017

Why did you decide to become an M&A lawyer? Was there anyone in particular who inspired you early on in your career?
I started off my training contract with Linklaters sitting in the M&A team and quickly realised that I really valued and enjoyed the opportunity to work closely with clients on strategically important transactions, and to work with a broad range of teams and offices within the Linklaters network. It’s a great way to build relationships. During that first seat I worked on a demerger of a company and its UK listing, and 15 years on I am still working with that company as a key client of the firm – which is a real testament to the opportunities that you have as an M&A lawyer to build relationships and become a trusted adviser.

Legal Business

Deals Yearbook 2022: Derek Tong, Linklaters – partner since 2019

Why did you decide to become an M&A lawyer? Was there anyone who inspired you early on in your career?
I sat with the M&A team in my second trainee seat and within a fairly short period I knew that I really wanted to qualify into that team. It felt like the M&A lawyers were at the centre of all the action and had more exposure to the broader commercial and strategic drivers for the deal. One of my mentors was our former corporate partner Iain Wagstaff, who sadly passed away a few years ago – I learnt an immeasurable amount from him and he was definitely one of the people who has inspired me most during my career.

Legal Business

Linklaters ushers in lockstep shake-up to attract and promote top talent

The latest strategic move in the war for junior talent, Linklaters has introduced a significant overhaul of its lockstep pay model in order to attract and fast-track high performers.

The firm’s partners last week backed a wave of measures that bring Linklaters’ remuneration policy in line with the majority of the Magic Circle. The three key changes are: an extension at the top of its lockstep for partners who make ‘an exceptional contribution’, the ability to accelerate partners up the ladder who also make outstanding contributions, and more flexibility to elect ‘top talent’ to the partnership earlier.

The changes are a statement of intent from Linklaters’ new-look leadership team. This year, the firm appointed global finance head Paul Lewis as managing partner, with M&A heavyweight Aedamar Comiskey (pictured) elected as senior partner.

In a statement, Comiskey said: ‘Paul and I are delighted that our partners have approved these amendments. They will further our bold ambition to be the best global law firm, delivering outstanding results for world-class clients. Notwithstanding these changes, lockstep will continue to underpin our strong culture of collaboration, collegiality and teamwork.’

Lewis added: ‘This vote underscores Linklaters’ commitment to attracting and retaining the best talent in the world and gives us additional flexibility to drive forward our ambitious strategic growth plans.’

These changes will go a long way to accelerate the long-predicted death knell of the more rigid lockstep system historically adopted by the UK’s elite firms. With these changes, Slaughter and May remains the only Magic Circle firm to stick to a pure lockstep structure, after Allen & Overy, Freshfields Bruckhaus Deringer and Clifford Chance all made changes in recent years.

Legal Business

Financials 2020/21: Linklaters maintains Magic Circle resilience with double-digit profit hike

Despite the pandemic, the 2020/21 financial year proved to be an improved outing for Linklaters as revenues inched up and profits saw a robust increase.

Turnover nudged upwards by 2% to reach £1.67bn – a modest increase, but an improvement on the marginal 0.7% growth seen last year. More notable was the firm’s rebounding profits: pre-tax profit stands at £815.3m, a 12% jump from last year, while profit per equity partner (PEP) grew by 10% to hit £1.773m.

Profit per all partners, which takes into account salaried partners, was also up by 10%, reaching £1.707m.

Viewed in the additional context of Linklaters opting not to use any governmental financial support packages throughout the year, the results are a respectable upgrade.

Linklaters managing partner Paul Lewis described the figures as ‘a very strong set of financial results’. He attributed them to ‘the hard work and excellent performance of our people over that period, especially given its unique challenges’. Lewis added: ‘Our global capabilities and enduring client relationships also came to the fore as clients turned to us to help them to navigate the myriad issues arising from the pandemic.’

Lewis is still in the early days of his premiership, having been elected as successor to Gideon Moore by Linklaters’ partnership in July.

Linklaters becomes the latest Magic Circle firm to announce its financial figures this summer, comfortably keeping in line with the standards set by the rest of the group. In July, Clifford Chance similarly unveiled modest revenue growth amid pacier profit increases.

In the same month, Freshfields Bruckhaus Deringer posted solid 5% increases to both its revenue and PEP, while Allen & Overy completed the trend with a 5% growth in revenue which was outstripped by a striking 17% increase in PEP.