Legal Business

Dealwatch

SKADDEN PULLS MOODY’S IN €3BN DEAL

Allen & Overy (A&O) and Skadden, Arps, Slate, Meagher & Flom led as Moody’s agreed a €3bn (£2.6bn) deal to buy Dutch data group Bureau van Dijk from Swedish private equity company EQT. Skadden advised Moody’s, alongside Dutch adviser Stibbe, while A&O acted for EQT. Latham & Watkins advised the banks, while Baker McKenzie acted for van Dijk’s managers. Simmons & Simmons is also playing a role, providing employment and pensions advice to Moody’s.

Legal Business

‘A landmark transaction’: Macfarlanes advises UK tech start-up Improbable on $502m financing from SoftBank

Macfarlanes has advised UK based virtual simulation start-up Improbable on its $502m financing raised from Japanese telecoms group SoftBank.

Improbable is now valued at more than $1bn following the largest ever venture finance round by a private British company. The investment will be used to further develop technology and hire additional staff for the five-year old company’s London and San Francisco offices.

Improbable turned to Macfarlanes, which has been advising the firm since 2012 on its previous funding rounds. The firm’s team included corporate and M&A partners Alex Edmondson and Richard Burrows. Cooley advised SoftBank on the funding round with a team led by business partners Ryan Naftulin based in London and Matthew Bartus in Palo Alto.

Edmondson said: ‘This is a transformational investment for Improbable, which we were delighted to advise and work closely with [chief legal officer] Rob Miller on, and is a continuation of the relationship we have built with Improbable and its founder Herman since first incorporating the company five years ago. It also represents a landmark transaction for the UK start-up scene, being the largest fundraising seen to date, and validates the UK technology sector as a significant global force.’

In March it emerged social gaming giant King Digital Entertainment’s chief legal officer and company secretary Miller (pictured) was to leave for Improbable. Miller joined the mobile games developer, best known for its Candy Crush Saga game, in 2012, when the company grew from three European offices to 10 and expanded from 150 employees to more than 2,000. Miller joined Improbable as its first in-house lawyer.

Last year Slaughter and May, Freshfields Bruckhaus Deringer, Davis Polk & Wardwell and Morrison & Foerster scored roles on SoftBank’s £24.3bn deal to acquire UK tech flagbearer ARM Holdings.

A long-time adviser to ARM, Slaughters led as the chip designer agreed a deal that became the largest ever acquisition of a European tech business. ARM turned to M&A heavyweight Steve Cooke, London-based corporate lawyer Chris McGaffin, who was promoted to partner at Slaughter and May in 2015, and Brussels-based competition partner Jordan Ellison also advised on the deal.

Davis Polk & Wardwell were also listed as legal counsel to ARM. Davis Polk’s team on the deal included managing partner Thomas Reid and Reuven Young.

Morrison & Foerster, a longstanding adviser to SoftBank, again acted for the Japanese firm along with Freshfields which was drafted in to provide London M&A muscle. Ben Spiers, Freshfields’ then global co-head of M&A, and corporate partner Stephen Hewes acted for SoftBank.

madeleine.farman@legalease.co.uk

Legal Business

Life during law: Tom Usher, Macfarlanes

My father, who sadly died last year, did his articles. Absolutely hated it. Left as soon as he could. He did briefly work in London and then went to Edinburgh, and carried out his career as a fund manager. He was always much more interested in stock markets than the law. He was a very kind, calm and perceptive man.

I joined SJ Berwin in 1991, qualified in 1993, became a partner in 1999, left in 2004. Came back in 2006. Until the bitter end.

Legal Business

City elite reduce partnership rounds as Slaughters makes up seven and Macfarlanes three

After making its first ever lateral hire in London last month, Slaughter and May has strengthened its London bench with five new partners, including three women. Macfarlanes also made up three partners in the City earlier this week.

In its partnership round announced by the Magic Circle firm today (30 March), Slaughters added seven across London, Brussels and Hong Kong. The firm made up three fewer than last year, but more than the four it promoted in 2015.

The new Slaughters partners join across five practice areas. The cohort includes Duncan Blaikie as a new IP partner, Christian Boney and Filippo de Falco in corporate, Susan Hughes in financing, Phil Linnard in pensions and employment. Outside of London Kerry O’Connell and Natalie Yeung were made up in competition, in Brussels and Hong Kong respectively.

Slaughters senior partner Steve Cooke (pictured) said: ‘The fact that we have promoted lawyers from a broad spread of practice areas reflects the underlying strength of our firm.’

Meanwhile, Macfarlanes announced Richard Burrows (mergers & acquisitions), Jeremy Moncrieff (tax) and Sarah Ward (banking & finance) are to become partners on 1 May. This year Macfarlanes promoted half of last year’s promotions round, when it made up six as new partners.

Charles Martin, Macfarlanes senior partner said: ‘In a market that is tough and likely to get tougher the commitment of highly talented young partners to driving forward their respective practice areas is of critical importance. We are confident that these three lawyers will each play an important part in the future success of the firm.’

georgiana.tudor@legalease.co.uk

Slaughter and May promotions in full:

Duncan Blaikie, IP/IT

Christian Boney, corporate

Filippo de Falco, corporate

Susan Hughes, financing

Phil Linnard, pensions and employment

Kerry O’Connell, competition, Brussels

Natalie Yeung, competition, Hong Kong

Macfarlanes promotions in full:

Richard Burrows, M&A

Jeremy Moncrieff, tax,

Sarah Ward, banking & finance

Legal Business

Trainee retention: HSF and Hogan Lovells post rates as Macfarlanes joins top of the class at 100%

Herbert Smith Freehills (HSF) has posted a spring trainee retention rate of 77%, compared to a rate of 94% this time last year when the firm recorded its third straight score of more than 90%.

HSF held on to 27 applicants which joined the firm as newly-qualified (NQ) lawyers, as 28 out of 33 applicants received offers, from a cohort of 35.

Hogan Lovells posted an 79% retention rate this spring. The firm had 29 qualifiers, 26 applied for the role and 23 were made offers, which were all accepted. This is similar to Hogan Lovells’ last retention round in August 2016 when its rate was 80%.

Meanwhile, Macfarlanes joined Mayer Brown and Slaughter and May as firms with 100% spring retention rates. Macfarlanes offered an NQ contract to all six trainees qualifying this March.

Macfarlanes partner and head of graduate recruitment Sean Lavin said: ‘It is always our aim to find roles for all our trainees upon qualification and we are obviously delighted to have been able to offer 100% retention for our March 2017 intake.’

Other firms to announce rates so far this spring include White & Case, which retained 88% of trainees, and Trowers & Hamlins which posted a rate of 92%. At the bottom of the table so far are Berwin Leighton Paisner (BLP) and Clifford Chance (CC) with 55% and 67% respectively. BLP only retained 11 out of 20 trainees, while CC kept 31 out of its 46 applicants.

georgiana.tudor@legalease.co.uk

Legal Business

‘An aggressive timetable’: Macfarlanes, Reed Smith and Travers line-up on largest main market IPO of 2017 so far

Macfarlanes, Reed Smith and Travers Smith have all advised on Xafinity’s £190.3m flotation, in what is the largest premium main market IPO of 2017 to date.

As part of the deal, Xafinity is seeking to place £179.6m of existing and new ordinary shares on the London Stock Exchange (LSE). The IPO also saw private equity house CBPE Capital sell its 100% stake in Xafinity.

Corporate partner Philip Taylor led for Reed Smith as the firm advised Xafinity, while the firm also offered expertise to CBPE Capital as it sold its stake in the company. Macfarlanes M&A partner Harry Coghill, alongside senior counsel Mark Slade and employment partner Robert Collard, provided advice to Xafinity’s management team.

Travers corporate finance partner Philip Cheveley advised Zeus Capital as financial adviser and sole bookrunner to the deal. Cheveley also ran the team that acted for Deloitte as financial adviser and sponsor.

Xafinity, a pensions actuarial, consulting and administration business, plans to utilise the net proceeds of the IPO to fund its existing banking facilities.

Cheveley told Legal Business: ‘It was challenging in the sense that we did it to quite an aggressive timetable. It’s a testament to the quality of the Xafinity business and its management team that they managed to do it on such a compressed timescale with such a high demand for the issue. Also, CBPE Capital was able to sell 100% of its stake, which is quite unusual.’

Taylor added: ‘The listing will not only enable Xafinity to raise its profile further among clients and provide it with access to the capital markets to aid future growth if required, but also enables CBPE to make a full and successful exit from its investment.’

Slade commented: ‘It was an interesting piece of work. One of the key challenges for management in these types of transactions is that they are inevitably immersed in every single area of the transaction and they’ve got limited time. It’s helpful to have an adviser who can do some of the thinking, in respect of their own personal position.’

In November 2016, Norton Rose Fulbright and Stephenson Harwood helped remedy a sluggish spell for the London IPO market by winning mandates on Civitas Social Housing’s float on the LSE. The listing raised £350m, well above initial estimates of £250m.

Meanwhile, Linklaters and Freshfields Bruckhaus Deringer acted on another major IPO in October 2016, advising medical products company ConvaTec on its $1.8bn flotation.

tom.baker@legalease.co.uk

Legal Business

A buzzword with edge – Macfarlanes head reviews the most hyped professional services book for years

Collaboration within a law firm is as self-evidently a good thing as motherhood and apple pie. But then you might think the case for global warming is pretty clear too. So, despite the wave of professional recognition Harvard Law School professor Heidi Gardner (pictured) has received for her work on team-working, her new book, Smart Collaboration, has the considerable challenge of getting lawyers past the outskirts of platitudinal praise and towards the town centre of actual working habits.

Gardner will please her lawyer readers by starting with the strength of the case for collaboration generally. And, to this law firm leader, the case stands up pretty well.

The book starts by asserting that increasingly complex client problems demand effective integration of advice from numerous specialists. It identifies the drive towards specialisation as one of the most conspicuous trends of recent years in the legal world. Intuitively this feels right. Clients need useable solutions to problems and these are rarely to be found in one practice area in a law firm. The go-to lawyer who can listen well to the client, harness the skills to be found across their firm and forge a solution that works across relevant dimensions is a valuable asset indeed.

The next assertion is of critical importance, and probably the one that will be most open to challenge and debate. Evidence is produced to show that client revenue generation is directly correlated to the number of practice areas with which a client works. Gardner’s extensive and impressive research is clear on this.

So, she concludes, ‘smart collaboration’ is a vital ingredient for success in the modern law firm. Indeed, she suggests that, in the fullness of time, being able to demonstrate good collaboration may just be a hygiene factor for a law firm. Every self-respecting client will simply expect it along with a functional IT system and coffee in the meeting rooms. By smart collaboration she means the type designed to meet a client need rather than the ‘would you like fries with that?’ cross-selling that appals most sophisticated clients.

The book moves most valuably (and possibly uniquely) onto the ‘how to’, which for most practitioners is the hard bit (and therefore most useful). How do you drive a spirit of co-operation through an organisation as culturally resistant to it as a large law firm? Each chapter of the book focuses on an aspect of collaboration and outlines what works – what can be done to foster it.

Gardner suggests that the right place to start is to convince people that it is in their interests to collaborate through giving them hard evidence that backs up the spiel. She puts forward the large volume of research that she has conducted as a tool for winning that internal argument. The challenges of convincing lawyers that both the firm and they individually will benefit financially are substantially covered over two chapters.

The arguments here range from the basic – fewer negligence claims – to the much more complex – a more robust practice capable of weathering economic cycles. Innovation and client loyalty are also features of effective collaboration that she explores.

The idea of collaboration as an important element of a culture that can be a magnet for attracting and retaining talent is one that will interest many law firm leaders. Using teamwork to engender productivity and loyalty, especially among the elusive and vital Millennials, is a compelling notion. The book also considers in detail the merits of lateral hiring and how a culture of collaboration can maximise the chances of a lateral partner successfully integrating into the practice.

Several chapters deal with the cast of characters who together make up a collaborative law firm. The solo specialist might find the whole idea a little too salesy. The committed collaborator will almost inevitably be frustrated by naysayers and find the speed of progress disappointing. B-player partners will need convincing that getting involved in collaborative exercises will not threaten management’s perception of their performance by reference to the metrics on which they are inevitably judged. Indeed, the management focus on the readily measurable may be one of the greatest obstacles to fostering the softer, more intangible elements of contribution in a law firm, of which collaboration is a good example.

But perhaps the most critical component of successfully spreading a culture of collaboration throughout a law firm is that leaders demonstrate collaboration themselves – that they lead by example. They also need to communicate the benefits of closer co-operation clearly and make sure the systems within the firm support it. One of the most obvious systems that must be correctly aligned is compensation. Gardner suggests leadership is key and that collaboration should be a high priority, if not a matter of urgency, for all law firm leaders today.

Chapter eight of the book sits slightly apart from much of the rest of it as it looks at the client attitude to collaboration. The research shows that clients appreciate it and are prepared to pay for it, at least as far as complex work is concerned. One thing they do not want to see is more faces than necessary on straightforward work. An interesting thought from Gardner’s research is that clients do not trust lawyers who pretend to know it all. As such, collaborating can make star lawyers look smarter in the eyes of a client because they bring in true specialists who make them look good, rather than themselves trying to be a credibility-defying Jack-of-all-trades. Clients most obviously appreciate the responsiveness, global reach and efficiency benefits of collaboration, Gardner’s work asserts.

Some of the ideas that the book puts forward are hardly rocket science. The book is, however, a welcome reminder of those ideas and a source of helpful pointers about how to tackle a variety of the practical challenges; how to get partners interested in understanding sufficiently deeply what goes on in other practice areas so they can understand what benefit those practice areas might offer the clients they deal with; how the partners with overall responsibility for the client relationship need to be supported; how to deal with collaboration in handling the work of important clients of the firm that pay lower rates either across the firm or for work in particular practice areas; the imperatives of consistent client service, quality and responsiveness, and using positive pressure on performance to deliver it.

Certain aspects of the subject might be worthy of further exploration. Collaboration within law firms is only part of the story. How to combine with other law firms, alternative service providers and other professionals to deliver something integrated to clients is increasingly key for many clients. If collaboration is an imperative for the profession, what is going to happen to teaching in law schools to make the lawyers of the future understand that it is important to be a team player and not always the brightest person in the room?

There are a few pages on the interaction between technology and collaboration. It seems clear that, as a practical matter, this is a very important aspect of the subject. In some quarters collaboration is seen as synonymous with lengthy internal meetings. Good use of technology can integrate collaboration with law firm systems in a compelling way. Smart collaboration must be efficiently delivered and, well, smart.

It would also be nice to see some further thinking about the relationship between collaboration and diversity. Are more diverse law firms also more collaborative?

Finally, many law firm leaders are seeing fatigue setting in among partners at the very mention of the word collaboration (or, for that matter, innovation). This is a shame, but partners know when they are being brainwashed or persuaded a little bit too hard. We need to move promptly through this phase and not let the negativity slow the progress.

So does the book achieve what it sets out to do? Yes, I believe it does. It is a valuable tool for law firm leaders and, while it may not provide the rocket fuel that will propel a law firm into the stratosphere of collaboration, it provides useful material to those of us who believe that steadier change is more sustainable and valuable. My strong suspicion is that becoming more institutionally adept at collaboration will soon be less a nice optional extra and more an essential ingredient to lawyering at the highest level.

Charles Martin is senior partner of Macfarlanes. Smart Collaboration is out now

Legal Business

City stalwart Macfarlanes opens in Brussels with KWM hires

Despite being known for its reluctance towards overseas expansion, Macfarlanes is launching a new office in Brussels early this year for the competition team it hired from King & Wood Mallesons (KWM) in December.

It has also emerged the firm closed its Johannesburg office in October last year after three years in business. This will make Brussels its only base outside of London. The Johannesburg office was shut after its only partner Scott Brodsky, formerly at Baker & McKenzie, left the practice to join a client.

The KWM competition trio which Macfarlanes hired late last year includes partners Cristophe Humpe, Tom Usher and Cameron Firth, alongside former KWM senior partner Stephen Kon who is joining the firm as a consultant.

Macfarlanes has seen revenue remain static at £161m for 2015/16, up less than 1% from £159.6m. The firm’s profit per equity partner is down 17% on 2014/15 when the firm reported PEP of £1.55m. Overall profits were also down to £74.5m, dropping 9% on 2014/15. The falling figures follow five years of top line growth.

Also last year, the partnership re-appointed Charles Martin (pictured) and Julian Howard to the roles of senior partner and managing partner respectively for another three years, five months earlier than their terms were expiring. Both Martin and Howard’s terms expire in May 2017, and the new ones will take effect for a further three years until May 2020.

georgiana.tudor@legalease.co.uk

Read more: ‘This is a gritty place’: Macfarlanes’ leaders on the hustle it takes to look effortless’

Legal Business

KWM competition trio defects to Macfarlanes in rare lateral play by City thoroughbred

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City firm Macfarlanes has made a rare triple lateral hire with three partners from King & Wood Mallesons‘ (KWM) European practice. The firm is taking on Tom Usher, Cameron Firth and Christoph Humpe as partners, and will also take on KWM’s former European senior partner Stephen Kon as a consultant.

Kon had resigned earlier in the week, having stepped down from the senior partner position earlier in the year. Partners have been peeling away from the legacy SJ Berwin practice after the partnership, which is carrying more than £30m in debt, failed to agree to a recapitalisation plan in November.

Usher, who billed almost £4m last year, had led the firm’s dispute resolution and regulation division and joined SJ Berwin in 1989.

Meanwhile, KWM China is understood to have bid for an out-of-administration purchase of certain legacy SJ Berwin offices including Dubai, Germany, Italy and Spain. It is also talking with partners to keep an outpost in London.

If a deal is agreed, the acquisition will remain within a verein structure, and the business will take on a significant number of lawyers but without any of legacy SJ Berwin’s liabilities.

While the Chinese arm is interested in these parts of the business, it is not yet clear what will happen to other outposts in France, Belgium and Luxembourg.

Last week the firm registered a new LLP in the UK under the name KWM Deutschland, which may include part or all of the new European entity which the Asian arm is keen to retain.

K&L Gates and Orrick, Herrington & Sutcliffe have also taken on a number of lawyers from KWM’s Munich office, while one of KWM’s top billers Craig Pollack and part of his team are to join Covington & Burling pending a partnership vote.

DLA Piper will take on real estate partner William Naunton and several members of his team including partners Cornelius Medvei, Bryan Pickup, Ed Page, George Burrha and Jeremy Brooks. Managing associate Omer Maroof will also join as a partner, alongside eight other lawyers and three trainees.

Tax partner Clive Jones will join Greenberg Traurig, alongside top biller Steve Cowins and Marc Snell, M&A partners Michael Goldberg and David Fitzgerald and partner Matthew Priday along with their teams.

victoria.young@legalease.co.uk

Read more: ‘This is a gritty place’: Macfarlanes’ leaders on the hustle it takes to look effortless

For more on King & Wood Mallesons, subscribers can read ‘Branded’ for an in-depth look at the firm.

Legal Business

Macfarlanes LLPs show profit dip to £82.5m as management pay rises

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After record profitability last year Macfarlanes has reported a 9% fall in profits to £82.5m, while management pay was up, according to its latest LLP accounts.

In 2014/15 Macfarlanes recorded operating profits of £91m with top member income up to £2m. However, this year the top earning member took home £1.76m. Key management figures at the firm collectively saw an increase in take home pay from £4.3m, up from £3.9m the year before.

Turnover increased just over 1% to £161m for the financial year ending April 2016, up from £159.6m the previous year. The increase is Macfarlanes sixth year of consecutive growth.

In its financial results reported over the summer, the London firm recorded profit per equity partner (PEP) of £1.29m. The fall in PEP came after a record £1.55m in 2014/15 that was better than four of the five Magic Circle firms, with the exception of Slaughter and May.

Staff costs increased to £48m in 2015/16 from £44m the year before. The total number of support staff increased from 206 to 299, while fee earners increased to 333 from 312.

Macfarlanes has landed roles on a number of key deals this year, securing a role advising on Verizon’s $2.4bn purchase of Fleetmatics and acting for Argus Media’s chairman in its £1bn takeover by General Atlantic.

On the drop in profitability, the firm said in a statement: ‘As far as the fall in profits is concerned, we have been consistently clear that 2014/2015 was a standout year for profitability. Accounting practice requires partner remuneration to be reported according to the year in which it is allocated. Therefore the remuneration for partners within the group reflects the balance of the higher profits in 2014/15 which were not allocated in the accounts for that year but were required to be allocated in 2015/16.’

matthew.field@legalease.co.uk

For more on Macfarlanes recent growth, see: ‘This is a gritty place’: Macfarlanes’ leaders on the hustle it takes to look effortless’