Legal Business

Dealwatch: Mayer Brown, Macfarlanes and Gateley act on City Link administration

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Corporate GateleyMacfarlanesMayer Brown
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Mayer Brown, Macfarlanes and Gateley are all acting on the administration of parcel delivery company City Link following its collapse on Christmas Eve.

Macfarlanes is acting for the administrators from EY, Hunter Kelly, Charles King and Tom Lukic, who were appointed on 24 December 2014 with M&A and private equity partner Simon Perry, restructuring and finance partner Jat Bains and senior counsel and head of insolvency Simon Beale leading. The firm also acted for Better Capital, which owns the Coventry-based company, on EY’s appointment.

Better Capital took the decision to place City Link into administration after having written down its £40m investment by 50% to £20m. City Link has been operating as a delivery company across the UK and Ireland for over 40 years, with an annual revenue of around £300m. According to its website, it has a fleet of 1,700 collection and delivery vehicles, with a national network of over 50 corporately owned depots.

Mayer Brown and Gateley advised City Link companies prior to the administration, with corporate restructuring partner Brendan McGeever leading for Gateley, along with insolvency and restructuring partner Daniel French. Meanwhile, Devi Shah, joint head of restructuring, bankruptcy and insolvency group in London led for Mayer Brown.

kathryn.mccann@legalease.co.uk

Legal Business

‘How not to conduct investment banking’: Addleshaws defeats Mayer Brown in UBS Commercial Court derivatives battle

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Litigation Addleshaw GoddardMayer Brown
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Banking giant UBS has been defeated in the Commercial Court today (4 November) over a $340m dispute it mounted against German water utility company Kommunale Wasserwerke Leipzig (KWL) relating to the sale of complex derivatives products by the bank, after a five-year long battle that saw Addleshaw Goddard and German firm Noerr defeat Mayer Brown.

KWL, the municipal water company for the City of Leipzig, entered into four single tranche collateral debt obligations (STCDOs) between 2006 and 2007 either directly with UBS or indirectly through two other intermediary banks, Depfa Bank and Landesbank Baden-Württemberg (LBBW). The STCDOs, which each consisted of a synthetic portfolio of credit default swaps on which KWL ‘sold’ credit protection to UBS in exchange for payment of a ‘premium’, had a notional value of over $400m.

After the STCDOs sustained major losses in the wake of the financial crisis, it emerged that the sale had been procured by substantial bribes paid by KWL’s financial advisers to its then managing director. Consequently, UBS sought to enforce each of the STCDOs against KWL and the intermediary banks.

Following a 14 week trial, Justice Males described the case as ‘a case study in how not to conduct investment banking in an honest and fair way’ and made findings of serious misconduct by UBS personnel and other parties involved, including bribery and dishonest behaviour which led to KWL investing in the complex products.

Notably, the court said it seemed surprising that a municipal water company should engage in the speculative business of selling credit protection which, if things went wrong, would expose it to liabilities on such a scale.

This was expressed in an internal email sent by Dublin bank Depfa, a third party to the proceedings, in November 2008: ‘You have to wonder what in the name of God a utility company were doing selling protection on this portfolio!! They must have been persuasive UBS salesmen!!!’

The judgment further criticised UBS Global Asset Management (UBS GAM) and held that it failed to properly monitor its concentrated bet on high risk financial entities. Males further found that the losses that KWL sustained under the STCDOs were caused by UBS GAM’s negligent portfolio management and KWL would therefore have been entitled to recover these losses as damages from UBS GAM if the STCDOs had not been rescinded.

Brick Court Chambers quartet Tim Lord QC, Simon Salzedo QC, Stephen Midwinter and Craig Morrison were all instructed for KWL by Addleshaw Goddard, which included a team led by partner Michael Barnett. Instructed by Mayer Brown for the UBS parties was Lord Falconer, and Brick Court Chambers trio Richard Slade QC, Jonathan Dawid and Edward Harrison.

Fountain Court Chambers’ trio David Railton QC, Richard Power and Edward Levey were instructed by Dentons for Depfa, while Maitland Chambers’ Nicholas Peacock QC, Catherine Addy, and Fiona Dewar were instructed by Baker & McKenzie for LBBW. Bakers’ financial disputes partner, Arun Srivastava, said: ‘We are pleased to have secured a positive outcome for our client LBBW. The Court accepted LBBW’s case on construction that the swap with UBS was not enforceable.’

On the decision, Addleshaws partner Barnett said: ‘While the judge expressed the hope that the bank’s conduct in this case “belonged to a bygone era”, the outcome highlights the importance for banks of maintaining rigorous, effective and independent control functions.’

sarah.downey@legalease.co.uk

Legal Business

Revolving doors: US sees spate of lateral hires

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Strategic recruitment DLA PiperMayer Brown
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Lateral hires last week have seen Mayer Brown, DLA Piper and Reed Smith make key hires in their US practices, while a Bingham McCutchen partner exits to go in-house.

Mayer Brown has grown its private equity and mergers and acquisitions (M&A) capabilities in New York with the hire of corporate and securities partner Jeff Legault, as the firm focuses on private investment funds in the States.

Legault joins from Reed Smith and specialises in mergers and acquisitions, both public and private, with an emphasis on private equity transactions across the industrial, manufacturing and financial services. His clients include public and private companies, private equity firms and investment banks.

On the other hand, DLA Piper has expanded its litigation practice in Washington DC with the hire of Jonathan Haray. He was previously assistant chief litigation counsel for the US Securities and Exchange Commission (SEC) and deputy chief of the fraud and public corruption division at the United States Attorney’s Office.

Haray has experience of advising on complex securities enforcement matters, including Foreign Corrupt Practices Act (FCPA) and securities fraud violations. From 2007 to 2012, he prosecuted cases involving FCPA violations, False Claims Act violations, health care fraud, corporate and insurance fraud, money laundering, and Bank Secrecy Act violations. He also served as an assistant US attorney in the superior court and appellate divisions from 2002 to 2007.

DLA Piper’s co-chair of its white collar, corporate crime and investigations practice Patrick Smith said: ‘Jonathan’s significant litigation background and extensive trial experience at both DOJ and the SEC add great depth to DLA Piper’s white collar practice both in DC and nationally. As these agencies continue their aggressive efforts to enforce the federal securities laws, Jonathan’s broad government enforcement experience will be a tremendous asset to our clients.’

And going from private practice to in-house is Bingham McCutchen corporate partner Chris Riley, who has quit the firm to join gaming and media streaming website Machinima as its general counsel (GC). Riley will lead the company’s legal department and provide strategic legal and business affairs guidance to the company and will report to Machinima’s chief executive officer Chad Gutstein.

Before becoming a partner at Bingham, Riley was a legal consultant at Disney Interactive, worked as GC and senior vice president at Ticketmaster, and as GC and vice president at Match.com.

Gutstein said: ‘Machinima’s continued success depends on our ability to attract and retain the best people. His [Riley’s] deep legal expertise and advisory skills and multiple stints as General Counsel for leading digital and traditional businesses, bring insights and proven executional excellence to Machinima.’

Reed Smith added two partners to its intellectual property (IP) practice in Chicago with Robert Browne and John Cullis joining from Neal Gerber & Eisenberg.

Browne has experience of advising clients in patent, trademark, copyright and unfair competition law and related litigation in federal district and appellate courts and before the International Trade Commission, while Cullis focuses on intellectual property litigation, counselling and procurement and routinely advises clients on the clearance, registration, enforcement, licensing and acquisition/disposition of IP rights.

Jaishree.kalia@legalease.co.uk

Legal Business

Mayer Brown cuts trainee intake by half and retains 67% while Weil retains 100% of trainees

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Mayer Brown will be cutting its September 2016 trainee intake by half, taking in just ten applicants compared to their usual intake of 20. 

The firm said in a written statement: ‘We constantly monitor the resource demands of all parts of the London business, as well as our ability to commit to our trainees and provide them with high quality training and career opportunities with the firm.’ Despite the September cuts Mayer Brown’s March intake will remain at five.

In terms of retaining its trainees, the firm confirmed today (25 July) that from a total of 15 trainee applicants previously, the firm has retained ten or 67% for September 2014. Fellow US firm Weil, Gotshal & Manges continued in the same manner it has adopted in recent years, keeping on the vast majority of newly qualified lawyers and retaining all 11 London trainees in its Autumn 2014 cohort

Dominic Griffiths, graduate recruitment partner and head of banking and finance at Mayer Brown said: ‘We are delighted that ten of our trainees will take up a permanent position at the firm and we look forward to seeing them progress as they continue to build their careers.’

Griffiths added: ‘At Mayer Brown we aim to match our trainees’ preferences with the needs of each department to ensure that there is a good fit and this will continue to be our priority. Some of our trainees will be leaving us in order to pursue opportunities outside the firm and we wish them all the very best for the future.’

Weil’s 11 associates will be joining teams across a broad range of practices, including corporate, banking, restructuring, private funds, tax, employment and real estate.

The 100% trainee retention rate follows London office’s promotions in January of Mark Lawford and Hannah Field-Lowes, who joined Weil as a trainee, to partner. Most firms have increased their trainee retention rates this year, with Magic Circle firm Freshfields one of the few exceptions. Weil maintained a high trainee retention rate in London in the aftermath of the recession, retaining 87.5% of trainees in March 2010, with the firm looking to expand its UK capacity as London firms slashed theirs to accommodate for a fall in mandates.

Graduate recruitment partner Jonathan Wood said: ‘We are delighted that each of our trainees have accepted their offers and will be joining Weil to embark on the next important phase of their careers. Our high retention rate is testament to both the importance the London office places on our graduate recruitment scheme, which is one of the most highly regarded schemes in the City and one which attracts the best and brightest talent.’

Jaishree.Kalia@legalease.co.uk

Legal Business

US results season: Sidley posts a 7% increase in turnover as Mayer Brown sees a return to 2007 PEP levels

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Financial results 2013 Mayer BrownSidley Austin
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A year of expansion has seen top 15 Global100 firm Sidley Austin post solid 2013 results, with revenue up by around 7% to $1.6bn from $1.49bn and net profits up by around the same margin to $547m from $510.5m. The firm’s profit per equity partner (PEP) and revenue per lawyer both rose by approximately 4% to $1.87m and $954,000 respectively.

Highlights for the 1,636-lawyer firm include being awarded a coveted qualifying foreign law practice license in Singapore last February, since when it has built a 25 fee-earner office, focusing in part on energy work.

The firm also took a ten partner securities regulation group from Bingham McCutchen in New York in April last year and an eight partner team from Weil Gotshal & Manges in Dallas in September. Six of the Weil Gotshal partners joined the complex commercial litigation practice and two the private equity group.

Sidley’s clients include JP Morgan, which the firm represented in mortgage-backed securities litigation, Airbus SAS and the People’s Republic of China in World Trade Organisation disputes.

Meanwhile Mayer Brown has posted a PEP figure of $1.285m, an increase of 11.6% that takes it to above 2007 levels.

Turnover was up by around 5.5% to $1.15bn, from $1.09bn in 2012, which had seen a drop of 4% on 2011 numbers. Over a five year period from 2007-12, the firm’s overall revenue is down 8%.

The firm attributed its growth in revenues to a strong performance across the board in its Americas, Asia and European offices, with litigation and finance singled out for performing particularly well.

Revenue per lawyer was up 9.7% from $711,000 to $780,000 while overall lawyer and partner headcount remained relatively flat.

The firm said its City office revenues were up 12% in 2013, with its finance, litigation and real estate teams performing well. Growth came from winning new panel appointments as well as a number of panel re-appointments for clients including General Electric, Kiln Group, Deutsche Bank and Nomura.

Mayer Brown senior partner Sean Connolly said: ‘We are very pleased with our results. As the market continues to shrink, we gain more market share.’

jaishree.kalia@legalease.co.uk, david.stevenson@legalease.co.uk

Legal Business

LLP latest: Mayer Brown sees revenue dip by 9.5% as Pinsents gains £20m from McGrigors merger

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Financial results 2013 Mayer BrownPinsent Masons
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Mayer Brown has released its LLP results for the year ending 2012/13 for the UK business, reporting a 9.5% loss in revenues while profits are down by 5.5%.

The top 30 Global100 firm’s UK results filed with Companies House on 3 February show its turnover dropped from £105.9m in 2012 to £95.8m last year. Profits also dropped from £22m to £20.8m over the same period, while its operating profits fell from just under £31m in 2012 to £29.1m in 2013.

The firm’s net debt however, also fell to £25.6m in 2013 from nearly £34m in the previous year. Its overdraft, which stood at £3.7m in 2012, was significantly cut to £228,296 during that period, while the cash position at the 1,536-lawyer firm improved from £405,916 in 2011/12 to just over £2m in the last year.

Overall staff headcount fell from 468 to 428, including 44 less support staff and 14 less legal staff compared to the previous year.

Correspondingly, the firm’s staff costs were lower last year, at £31.3m from £34.3m, while the total amount paid out in salaries also decreased to £27m from £29.6m.

Nevertheless, the firm’s highest paid equity member took home slightly more in 2013 at £1.16m, up from £1.05m.

The firm said in the filings that while the business environment continued to be challenging, its members’ profitability has been maintained through managing its cost base, reducing operating expenses by 11% and a decrease in headcount.

Elsewhere, Pinsent Masons accounts revealed that the cost of its merger with Scottish firm McGrigors in May 2012 was £20m, although it received £17m directly from the merger.

The merger also had a significant impact on Pinsent’s 2011/12 turnover, with the top 20 LB100 firm posting a 39% increase in revenue from £220.5m to £306.7m, while profits were up from £62.9m to £85.6m.

McGrigors turnover for the 2011-12 financial year was £43m with a profit of £13m.

The merger also largely accounts for the additional 418 fee-earners who have joined Pinsents, including an extra 39 equity partners and 62 non-equity partners.

The firm’s highest paid member received £590,200, up from £531,600 the previous year.

However, the firm’s overdraft has gone up by over £9m, to £9.7m and its overall costs have risen by 43% to £136m.

Also revealing its last pre-merger figures was Dickinson Dees, which saw its merger with Bond Pearce go live in May 2013. Its filings reveal a modest 3.2% increase in revenues to £47.3m but a slight reduction in profits of 0.6% to just over £12m. This is in contrast to Bond Pearce’s LLP accounts filed in December, which revealed an 11% increase in revenue to £51.8m, up from £46.5m in 2011-12.

Dickinson Dees’ highest paid member received almost 10% more than in the previous financial year, taking home £300,000.

The firm’s borrowing also increased, with its bank overdraft facility up to £2.3m from £1.6m and its net debt having increased by over a £1m to almost £6m.

jaishree.kalia@legalease.co.uk, david.stevenson@legalease.co.uk

Legal Business

Revolving doors: Key hires for Mayer Brown, Sullivan & Worcester, Harbottle, DWF, Irwin Mitchell and Burness Paull

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Strategic recruitment DWFIrwin MitchellMayer Brown
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Mayer Brown is continuing to beef up its City offering with its seventh partner hire in two months, as Allen & Overy (A&O) employment and benefits partner Stefan Martin joins the firm, the top 25 Global 100 firm announced last week.

The appointment of Martin – who joined A&O in 1992 and has been a partner at the Magic Circle firm for 13 years, having spent most of his career advising financial institutions and corporates on employment issues – comes as Mayer Brown recently revamped its international strategy, re-grouping around its large international clients and naming London as one of five global sites on which to focus much of its energies alongside Washington D.C, New York, Chicago and Hong Kong.

Also boosting its London capability is Boston-headquartered Sullivan & Worcester, which has made a significant double hire to its City finance team of former Squire Sanders acquisition partner Mark Norris and Dentons trade finance partner Simon Cook.

A former Clifford Chance and Simmons & Simmons lawyer, Norris advises on acquisition finance, structured export credit finance, structured trade and commodity finance in emerging markets, which includes financings in Africa and Europe.

Meanwhile Cook is known for his expertise in structured finance, trade and commodities finance, project finance, receivables finance and borrowing-base facilities in Africa, the Middle East and the CIS, with the UK Legal 500, 2013 describing him as a ‘great project manager’ who ‘gets the job done.’

Elsewhere, Vodafone’s chief of legal, consumer services and terminals Daniel Tozer has made the move back to private practice, joining West End TMT boutique Harbottle & Lewis after nine years at the telecoms giant.

In 2009, Tozer became head of the team providing legal support to Vodafone’s global terminals function, handling the contractual relationships with Vodafone’s mobile handset suppliers such as Apple, RIM, BlackBerry, HTC and Samsung, as well as operating system suppliers such as Microsoft and Google. He notably acted as key legal advisor in the negotiations which brought the iPhone and iPad to Vodafone UK and across the world.

Harbottle’s managing partner Glen Atchison said: ‘Daniel is passionate about helping businesses to create, implement, launch and deliver innovative products and services. Whilst at Vodafone he led on the legal aspects of many of its most business-critical commercial transactions, gaining a level of practical experience that will bring real value to many of our clients and make him an excellent addition to the firm.’

His move comes as expansive UK top-25 firm DWF has also appointed former Trowers & Hamlins local government laws commercial contracts and public procurement partner Michael Mousdale to its Manchester office, bolstering its national commercial team.

Just last month the 984-lawyer firm acquired a 50-strong team from insurance specialist firm Greenwoods, following objections from Aviva that Greenwoods recent merger with Plexus Law may compromise the teams’ work for the insurance giant, which it counts as its main client.

Across the Scottish border and Burness Paull has poached two pensions partners, Martha Quinn and Mark Lindsay, from fellow Scots firm Brodies, who join as consultant and director respectively in the pensions team.

Having formerly worked in the City at Berwin Leighton Paisner, legacy Norton Rose and Wragge & Co, Quinn has been involved in some of the largest public sector, insurance and utilities transactions in the UK, while dual-qualified Lindsay was previously at City firms Slaughter and May and Stephenson Harwood.

Head of the pensions team Sarah Phillips said: ‘These two senior appointments coincide with a period of significant growth for the Burness Paull’s pensions team. We have expanded in Aberdeen with instructions from high profile oil & gas clients and achieved further growth in advising on a string of asset backed funding, M&A/restructuring and banking transactions, pensions litigation, and general company and trustee pensions advice. Our trustee company, Burness Paull Pension Trustees Limited, has seen its mandates double in the past year.’

francesca.fanshawe@legalease.co.uk

Legal Business

Strategy review sets expansive course as Mayer Brown aims to galvanise its business

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Eight months in the making, Mayer Brown’s revamped international strategy will now see the US law firm re-group around its large international clients and allocate significant resource to providing a more joined up global service in which London is forecast to be key.

The new strategy, put together by the 1,536-lawyer firm’s 12-strong partnership board and eight-member management committee, will see Mayer Brown focus on strengthening its US strongholds in Washington DC, New York and Chicago, as well as its 85-partner London site and Hong Kong office, which now houses 170 lawyers, of which 60 are partners.

With deals increasingly overlapping practice groups, such as litigation and regulatory, Mayer Brown plans to institutionalise its global clients so it can provide a full service to clients like HSBC in the five key regions.

Mayer Brown chairman Paul Theiss, who took over from Herbert Krueger in June last year, said: ‘Our partners around the world who work with the same clients co-ordinate very closely so we can share ideas and understand businesses’ objectives as well as possible. This helps us to meet our clients’ needs. We’ve allocated significant resources to this effort, with the goal of providing increased value.’

London senior partner Sean Connolly said: ‘Client teams are organised on a multi-jurisdictional basis and it is through these teams that we gain a deeper understanding of our clients’ needs and how the firm’s resources can be used to support them.’

Despite repositioning itself over ten years ago, the Chicago-founded firm still suffers from a branding issue and is seen as having made less headway than rivals in breaking away from its US roots.

However, part of the strategy is to grow the London office in key areas, using it as a European hub and increasing its domestic work. Global real estate group head and management committee member Jeremy Clay told Legal Business: ‘This is where we want to evolve as we can leverage our corporate relationships. We are building on strengths – securitisation has always been a strong area for us and we have recently recruited here and in our London real estate team, hiring Martin Wright and Pat Jones.

‘The London office does significant real estate work for us, Asia and other international investors. This joins up with our Germany and Paris teams. We also intend to be a player in our local market, acting for major UK investors and property companies.’

The firm has added eight City partners this year, with Berwin Leighton Paisner’s Trevor Wood and Richard Todd, White & Case’s Mayank Gupta and Allen & Overy’s David O’Connor most recently joining its banking and finance practice. It also plans to bolster its employment and benefits, pensions and arbitration groups.

The top 25 Legal Business Global 100 firm achieved fee income of $1.09bn last year, but Theiss says the ambition is to grow in a controlled manner and to be among the world’s top 10-20 firms.

Theiss reflects: ‘We are over the growing pains. We have passed the hurdle of becoming international, which many firms are trying to do now. There’s been a significant period of change at Mayer Brown as we’ve become a truly international business law firm.’

 

jaishree.kalia@legalease.co.uk

Legal Business

Strategy review sets expansive course as Mayer Brown aims to galvanise its business

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Mayer Brown
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Eight months in the making, Mayer Brown’s revamped international strategy will now see the US law firm re-group around its large international clients and allocate significant resource to providing a more joined up global service in which London is forecast to be key.

The new strategy, put together by the 1,536-lawyer firm’s 12-strong partnership board and eight-member management committee, will see Mayer Brown focus on strengthening its US strongholds in Washington DC, New York and Chicago, as well as its 85-partner London site and Hong Kong office, which launched in 2006 and now houses 170 lawyers, of which 60 are partners.

Legal Business

City ambitions – Mayer Brown adds to London laterals tally with hire of BLP finance partner

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Strategic recruitment Berwin Leighton PaisnerMayer Brown
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Mayer Brown has added to its tally of recent London hires as Berwin Leighton Paisner (BLP) finance and restructuring partner Trevor Wood joins the US firm.

Wood will be reunited with former BLP banking and finance partner Richard Todd when he joins 1,536-lawyer Mayer Brown, which has made six lateral hires in its London office in the last month, compared to just five in 2012.

Meanwhile, BLP’s partner departures continue in the wake of the firm’s disclosure in September that its profits for 2012/13 are down by nearly 40%. The firm also unveiled a drop in revenues this summer of 5% to £233m, making it the worst financial performer of the top 25 UK firms.

At the start of this month (October) BLP private equity partner Michael Weir joined former colleague and head of private equity Raymond McKeeve at Jones Day. Other recent departures include Patrick Somers, who spearheaded BLP’s Managed Legal Services initiative and who joined DLA Piper in September. In the same month, Mishcon de Reya announced the hire of non-contentious commercial partner Adam Rose, while rated contentious tax head Liesl Fichardt left for Clifford Chance.

The moves come as BLP moves to address its profitability issues. The top 20 firm also completed a redundancy round in May, which resulted in the loss of 102 jobs including 58 legal staff and 44 secretarial staff with the aim of reducing salary costs by 15%.

Before this year BLP was labelled as one of the most upwardly mobile firms in the last decade, with an enviable long-term performance. However, over-expansion into difficult markets, together with a drop in transactional work and the cost of an aggressive lateral hiring strategy has seen it hit hard, although, according to one senior partner at the firm, BLP has already seen growth on this time last year.

david.stevenson@legalease.co.uk

For further analysis of BLP’s performance see Comment: The lingering enigma of BLP’s bad year