Legal Business

Letter from America – Reed Smith puts in confident 2014 showing with revenues up to $1.15bn

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Re-enforcing what is already shaping up to be a robust year for major US-bred advisers, Reed Smith is the latest major law firm to announce robust growth with revenues rising 7% in 2014 to reach $1.15bn.

Growth in the world’s two dominant legal hubs – New York and London – helped to propel revenue and profitability at the firm, which last year received mandates from Barclays Bank, Sky and AstraZeneca. Revenue for the 700-partner firm increased from $1.07bn in 2013 to $1.15bn while profit per equity partner climbed 6% from $1.14m to $1.2m. Revenue per lawyer growth was more subdued, rising 2% from $691,000 to $703,000.

Reed Smith attributed the results to its focus on five core business sectors: financial services; life sciences and health; energy and natural resources; shipping and transport; and media and entertainment.

London, now the firm’s largest office with 373 lawyers, has been growing quickly. The office, which now generates well over £125m annually – has hired 15 partners in the past 12 months and promoted seven London lawyers to the partnership at the start of the year.

One of the firm’s biggest mandates arrived in London from Marathon Asset Management, with partners Tamara Box and Iain Balkwill advising on the acquisition, restructuring and financing of an €850m portfolio of non-performing loans.

Reed Smith’s Houston office, which opened in February 2013, also made an impact on the firm’s revenues having since grown to 45 lawyers.

Sandy Thomas, global managing partner at Reed Smith, said: ‘Reed Smith achieved solid financial results in 2014. Work flow into and out of our offices across our platform has never been stronger and that underscores a key asset – our single global partnership.’

He added: ‘Reed Smith begins 2015 with enviable forward momentum. Our newest offices in Singapore and Houston are fully integrated into our operations, and their performance in 2014 exceeded our expectations.’

Thomas has launched a five-year plan to drive growth in the firm’s corporate practice, particularly in the US. Initiatives have also been rolled out to improve productivity, including growing its client value team, which manages mandates and prices work. The team launched in 2012 in Pittsburgh and now has 15 members globally, including three in London.

Reed Smith’s announcement is the latest in a string of robust 2014 results to so far emerge from leading US law firms, with Latham & Watkins establishing itself as a pace-setter last month after confirming that its revenues were up more than $300m.

With a resilient national economy powering US-bred advisers, UK rivals look set to face increasingly intense competition in Europe.

tom.moore@legalease.co.uk

Legal Business

Trainee retention: Reed Smith, A&O and HSF keep on over 90% of spring 2015 qualifiers

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Allen & Overy (A&O), Herbert Smith Freehills and US firm Reed Smith have helped to quash the nervousness among trainee lawyers across the City, with each keeping over 90% of their recently qualified trainee intakes.

HSF has kept on 39 of its 42 trainees as newly qualified lawyers, giving it a retention rate of 93%. All 39 trainees offered a permanent job at the firm accepted, with one trainee having chosen not to apply.

Last year, the firm posted a 90% retention rate with 24 lawyers of the 38 successful trainees qualifying into corporate and disputes.

Given the returning workloads at City law firms, early indications are that firms’ much-shrunken trainee intakes are more likely to be offered a job as a newly qualified lawyer than in previous years.

This is true in the case of A&O, which kept on 43 of its 46 qualifying trainees from its spring intake, also giving the Magic Circle firm a 93% retention rate. All but one of its spring intake applied.

This is markedly up on the 82% retention rate A&O posted with its autumn 2014 cohort, when just 41 of 50 qualifying trainees stayed on, and the 84% kept on six months earlier. However, the trainee intake has fallen sharply over the last four years in a bid to cut costs.

Plugging that gap left by the Magic Circle are the US firms rapidly gaining market share in the City, with the likes of Akin Gump Strauss Hauer & Feld having launched trainee schemes.

Reed Smith is keeping 12 out of 13 trainees on as newly qualified lawyers this spring. That gives the firm a 92% retention rate, with the firm not having fallen below 90% for over a year.

The NQs will be split between multiple practices areas with two each in corporate, finance, real estate and shipping plus one each in commercial disputes, employment, energy and media. All will be based in London with one shipping secondment to the Athens office for 12 months.

Lucy Crittenden, Reed Smith graduate recruitment manager, said: ‘We’re pleased to maintain a high trainee retention rate this spring. The quality of our trainees has been consistently high and the retention rate reflects both that and our philosophy of recruiting the best talent to retain on qualification.’

tom.moore@legalease.co.uk

Legal Business

Routes into law: Queen Mary teams up with Reed Smith on ‘degree with apprenticeship in law’

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US law firm Reed Smith and Queen Mary University in London have created the first degree with an apprenticeship in law offered at an elite UK university.

The first of its kind in the Russell Group, the four-year law degree will see students take a year-long placement at Reed Smith, which has been hungry for growth in London making up seven partners in the City for 2015.

The new four-year LLB, tagged Law in Practice, is being made available to existing Queen Mary LLB students from January 2015, with the first formal placement planned to take place in 2016-17. Initially, five students will be guaranteed a place with a view to increasing the number to 10 in 2017-18.

Students will initially apply to the LLB and can then apply for a place on the new programme at the end of their first year. As part of the criteria for the course, students will be required to complete an eligibility assessment at the end of the first year, with successful students then required to complete special skills modules in the second year prior to the placement.

The course follows Reed Smith’s creation of its Legal Practice Course in partnership with BPP’s law and business schools in 2012, which was modelled on MBA-style business intelligence projects designed to help students understand law firm clients and leads to a Master’s qualification.

Professor Valsamis Mitsilegas, head of the law department at Queen Mary University of London, said: ‘This innovative new programme supports and reaffirms our commitment to deliver real-world, practical experience, alongside traditional educational approaches and academic excellence that students expect from one of the UK’s leading law schools. The new degree provides our students with an opportunity available at no other Russell Group university.’

Nigel Spencer, global director of learning and development at Reed Smith, added: ‘Careers in law are increasingly competitive and both degrees and apprenticeships offer valuable routes to student employability. Our new “degree with apprenticeship in law” offers the best of both, ensuring that students can benefit not only from the in-depth critical thinking of a law degree at a top university but also gain hands-on commercial experience of legal practice in a City law firm.’

tom.moore@legalease.co.uk

Legal Business

Asia: Reed Smith establishes South East Asia corporate practice as Greenberg launches in Tokyo

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Reed Smith has hired Stephenson Harwood’s South East Asia head of corporate Matt Gorman to launch a corporate practice in the region from its Singapore office.

Gorman leaves Stephenson Harwood after 14 years, before which he was seconded to Royal Bank of Scotland for eight months in London. He joins as a partner with experience of advising on energy and natural resources, TMT, real estate and financial services deals.

Reed Smith first set up its Singapore office in 2012 offering client services in international arbitration; energy, commodities and natural resources; shipping and insurance recovery work; and finance including structured finance and derivatives.

Reed Smith Singapore office managing partner Gautam Bhattacharyya said: ‘We have built a strong platform in Singapore since we established our office and Matt’s arrival now ensures we are able to fully support the transactional needs of our clients.’

Gorman added: ‘The chance to continue to develop my own practice alongside the terrific platform that Gautam and the team have established in Singapore was a huge draw.’

Meanwhile, Greenberg Traurig has launched a new office in Tokyo with a three-partner team from DLA Piper and White & Case.

The new office will operate under the name Greenberg Traurig Horitsu Jimusho, with DLA Piper’s Koji Ishikawa heading the new office, while new co-chairs Yuji Ogiwara and Koichiro Ohashi are joining from White & Case. Tokyo, launched in response to growing client needs and increased investment into Japan, is Greenberg’s third in the region and will work closely with existing teams in Shanghai and Seoul.

The firm’s new partners said in a statement: ‘Contrary to its appearance, Japanese clients are not well served by international law firms in Tokyo. We often hear from Japanese clients that so-called “elite law firms” are too expensive and their practice areas are too narrow to meet their needs. Also, Japanese clients appear to have some frustration that other established US and foreign firms are too independent from their firms and do not provide good synergy with or access to their global operations. We will not suffer from these issues and will deliver not only an elite level of excellence but the true value that Japanese clients seek today.’

jaishree.kalia@legalease.co.uk

Legal Business

Investing in London: Reed Smith promotes seven in the City in 24-strong partnership round

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Pittsburgh-headquartered Reed Smith has made its London office the centre of its promotions round by making up seven London lawyers to partner, four more than any other office.

As part of a 24-strong promotions round, Reed Smith elected three London-based lawyers in its financial industry group, Iain Balkwill, James Fisher and Nicholas Williams. The firm also boosted its private equity and energy and natural resources groups with the promotions of James Cross and Shareena Edmonds, respectively, and made up disputes lawyer Chloe Carswell, who is well known for representing Kazakhstan against a multi-million pound arbitration claim brought by two Turkish telecommunications companies. Brigid North in real estate was also made up.

The strong London promotions round is a reversal on last year, when five associates were elected to the partnership in New York and three in London, this year’s promotions resulted in just three New York lawyers making partner.

Sandy Thomas, Reed Smith’s global managing partner, said: ‘They have demonstrated a commitment to the profession, this firm and their clients that is commendable. This is an important career step for each of them and an important milestone for Reed Smith as well. We expect great things from this group in the years ahead.’

tom.moore@legalease.co.uk

Legal Business

Revolving Doors: OC, Paul Hastings and Reed Smith bulk out their City offerings as HSF loses legacy Freehills partner in Singapore

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Last week, Osborne Clarke, Reed Smith and Paul Hastings all expanded their City practices, while Clayton Utz hired Herbert Smith Freehills’ (HSF) Singapore real estate head.

OC expanded its private equity practice with Russell Van Praagh joining as a corporate partner from McDermott Will & Emery as the firm looks to improve on the 32 private equity transactions it carried out in 2013, with a total deal value of £1.2bn.

Van Praagh joined the US firm from ailing Dewey & LeBoeuf in April 2012, alongside partner Mark Davis. He focuses on private equity, venture capital and investment work for institutions, family offices and private individuals.

Meanwhile, US firms Reed Smith and Paul Hastings both made laterals in London. White & Case’s technology lawyer Ashley Winton quit to join Paul Hastings’ City corporate practice as the firm pushes to expand its London technology and privacy practice. Winton advises on technology, IP and antitrust with particular emphasis on European regulatory issues and will officially join the firm on 3 November.

Reed Smith expanded its tax, benefits and wealth planning group with partner Simon Gough, DLA Piper’s former head of UK Tax. He focuses on structured and asset finance transactions as well as contentious tax matters.

Caspar Fox, head of Reed Smith’s European tax practice, said: ‘Simon is a renowned figure in the tax market. His welcome arrival will bolster our European offering, providing immediate benefits to our clients across our key sectors of media, financial services and shipping. His expertise will dovetail neatly with our current practice and provide valuable additional resource to our team.’

And while Herbert Smith Freehills (HSF) ramped up in Asia with a double Ashurst hire (reported last week), the firm also lost real estate head, funds-focused corporate partner Simon Taskunas.

Taskunas rejoins Clayton Utz in its Perth office, after he left and relocated to join legacy firm Freehills in Singapore in 2006. Alongside Taskunas, property partner Danielle Mildren is also joining the firm from Minter Ellison, where she was a senior member of the firm’s property team. 

Taskunas specialises in multidisciplinary real estate sector work for clients based in Asia Pacific including institutional fund managers. He has experience in advising on structuring and investments, M&A, joint ventures, leasing, finance and property developments. Mildren’s new role starts from this month, while Taskunas will join the firm in January 2015.

jaishree.kalia@legalease.co.uk

Legal Business

Reed Smith ISP clients defeated in landmark counterfeit website dispute brought by Cartier owner

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In what gives brand owners the power to combat trademark infringement in the EU, UK internet service providers were defeated as London’s High Court on Friday (17 October) handed down a landmark judgment establishing that trade mark owners can secure court orders blocking websites that are structured to infringe their trade mark rights by selling counterfeit goods online.

Justice Richard Arnold held that the UK’s five major internet service providers comprising Sky, BT, EE, TalkTalk and Virgin (collectively the ISPs) should block or at least impede access by their respective subscribers to six websites, dubbed the ‘Target Websites’ which advertise and sell counterfeit goods.

The battle saw the ISPs represented by Reed Smith partner Michael Skrein who instructed 8 New Square duo Charlotte May QC and Jaani Riordan. IP boutique Wiggin, meanwhile, represented the claimant, Switzerland-based luxury goods holding company Richemont, which owns Cartier, MontBlanc and Chloé, with Wiggin’s head of IP/rights protection team Simon Baggs leading a team and instructing 8 New Square’s Adrian Speck QC and 11 South Square’s Benet Brandreth.

The court concluded that there is a clear public interest in preventing the sale of counterfeit goods online and Richemont have a ‘legitimate interest in curtailing such activity’ and such orders by the claimants ‘would not interfere with the provision by the ISPs of their services to their customers’.

It is the first time an application for a website-blocking order against internet service providers in order to combat trade mark infringement has been made in the EU. This test case is likely to be followed by other applications by Richemont and other trade mark owners, both here and in other countries.

David Allen Green, Of Counsel and head of the litigation and media practices at Preiskel & Co, and who acted on behalf of Open Rights Group (ORG) which made written submissions to the court focusing on the position of third parties potentially affected by the orders sought by Richemont, said: ‘ORG is not on the side of counterfeiters. But innocent internet users can end up being affected by these orders. The court should be mindful of how these orders can impact on third parties. We are grateful to the High Court for recognising that the test to be applied by the court includes the requirement of there being safeguards against abuse. We hope that this intervention will go some way to help ensure that future claimants cannot use blocking orders to restrict legitimate activity or free speech.’

sarah.downey@legalease.co.uk

Legal Business

‘Chinese law firms are underestimated’: Q&A with Roger Parker, managing partner for EMEA at Reed Smith

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Reed Smith’s managing partner for Europe, Middle East and Asia, Roger Parker, discusses international expansion, Chinese law firms and trying to get more corporate work.

Are law firms feeling more restraint when it comes to international expansion?

There is a more conservative approach from law firms partly reflecting a concern on dilution and partly more focused execution on strategy. Similarly, when assessing physical presence in markets. There are examples of firms pulling back from strategic markets, being more business like where there is a limited business rationale or justification to be in a certain location.

There is more definition and precise application of business principles and the international pullback is a sign that not all firms have the business and the history to operate in particular locations. There is more hesitancy about opening new offices in the industry – we have moved away from the mood of the 2000s and wide spanning networks across the board. For us for example in the Middle East, we remain in Abu Dhabi and Dubai but we haven’t gone into other Middle East jurisdictions at this stage.

One cannot make real progress strategically with partial or uncertain openings. You have to go in with some scale, if you’re one person and a secretary, you’re less likely to succeed than if you go in full blooded.

How worried should international law firms be by Chinese firms?

The Chinese law firms are underestimated but their ambition and scale should not be. They have the resources to grow outside of China and look at where they are already established or looking to be geographically, they will be a big challenge for the Western law firms.  One reason, why some firms have begun to hesitate about investing further in China, is license restrictions and so international firms should have existing clients and business rationale behind them.

Are law firms business minded enough?

More so yes. With time and evolution the quality of management at law firms has grown and to some extent that is a consequence of size. The Magic Circle firms have for example had a strong position in the London market and maintained it. For our own part, we have a financial models that we apply to expansion. With our recent openings in Singapore and Houston for example, we take a three year view and more.

What has been your biggest achievement in the last three years?

We’re market leaders in commodities, shipping, media and energy. In the last few years we’ve turned that into a much broader business, focusing on renewable energy and transactional work. We are now strengthening those areas in Asia.

Post Reed Smith merger we’ve filled any gaps in our offering, we’ve grown and have developed our bench strength. We’ve invested in our financial services offering in complex finance and that’s spread to other related areas, such as real estate and leveraged finance. We’re noticing that our competitors and the nature of the firms we compete against are different in this market than they were five years ago.

Five years ago, if you look at transactional practices, we were very much competing in the mid-market space. We’re now competing more against the UK silver circle, with firms like Simmons and Simmons, BLP and KWM SJB.

We’ve done that because we’ve invested and developed our transactional practice and we have a strong international flow. Our global reach and one global partnership approach helps us more than some other firms. The quality of transactional deal is going up, but as soon as that is achieved there is a need for greater bench strength which requires more investment. It’s a circle.

What would you have liked to achieved, but haven’t?

We haven’t moved as fast as we would like in recruiting in the corporate space, bearing in mind our objective of achieving a sustainable position in the silver circle, which means we need to shift our positioning in relation to the corporate market generally to win more FTSE 100, FTSE 250 and FTSE 350 clients. That’s a very challenging thing to do. We have achieved this in financial services, although we’ve got further to go. In financial services we have more of a defined sectoral play and we’ve had success with people we’ve brought in.

We’ve built our reputation for doing transactions in certain sectors, such as the media industry and the energy sector, so we are more likely to be approached for transaction work. This applies also to our corporate practice, where we have strong sector strength and we’ve seen strong results. However, the corporate market doesn’t always work on a sectoral basis which sometimes means when there’s a big transaction GCs are looking for people with experience and not sectoral focus and that is something we need to consider.

How did the financial crisis affect your push in the financial services space?

When we talk about financial services we’re talking also about funds and financial sources that have grown up since 2008. One reason we’ve been able to make this progress is because we’ve been in that space, with the challenger forces, private equity and venture capital firms and funds.

These emerging financial services markets in the City are a big opportunity for London, which has created huge opportunities in the professional services space and we’re riding on that.

What is your biggest bugbear?

There is a lack of coordination between the City law firms to sell the financial and legal services sector internationally and to promote the talent and ease of doing transactions here. There could be more initiatives to tell international companies about this and the wider world about the amount of pro bono work done by the City’s law firms, for example.

Tom.moore@legalease.co.uk

Legal Business

Reed Smith and BLP lead on £430m business park buy up

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Reed Smith and Berwin Leighton Paisner have led on a £430m purchase of three UK business parks by asset management groups Oaktree Capital Management and Patrizia.

Partners Oliver s’Jacob and Graham Reid, who sit within Reed Smith’s real estate private equity and real estate groups respectively, were instructed by the US and German asset managers in their joint venture acquisition of industrial-based business parks in Basingstoke, Cheshire and Glasgow from the UK’s Hermes Real Estate. Chineham Park in Basingstoke is home to the likes of defence giant Cobham and US electronics group Honeywell, while Birchwood Park in Warrington and Hillington Park in Glasgow are home to more than 450 businesses combined.

Hermes was advised by Berwin Leighton Paisner’s commercial real estate partner Samant Narula and corporate finance partner Simon Pollock. For Scottish law advice BLP enlisted support from property partner Gillian Downie of Maclay Murray & Spens, while Reed Smith used a team from Brodies, led by head of property Nick Scott.

For Hermes, one of the largest real estate managers in the UK, registered in Jersey, offshore advice was provided by finance and corporate partner James Hill of Mourant Ozannes, while Carey Olsen’s James Mulholland acted for the purchaser.

Oaktree Capital Management and Patrizia have become repeat clients for Reed Smith, with the firm having advised the parties on their £245m acquisition of IQ Winnersh, an industrial park near Reading, from listed investment trust SEGRO. The latest deal is the third major mandate Reed Smith’s real estate private equity team has signed or closed this month, having advised Marathon Asset Management on its £130m acquisition of 11 former Queens Moat House Hotels and MStar Europe, a £500m joint venture, on its public takeover bid for London Stock Exchange-listed, Tamar European Industrial Fund for £53.55m.

Oliver s’Jacob, partner and head of Reed Smith’s real estate private equity practice, said: ‘This is one of the most anticipated real estate deals of the summer. Following our ongoing work for Patrizia and Oaktree Capital Management, our cross-practice team was able to mobilise a team of over 60 lawyers at short notice to exchange contracts on this significant acquisition within a three week deadline.’

Tom.moore@legalease.co.uk

Legal Business

Senior management reshuffle approved at Reed Smith

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Reed Smith’s recently elected managing partner, Sandy Thomas, has had his recommendations for a senior management reshuffle, which rotates nearly half the team, approved by the firm’s partnership.

In addition to Sandy Thomas, who began a three-year term as managing partner in August, the seven member team is comprised of three new members. Edward Estrada, current managing partner of the firm’s New York office, moves up to global head of strategy replacing Philadelphia-based Michael Pollack. Pollack, the senior management team’s longest serving member with 14 years under his belt, will shift across to chief legal officer following the retirement of Carl Krasik.

Pittsburgh-based Casey Ryan, the firm’s current vice chair of litigation, replaces Colleen Davies as global head of legal personnel after an eight year stint in the senior management team that first began as global head of litigation, a role San Francisco-based Ray Cardozo will now fill after replacing Jack Nelson.

Nelson, who introduced a new pricing system to offer clients lower litigation costs, has been demoted to vice chair of the litigation department, with Davies leaving management altogether to focus on developing her life sciences litigation practice. The changes have been staggered to take place between now and March 2015.

London-based corporate partner David Boutcher returns as chair of the business and finance department while London litigator Roger Parker continues as EMEA managing partner and Pittsburgh-based Gary Sokulski remains in post as chief operating officer, a role he assumed in 2004.

Sandy said: ‘In selecting new members, I have focused on choosing individuals with a firm-first approach to leadership, experience in management, knowledge of the firm and its people, openness to innovation and change in how we operate, and the respect each is afforded as a lawyer. Those affirmed by the partnership embody these characteristics and can be depended upon to guide our future growth.’

Estrada, who has been a member of the executive committee since 2010 and served as co-head of the firm’s US commercial litigation practice, focuses on hedge funds and commercial restructuring and bankruptcy. Before becoming vice chair of the firm’s litigation department, Ryan headed up the labour and employment group and remains a member of the firm’s professional responsibility committee in which she has been tasked with improving diversity at the firm. Litigation department chair-elect Ray Cardozo has been office managing partner of the San Francisco office since 2012.

Tom.moore@legalease.co.uk