Legal Business

Hefty fines: Cleary, Slaughters and CC advise on banks’ €1.7bn rate-rigging settlement

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A collection of some of Europe’s strongest antitrust practices have been advising some of the world’s largest global banks as they today (4 December) agreed fines with the European Commission for their participation in illegal cartels to rig interest rates.

Cleary Gottlieb Steen & Hamilton, Slaughter and May and Clifford Chance were among the law firms advising a total of eight international financial institutions – including the Royal Bank of Scotland, Deutsche Bank, JPMorgan, and Citigroup – who have been fined a total of €1.7bn for their roles in the cartels.

Four of the institutions participated in a cartel relating to interest rate derivatives denominated in the euro currency while six participated in one or more bilateral cartels relating to interest rate derivatives denominated in Japanese yen. As is standard procedure for competition investigations, the companies’ fines were reduced by 10% for agreeing to settle.

Barclays, advised by Clifford Chance’s competition partners Elizabeth Morony and Oliver Bretz, escaped a fine in its entirety for revealing the existence of the euro cartel, avoiding a total pay-out of €690m for its participation in the infringement.

UBS, advised by Gibson Dunn & Crutcher‘s City disputes head Philip Rocher alongside Brussels-based David Wood, also received full immunity for revealing the existence of the cartels, avoiding an estimated fine of €2.5bn for its participation in five of the seven infringements.

Meanwhile, the Brussels-based Cleary team advising Citigroup, which received the lowest fine of £58m (€70m), was led by EU competition partner Robbert Snelders.

King & Wood Mallesons SJ Berwin‘s City-based partner Tom Usher was by instructed RBS as the firm advised the bank on its competition breaches leading to a £325m (€391m) settlement with the EC.

Elsewhere, Magic Circle firm Slaughter and May had competition litigation head Michael Rowe and head of disputes Deborah Finkler act for Deutsche Bank, which was levied the highest sanction out of all the banks worth £600m (£724m).

Pinsent Masons‘ senior competition partner Alan Davis advised broker RP Martin, which was fined £205,000.

According to the BBC, banks that have not yet settled fines but are being investigated include HSBC and Credit Agricole, as well as JPMorgan, which accepted a fine for rigging in one market but not another.

Speaking in relation to the settlement, the Commission’s vice-president in charge of competition policy Joaquín Almunia, said: ‘What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other. Today’s decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector. Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few.’

Sarah.downey@legalease.co.uk

Legal Business

Merit driven pay – Slaughter and May introduces discretionary associate bonus

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Building on its decision earlier this year to introduce an element of merit to its associate pay, Slaughter and May has overhauled its associate bonus, moving away from a ‘blunt instrument’ flat rate bonus of 5% to a performance and seniority related uplift.

The overhaul – which was unveiled by the Magic Circle firm today (2 December) and follows its decision in January to create ‘good’ and ‘exceptional’ salary bands for associates from 4.5 years post-qualification experience (PQE) and upwards – will see associates paid up to a 12% bonus based on both their PQE level and performance.

Associates of under six months PQE who are judged as ‘good or exceptional’ will receive a bonus of 6%, which for associates of 1-2 years PQE will increase to 8%, for those of 2.5 – 4 years PQE will rise to 10%, and for associates of 4.5 – 6.5 years PQE will increase to 12%.

Trainees and support staff will receive a bonus of 3%, compared with a 2.5% bonus in 2012.

While the 690-lawyer firm has been quick to point out that the new bonus structure is heavily PQE-related rather than being purely merit-driven, a statement from the firm today said: ‘Associates whose performance falls short of the level of achievement that we would expect will receive a lower bonus percentage.’

However, executive partner Richard Clarke told Legal Business: ‘The performance element is relatively modest when compared to the PQE element. It is primarily a lockstep philosophy with some performance element.’

He added in a statement: ‘Our philosophy as a firm is different to the extent that we do not impose billing or time recording targets on our associates and our approach to bonus differentiation is to recognise performance and career progression while ensuring that we reflect our team culture of valuing everyone’s contribution.’

This move comes as more large City firms move to a merit-based remuneration system, such as Norton Rose Freehills and Freshfields Bruckhaus Deringer. It also follows the recent decision by RPC to dispense with newly-qualified fixed salary bands in favour of pay that is linked to both merit and the value of the associate’s area of contribution to the firm and to the client.

david.stevenson@legalease.co.uk

Legal Business

Slaughters teams up with Carillion law venture to cut costs for bluechip clients

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As general counsel (GCs) push their advisers to think more innovatively about costs savings, Slaughter and May has begun offering the services of Carillion’s new low-cost legal arm to its own clients, including a recent transaction for key client Vodafone.

The Magic Circle firm, which is one of Carillion’s lead corporate panel advisers, offered Vodafone the option to use Newcastle-based Carillion Advice Services (CAS) on an undisclosed deal, which included a customer contract exercise.

Slaughters has previously used CAS to strip out the more commoditised elements of its instructions from the construction giant. However, this marks one of the first times it has used CAS for other major clients. William Underhill (pictured), who is the Carillion relationship partner, said: ‘It was not a small decision for us to promote CAS, our relationship with Vodafone is very important and you expose that relationship by introducing another provider who you say you think can do the job. But we had seen enough of their operation to have confidence.

‘It was exactly in CAS’s sweet spot in that there was legal content such that the task was not purely administrative but it could be done effectively without input from our lawyers.’ Unlike many legal process outsourcing ventures, CAS interacted directly with Vodafone’s clients.

The move has been well received by Vodafone, where group GC Rosemary Martin has been pushing her panel firms, of which Slaughters is one, to come up with creative solutions to the problem of reducing costs.

Slaughters’ Roland Turnill, who holds the Vodafone relationship and recently led on the telecoms giant’s $130bn Verizon disposal, said: ‘It is of real value to us and our clients to have access to the CAS service in the right circumstances and for the right sort of work.’

The example of Slaughters as one of the City’s most traditional and prestigious firms teaming up with CAS will be seen as evidence of a more imaginative approach from top-tier advisers to offering value.

Turnill said: ‘I am a real enthusiast.’ Underhill added: ‘The in-house legal function are under huge cost pressures: they don’t have enough people and they need to adopt a smart solution like CAS to take on some of the burden. Why would we stand in the way of progress?’

A large part of the attraction of the now 70-strong CAS team is that it is heavily process driven, audited and staffed by highly qualified, legally trained staff, with CAS benefiting from the fact that it can be difficult for them to find other legal jobs in the Newcastle area.

Richard Tapp, Carillion’s company secretary and director of legal services, who first trialled the CAS arrangement last year with panel employment advisers Clarkslegal, said: ‘We’re very conscious of the need to make sure we do this properly and have structured it to ensure that the quality is high, accredited and third-party audited.

‘You instruct a law firm for their intellect and experience, not for the day-to-day work that needs to be done properly but not with the same skill as their core expertise.’

caroline.hill@chillmedia.co.uk

Legal Business

Slaughters teams up with Carillion law venture to cut costs for bluechip clients

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As general counsel (GCs) push their advisers to think more innovatively about costs savings, Slaughter and May has begun offering the services of Carillion’s new low-cost legal arm to its own clients, including a recent transaction for key client Vodafone.

The Magic Circle firm, which is one of Carillion’s lead corporate panel advisers, offered Vodafone the option to use Newcastle-based Carillion Advice Services (CAS) on an undisclosed deal, which included a customer contract exercise.

Legal Business

Best year for UK IPOs since 2010 as Slaughters and Simpson Thacher bring £1bn Infinis to market

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Private equity exits are turning 2013 into the best year for UK IPOs since around 2010 as Slaughter and May and Simpson Thacher & Bartlett represent Infinis and its principal shareholder Terra Firma while Ashurst advises the banks on the wind power company’s £1bn float.

Slaughter and May corporate and commercial partners Jeff Twentyman and Kathy Hughes notched up another IPO for the firm, having already advised on high-value floats this year such as Countrywide and Esure.

The corporate duo are working alongside finance partner Philip Snell; financial regulation partner Jan Putnis; pensions and employment partners Sandeep Maudgil and Jonathan Fenn; real estate partner John Nevin and tax partner Gareth Miles.

The Simpson Thacher & Bartlett team will advise the issuer on US law led by corporate and commercial partner Greg Conway and associates Sinjini Saha and Janeen Hayat.

Meanwhile, Ashurst secured a role advising investment banks Barclays, Deutsche Bank, Royal Bank of Canada, Kempen and Liberum, led by head of equity capital markets Nicholas Holmes, with Ray Fisher leading the US team.

The Infinis instruction comes as Ashurst’s corporate team has also won a lead role advising Merlin Entertainments Group – the private-equity backed owner of Madame Tussauds and the London Eye – on its £4bn flotation on the London Stock Exchange, in a bid to raise £200m from the sale of new shares to reduce debt. The deal was led by corporate partners Mark Sperotto, Jonathan Perry and Holmes. Freshfields Bruckhaus Deringer, Clifford Chance and Simpson Thacher & Bartlett are also advising on the deal.

Other IPO deals for Ashurst this year including advising the Royal Bank of Canada on investment fund Foresight Solar’s IPO, and investment banks Goldman Sachs, JP Morgan, Deutsche Bank and Morgan Stanley on Riverstone Energy’s float.

Holmes said: ‘To have four such significant deals in the market at the same time is a very significant achievement. This follows major IPOs such as Esure and Foxtons and significant secondaries like William Hill’s £375m rights issue and reinforces what an excellent year the Ashurst capital markets practice is having.’

Issuers in the U.K. have announced more than 70 IPOs this year, the most since at least 2010, when 84 companies disclosed plans to go public, according to data compiled by Bloomberg. IPOs in Europe raised about $17 billion this year, the data shows, compared with $10 billion in the same period in 2012.

jaishree.kalia@legalease.co.uk

Legal Business

First limb of Lloyds privatisation sees Slaughters and Freshfields win lead roles

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Five years on from the collapse of Lehman Brothers, Slaughter and May and Freshfields Bruckhaus Deringer have won the leading roles on the first limb of the government’s privatisation of Lloyds Banking Group, which was rescued by the UK taxpayer in 2008.

Slaughters is advising UK Financial Investments Limited (UKFI) on the HM Treasury’s disposal of a 6% stake in Lloyds Banking Group, worth around £3.3bn.

The Slaughters team is being led by corporate and commercial partner and head of the equity capital markets group, Nilufer von Bismarck, supported by associates Jonathan Wiseman and Liam Townson. The team also includes tax partner Tony Beare who is supported by associate Michael Ringer.

Freshfields is representing Bank of America Merrill Lynch, J.P. Morgan Cazenove and UBS as joint bookrunners in relation to the sale, led by corporate partners Will Lawes, Julian Makin, Sarah Murphy and Mark Austin, while UK tax advice is being provided by partner David Haworth.

Cravath Swaine & Moore is advising UKFI on US law aspects, led by corporate partner Alyssa Caples, who is supported by associate Jonathan Coleman.

Today’s share placing to institutional investors will raise proceeds of £3.2bn and reduce the government’s 38.7% stake in Lloyds to 32.7%.

In what represents a potential windfall instruction for the Magic Circle firms, the second limb of the privatisation will see the government sell Lloyds stock to retail investors, although potential institutional buyers have been promised that the Treasury will not sell any more Lloyds shares for at least 90 days.

jaishree.kalia@legalease.co.uk

Legal Business

Line up, line up: Twitter, Royal Mail and Foxtons go to market

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After a flurry of initial public offerings (IPOs) earlier in the year, with Esure, Countrywide and Partnership Assurance among the UK companies to go public, a new wave of IPOs are lining up to go to market, including Royal Mail, Foxtons and, most recently in the US, Twitter.

Twitter rather aptly tweeted its intentions to float on the stock market yesterday (12 September) with leading technology IPO specialists Wilson Sonsini Goodrich & Rosati tipped for the role.

The social media giant, estimated by the Wall Street Journal to be worth around $10bn, took advantage of a rule adopted last year by the Securities and Exchange Commission, which allows growth companies with under $1bn in revenues to keep their financial details confidential until closer to the float.

According to Reuters, Twitter’s lead adviser will be Wilson Sonsini Goodrich & Rosati, famous in Silicon Valley for taking public big names such as Apple, Netscape and Google.

Yesterday also saw the UK government notify the London Stock Exchange that the long running Royal Mail IPO is imminent, with lead advisers Slaughter and May, Freshfields Bruckhaus Deringer and Linklaters now gearing up to do a deal that has been in the pipeline for over a year. Royal Mail is being advised by Slaughters, led by equity capital markets (ECM) partner John Papanichola alongside corporate finance partner William Underhill.

The past year has seen the Slaughters team assisting Royal Mail in its preparations for float, advising on numerous thorny issues including its employee share scheme, which will see the postal group’s employees take 10% of the shares and the remainder go to institutional investors and the public. ‘It is a slow process and is not expected to go to market before November,’ one ECM partner said of the IPO.

Freshfields is advising the government, with corporate partner Tim Jones leading for the Department for Business Innovation and Skills on the IPO, backed by a team including pensions partner Charles Magoffin. Linklaters are advising the underwriters, Goldman Sachs and UBS.

Meanwhile, Foxtons IPO, also a private equity exit in which Dickson Minto is representing long-term clients BC Partners, which bought Foxtons in 2007 for £360m with £300m of bank debt, is expected this September. The company was badly hit by the financial crisis and lenders Bank of America and Mizuho stepped in in 2010 in a debt-for-equity swap after BC Partners breached its bank covenants, however, the private equity house kept its minority stake and regained control last year.

More recent estimates place the value of Foxtons’ IPO above £700,000 and, given the success of earlier IPO’s, there is a renewed buzz in the market, underlined by cautious optimism. ‘It’s a general question of confidence, the backdrop of the last few years consisted of private equity exits performing badly at market. There was talk of the pricing mechanism breaking down. But with the success of Crest Nicholson earlier this year, there is a renewed appetite for IPOs,’ said one corporate partner at a US firm based in London.

david.stevenson@legalease.co.uk

Legal Business

In-house: Clifford Chance and Slaughter and May lawyers take senior roles at CMA, Shell and PwC

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Magic circle lawyers have this week filled a number of senior regulatory and in-house positions, with a Slaughter and May partner unveiled as general counsel of the new Competition and Markets Authority (CMA) and a former lawyer named Shell‘s UK legal head; while Clifford Chance‘s head of employee benefits has joined PwC as a director in its employee rewards team.

The CMA – the new body which brings together the Competition Commission and and some consumer functions of the Office of Fair Trading- yesterday (12 September) announced the appointment of former Slaughter and May partner Sarah Cardell as GC as it completes its leadership team in time for its official launch on 1 October.Cardell most recently occupied the role of partner for legal markets at energy watchdog Ofgem, having left her position as competition partner at Slaughters in March 2011. She will join new CMA executive director, Sonya Branch, who moves across from her role as the executive director at the OFT, where she has been since 2007 having left role as corporate partner at Clifford Chance.

Business secretary Vince Cable said of the appointments: ‘The appointment of this executive team is another milestone in the creation of the new CMA. [They] complete our senior executive team and are a major step in creating the new organisation.’

Shell meanwhile, has appointed another former Slaughters lawyer as its UK legal chief, as Michael Coates takes over from current head Bob Henderson. Henderson is relocating to the US next month to take up the post of associate GC of integrated gas and new business development as part of a reorganisation of the energy giant’s senior legal team.

Coates, who will assume the new role on 1 October, most recently worked as secretary to the company’s executive committee and as executive assistant to Shell chief executive Peter Voser, a role he took in 2011, having joined Shell from Slaughters in 2004.

The restructuring was led by group legal director Peter Rees QC in a bid to expose senior lawyers to different areas within the business.

The news comes shortly after Shell concluded a review of its external legal advisers in May, ‘prequalifying’ more than 150 firms to its global network, a number which will then reduce as Shell’s lawyers form closer relationships with certain firms.

Elsewhere, PwC continues to expand its 140-strong reward team with the appointment of Clifford Chance’s former head of employee benefits Daniel Hepburn. Hepburn has advised on employee rewards for over 20 years and has worked with many leading UK and multinational companies on their employee incentive arrangements. In his new role, he will advise on the design and implementation of a wide range of employee and executive incentives, including share, cash, bonus and other arrangements.

Carol Dempsey, a partner in PwC’s reward team, said: ‘Daniel joins at a crucial time as many companies are re-evaluating the way they reward their employees of all levels, while dealing with ever increasing regulation on remuneration structures and practices.’

francesca.fanshawe@legalease.co.uk

Legal Business

Real estate round up: Macfarlanes, HSF, Slaughter and May and Hengeler Mueller each win key commercial property mandates

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It’s been a week for the traditional corporate bluebloods to shine in real estate-related work, with Macfarlanes, Slaughter and May and German royalty Hengeler Mueller individually winning significant transactions.

Macfarlanes secured a key role advising CBRE Britannica on the sale of its shopping centre portfolio for £250m to US investor Kennedy Wilson, advised by Herbert Smith Freehills.

The firm directly advised Malcolm Shierson and Daniel Smith of Grant Thornton – who were appointed as administrators when CBRE Retail Property Fund became insolvent – as well as ING, Deutsche Hypothekenbank and Hypothekenbank Frankfurt, the lenders to the shopping centre fund.

The team, led by partners Jat Bains and Dominic Cunliffe, the firm first acted for ING over the financing of the Britannica retail property investment fund in 2004, having been called to advise the lenders when it fell into covenant breach. Once Britannica went into administration, the firm was further called upon by the administrators to assist with the sale of the property portfolio.

The Herbert Smith team for Kennedy Wilson comprised real estate partners James Barnes and Jeremy Walden, finance partner Simon Chadney and tax partner Will Arrenberg.

Macfarlanes real estate partner Cunliffe said: ‘The asset sale required a phenomenal effort from our team, particularly given the vast amount of information which had to be pulled together and disseminated in a very short space of time as part of the due diligence process. Given the constant threat of further tenant insolvencies potentially disrupting the sale process, we had to move quickly. We are pleased to have met the challenges presented by this particular transaction.’

The 312-lawyer firm has made efforts to boost its commercial real estate practice of late, recently hiring Ashurst’s head of construction Ann Minogue, who moved after 20 years at the top 15 rival firm, as well as commercial real estate partner Clare Breeze, who joined from Shearman & Sterling in June.

Herbert Smith Freehills, meanwhile, has also added the UK’s largest supplier to the building and construction market, Travis Perkins, as a client and was recently instructed on the sale and leaseback of its new 630,000 square foot regional distribution centre located at the Omega North in Warrington, Cheshire from Standard Life Investments Long Lease Property Fund in a deal worth £52.8m.

The team was led by real estate partner Shelagh McKibbin alongside Arrenberg.

Slaughter and May advised Legal & General Property on its £200m purchase of a City of London office and retail building of over 200,000 square feet, structured through the acquisition of the entire issued share capital of the undisclosed holding company of the property-owning vehicle. The team was led by a four-partner team including Jane Edwarde, Robert Chaplin, Jeanette Zaman and Marc Hutchinson specialised in real estate, corporate, tax and finance respectively.

Finally, in a market-leading corporate deal in the German real estate market, Hengeler Mueller is advising Berlin’s largest residential landlord by market value, GSW Immobilien, over rival Deutsche Wohnen’s public tender offer of €1.75bn to acquire the company.

Deutsche Wohnen is being advised by Sullivan & Cromwell’s Frankfurt office, with a team comprising partners Carsten Berrar, York Schnorbus, Konstantin Technau and Krystian Czerniecki.

The Hengeler Mueller team includes partners Maximilian Schiessl (corporate), Dirk Busch (capital markets), Christof Jackle (M&A), Gerd Krieger (corporate), and Christoph Stadler (antitrust) from the firm’s Duesseldorf and Frankfurt offices.

In another impressive win under Schiessl’s leadership, the German firm also scored a significant role this summer when it was appointed to advise Kabel Deutschland over Vodafone’s acquisition of the company, which offered Kabel shareholders €87 per share in cash.

sarah.downey@legalease.co.uk

Legal Business

The guessing game is over as Vodafone’s $130bn Verizon sell off sees Slaughters acting opposite Macfarlanes and Wachtell

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Intense speculation over Vodafone’s $130bn disposal of its US group, whose principal asset is its 45% interest in Verizon Wireless, to Verizon Communications this evening (2 September) came to an end after the deal announced, with Macfarlanes revealed as acting for Verizon and Slaughter and May for Vodafone. Slaughter and May corporate partner Roland Turnill led for the telecoms giant on one of the largest corporate deals in history, along with Simpson Thacher in the US.

Verizon was advised by Macfarlanes’ managing partner Charles Martin and corporate partner Graham Gibb, alongside Wachtell, Lipton, Rosen & Katz partners Daniel Neff and Steven Rosenblum. Hogan Lovells also had a secondary role for Vodafone.

Slaughter and May is one of Vodafone’s go-to corporate panel firms and Turnill has acted on deals including its 2011 $5bn acquisition of Essar’s minority shareholding in Vodafone Essar. The instruction comes after Linklaters, also on its panel of lead advisers, in June advised Vodafone on its €7.7bn takeover of Kabel Deutschland.

This latest transaction was unanimously approved by the boards of both companies and is subject to regulatory approval, as well as the approval of both companies’ shareholders, a Vodafone statement said today. The transaction is expected to close in the first quarter of 2014.

Vodafone’s announcement this evening on the London Stock Exchange came after an earlier statement responding to media speculation, which confirmed that talks were taking place but that there was ‘no certainty a deal would be reached’.

Lowell McAdam, Verizon chairman and CEO, said of the deal: ‘Today’s announcement is a major milestone for Verizon, and we look forward to having full ownership of the industry leader in network performance, profitability and cash flow.’

Vittorio Colao, Vodafone group CEO, added: ‘This transaction allows both Vodafone and Verizon to execute on their long-term strategic objectives. Our two companies have had a long and successful partnership and have grown Verizon Wireless into a market leader with great momentum. We wish Lowell and the Verizon team continuing success over the years ahead.’

sarah.downey@legalease.co.uk