Legal Business

Stewarts’ PEP descends as revenue follows ‘non-linear’ growth path with 11% bounce

Stewarts’ PEP descends as revenue follows ‘non-linear’ growth path with 11% bounce

Stewarts Law has partly recovered from a 20% drop in turnover last year in what managing partner John Cahill described as a ‘very satisfactory’ year, although partner profits have continued to fall.

The UK’s largest litigation-only firm increased revenue by nearly 11% to £69m in the 2018/19 financial year, following a 20% drop in turnover from £77.9m to £62.4m last year. Profit per equity partner (PEP) decreased a further 16% to £1.2m from last year’s £1.4m: a figure that had dropped 28% the previous year.

On a five-year basis, however, revenue has increased by 49%, with PEP up 7% on average in that time. The firm is aiming for revenue of £100 million by 2022.

Cahill (pictured) commented: ‘We are pleased to post another very satisfactory set of financial results. During the year we have made significant investment in new practice areas including financial crime and media disputes.’

The firm appointed in June last year Richard Kovalevsky QC as a partner to head up the new financial crime department, joining after 13 years at 2 Bedford Row. David Savage also joined the team from SG Kleinwort Hambros Bank recently.

Cahill added: ‘I indicated last year that our revenue patterns would be ‘non-linear’ and that remains the case, although both revenue and PEP have increased over the last five years.’

Stewarts is acting for 58 institutional investors including the BAE Systems pension scheme, the Church Commissioners, Bank of America, the government pension fund of Thailand and the American Red Cross in an on-going case against Tesco. The firm is also representing 280 individuals in a case against Ingenious Media regarding investments in film and video game production partnerships.

Legal Business

Revolving doors: Dechert makes hires from Sidley and Hill Dickinson expands its commodities team

Revolving doors: Dechert makes hires from Sidley and Hill Dickinson expands its commodities team

The lateral hires market has seen significant moves recently with Dechert hiring more partners from Sidley Austin, Crowell & Moring making another hire from Squire Patton Boggs and Hill Dickinson expanding the firm’s commodities team with two partners.

Dechert added to its global finance and litigation practices with the recruitment of Aparna Sehgal and Simon Fawell from Sidley, following structured finance partner John McGrath, who recently joined from the same firm. Furthermore, Dorothy Cory-Wright was appointed last year as head of disputes and is also from Sidley.

Sehgal is the fourth finance partner Dechert has hired in the last nine months and works with clients from financial institutions, alternative capital providers and corporates on issues concerning multi-jurisdictional transactions, intercreditor issues, acquisition and financing of performing and non-performing loan portfolios, insolvency and enforcement strategies.

Co-leader of the global finance practice group Richard Jones commented: ‘Aparna is a strong addition to our global finance team. Her extensive experience in real estate finance complements our existing capability and strengthens our offering to our financial services clients.’

Gus Black, global co-chair of Dechert’s financial services group, added: ‘Her appointment, which closely follows the additions of John McGrath and Simon Fawell, supports Dechert’s strategic growth plans in London to meet growing client demand.’

Crowell & Moring once again hired from Squire Patton Boggs, recruiting litigation partner Laurence Winston to co-head the firm’s international disputes resolution group. His appointment comes amid a turbulent period for Squires’ London arm, which has been depleted by a number of departures since the beginning of the year, most of which have decamped to Crowell & Moring.

Financial litigation partner and former City head Robert Weekes left for Crowell & Morning in January, and was later joined by insolvency partners Cathryn Williams and Paul Muscutt. Energy partner Robin Baillie and finance partner Andrew Knight also left Squires for Crowell & Moring in February.

Elsewhere, Hill Dickinson announced the hire of Mark Aspinall and Paul Sinnott from Eversheds Sutherland into the commodities team. This follows the recent hire of litigation partner Beth Bradley, previously of Clyde & Co, and takes the number of partners in the group to nine.

Aspinal has expertise in dispute resolution, transactional matters covering trade finance as well as physical trading of steel and non-ferrous metals, shipping fraud, asset tracing and seizure actions. Sinnott, a commodities lawyer in both the physical and derivatives markets working mainly for energy and metals industry clients, focuses on transactional and regulatory matters as well as disputes resolution.

Hill Dickinson head of commodities Jeff Isaacs told Legal Business: ‘We’ve seen a marked uptick in commodities work, particularly on the soft agricultural commodities front where we have a particular specialism. We have plenty to do and we have a strong influx of work and we’re confident about the future.’

Stewarts hired David Savage to its financial crime department from SG Kleinwort Hambros Bank, where he was group senior sanctions officer. Savage follows Richard Kovalevsky QC, who established the firm’s financial crime department in July 2018, and brings experience working in the financial crime within a bank.

Savage told Legal Business: ‘Financial crime compliance is becoming more and more costly. Regulators have cottoned on to the fact that this is a big ticket business that they can extract large sums of money, by way of fines, from various companies. It’s going to be, in the near-term, a huge cost for anyone involved in international business to combat financial crime.’

Finally, DLA Piper also announced a hire in the form of Marine Lallemand, who will join the litigation and regulatory practice in Paris from Orrick Rambaud Martel.

Legal Business

Sponsored foreword: Period of upheaval set to continue

Sponsored foreword: Period of upheaval set to continue

It is fair to say that the volume and nature of commercial disputes generally reflect shifts in the prevailing winds of social, economic and political change. In the ten years since we established commercial litigation at Stewarts, the various forms of upheaval gave rise to a host of high-value, complex litigation and arbitration. This trend of upheaval and dramatic transformation looks set to continue over the next few years.

The financial crisis of a decade ago caught many unaware in terms of its fallout. It was not just another humdrum recession leading to the classic spate of insolvencies and repossessions of the kind we saw in the early 1990s. This was different. Although it gave rise to many claims against professional advisers and other deep-pocketed defendants, many of those who were seen as the cause of the disaster escaped unscathed. They were bailed out or not prosecuted or went unchallenged.

Legal Business

Sponsored briefing: My Litigation Crystal Ball

Sponsored briefing: My Litigation Crystal Ball

Clive Zietman considers the big trends likely to shape the commercial disputes scene

If I possessed a crystal ball, I would be writing this on a sun-drenched beach somewhere having won the lottery several times in a row. Sadly, I still have to work for a living and that lottery win remains elusive. Despite the huge difficulties in predicting the future, some trends have emerged in litigation practice over the last few years that look set to continue. This article picks up on a few of those trends and contains input from the specialist lawyers in some of my firm’s practice groups about what to look out for in the coming years.

Legal Business

Sponsored briefing: Financial crime and criminal prosecutions in the UK

Sponsored briefing: Financial crime and criminal prosecutions in the UK

Richard Kovalevsky QC on the difficulties facing prosecutors of financial crime

Following the Bribery Act coming into force on 1 July 2011, commentators focused on the contention that while there was a Rolls-Royce in the garage, prosecutors in the area of corruption and financial crime were using an old Mini as the vehicle of choice. In 2012 and 2013, the sleek well-engineered machine that is the Bribery Act remained unused while the everyday patchwork of existing offences seemed to be the preferred vehicle for prosecutors.

Legal Business

LB100 Second 50: London stalling?

LB100 Second 50: London stalling?

With initial post-referendum Brexit shock giving way to pre-breakaway uncertainty, the boutique and mid-market London firms in the second half of the Legal Business 100 are maintaining a brave front in the face of political and economic uncertainty.

Overall the story is encouraging for London firms in the second 50, with total revenue up 6% to £774m, with an average revenue of £40.7m across the 19 City firms in the second – the same number as last year. Average profit per equity partner (PEP) spiked by 12% to £409,000.

Legal Business

Revenue plunges 20% at Stewarts as contingent fee swings end stellar run

Revenue plunges 20% at Stewarts as contingent fee swings end stellar run

Disputes specialist Stewarts has experienced a reality check after a consistent period of striking financial growth, with revenue tumbling by more than 20% for the 2017/18 financial year.

Turnover has dropped from £77.9m to £62.4m, while profit per equity partner (PEP) fell by an even wider 28% margin to £1.4m.

Despite the stark decreases, managing partner John Cahill (pictured) described it as ‘a solid set of financial results’ and insisted the firm is targeting revenues of £100m by 2022.He added: ‘During the year we have made significant investment in a number of new contingent cases. I indicated last year when announcing a set of record results that our revenue patterns will be “non-linear” and that remains the case.’ 

Last year Cahill did state that contingent fee arrangements would result in ‘non-linear’ patterns of income and fluctuations in profit. In 2016/17, the firm recorded a 25% increase in turnover and PEP climbing 19%, both of which have been more than wiped out by the latest results.

Certainly Stewarts benefitted from the conclusion of major cases in the previous financial year, not least the financial settlement of the £4bn shareholder group action against the Royal Bank of Scotland. Shareholders represented by the firm accepted a last-gasp offer of 82p per share.

Another major mandate, Stewarts’ representation of 125 institutional funds who claim they lost money as a result of a 2014 Tesco profit overstatement, is ongoing.

The latest results bring three consecutive periods of double-digit growth to an end. However, when put into perspective Stewarts is still on a strong upwards trajectory. The firm’s revenues have jumped 38% over a five-year basis, while PEP has increased 22% over the same period.

Stewarts also still offers attractive levels of remuneration in comparison to its competitors, for the 2017/18 financial year the top of equity took home £1.6m.

Despite the financial regression, the firm announced in July that it would be setting up a financial crime unit, significantly expanding Stewarts’ practice.
Richard Kovalevsky QC, formerly of 2 Bedford Row, was appointed to head up the new department.

Legal Business

Disputes round-up: Vannin Capital hires Fountain Court’s Martenstyn as managing director as Stewarts makes litigation tech play

Disputes round-up: Vannin Capital hires Fountain Court’s Martenstyn as managing director as Stewarts makes litigation tech play

In a further indication of the growing prominence of litigation funders, Vannin Capital has turned to Bar stalwart Paul Martenstyn for its new managing director as Burford Capital announces a robust 17% increase in income.

Elsewhere, Stewarts has struck a partnership with tech start-up Solomonic, while the Supreme Court has ‘with reluctance’ dismissed the appeal of a wife who wants to divorce her husband in the Owens v Owens case.

Martenstyn’s move to Vannin comes after a decade at Fountain Court Chambers. He became a clerk at the set in 2008, and had served as deputy senior clerk since 2011. Among his major accolades, he was the first barristers’ clerk to receive a professional qualification from the Chartered Institute of Marketing.

Martenstyn will start his managing director role at Vannin on 1 October, and will be charged with promoting the funder’s brand at home and abroad.

Alex Taylor, Fountain Court Chambers’ senior clerk commented: ‘Paul has been a stalwart of our clerking team for almost ten years and a clerk of absolutely the highest order. Although we will certainly miss him, I can see that the opportunity to tackle a new professional challenge and to contribute to Vannin’s progress through what Paul does best was extremely attractive.’

He will be joining at a time of heavy investment for the litigation funder. In 2016 Vannin announced it had increased its capital to $500m after a financial injection from asset management firm Fortress Investment Group.

Likewise, it is a boom period at funding rival Burford. The financier announced H1 results today (25 July) including a 17% increase in income to $205.2m. Profit after tax also rose 17% to $166.3m while operating profit was up 18% to $183.5m.

According to Burford, such is the demand for litigation funding in the market that it has reached $540m in legal finance commitments in the first six months of 2018 alone.

While impressive by anyone’s standards, the double-digit increases across the board do not quite compare with the 130% income hike Burford recorded in H1 2017.

Meanwhile, litigation specialist Stewarts has revealed a new tie-up with litigation tech start-up Solomonic.

Solomonic works via an initial human process of analysing a set of previous judgements, which is then reviewed by a barrister. At present this is done by Solomonic co-founder and former One Essex Court barrister Gideon Cohen. After this in-depth analysis, the information is fed into an engine which converts it into a series of algorithms.

Rather than giving traditional percentage estimates of an outcome, the process is designed to inform tactical decisions during litigation, such as whether or not to settle or pursue a particular argument.

Edward Bird, Solomonic’s chief revenue officer, told Legal Business that Solomonic is trying to ‘achieve actual intelligence’ as opposed to typical machine learning: ‘We don’t say “we do predictions.” We give you rigorously analysed data that actually helps you make evidence-based decisions.’

Julian Chamberlayne, Stewarts’ head of knowledge management and compliance, added: ‘We think there are some serious marginal gains to be made here. It’s like the Team Sky cycling approach, we’re looking for incremental gains rather than the magic answer!’

Finally, the Supreme Court has unanimously dismissed the appeal of 68-year-old Tini Owens, who has been told she must remain married to her husband for the time being.

Tini Owens had made consecutive appeals to the Court of Appeal and the Supreme Court after a lower court refused to grant her a decree nisi, despite acknowledging that her marriage to Hugh Owens had broken down.

The Supreme Court admitted that her appeal generated ‘uneasy feelings’ but asserted ‘uneasy feelings are of no consequence in this court, nor indeed in any other appellate court.’

Charles Russell Speechlys family law partner Sarah Jane Boon said the Supreme Court’s decision represented a ‘woeful failure’ to resolve ‘a perverse situation.’

She added: ‘Mrs Owens has failed to satisfy the court that she is entitled to a divorce by a narrow margin on an objective test, raising serious questions about whether the current law remains fit for purpose when it produces results such as this.’

Legal Business

Disputes round-up: Retailers beat Visa/Mastercard on fees as Stewarts launches financial crime unit

Disputes round-up: Retailers beat Visa/Mastercard on fees as Stewarts launches financial crime unit

The UK’s largest disputes specialist, Stewarts, has helped secure a win in the high-profile Visa/Mastercard interchange fees case less than a week after launching a financial crime department.

On Wednesday (4 July), a host of British retailers represented by Stewarts, Mishcon de Reya and Morgan Lewis & Bockius  won a Court of Appeal ruling against the financial services giants.

The MasterCard/Visa case concerned interchange fees, which are charges made by the card-issuers on payments by debit or credit cards in store or online. Sainsbury’s, Asda, Argos and Morrisons sued the card companies alleging the fees were an unlawful restriction of competition based on EU law.

The retailers’ case was dismissed by Justice Popplewell last year, when he ruled the charges were necessary to MasterCard and Visa’s business operations and were below an objectionable level.

But the retailers appealed, with two of the appeals brought from the Commercial Court and one from the Competition Appeal Tribunal (CAT). Sainsbury’s was represented by Mishcon and Morgan Lewis, while Asda, Argos and Morrisons were advised by Stewarts. Jones Day acted for MasterCard and Linklaters represented Visa.

This week’s judgment overturned last year’s decision, with Master of the Rolls Sir Terence Etherton ruling that the fees restricted competition and were therefore unlawful. He ruled that all three cases should be sent back to the CAT due to its specialism in competition matters.

Elaine Whiteford, competition partner at Covington & Burling, commented on the combination of the three cases: ‘Given that competition litigation is characterised by multiple claims being brought by different parties in parallel and that this risk of different approaches by different courts arises in many cases, it may well be that the Court of Appeal’s approach provides a strong signal of how such claims will be handled in future.’

The win capped off a successful period for Stewarts, which announced last Friday (29 June) it had hired Richard Kovalevsky QC as a partner to head up a new financial crime department.

Kovalevsky joins as the firm’s 62nd partner after 13 years at 2 Bedford Row. He is recognised as a leading individual in the Legal 500 for fraud work, and took silk in 2003.

Managing partner John Cahill said Stewarts plans ‘to establish a leading financial crime team’ with the hire, citing overlaps with pre-existing practices such as civil fraud, asset recovery and tax litigation.

Elsewhere, HFW made a disputes hire in the form of Emmanuel Roger France, a dispute resolution specialist and founding partner of Fieldfisher’s Brussels office.

France joins HFW’s own Brussels base, bringing with him more than 19 years’ experience in fraud, asset recovery and white-collar crime matters. It was the firm’s second lateral disputes hire this week, after the firm brought in Trowers & Hamlins international disputes head James Harbridge to its Dubai office on Monday (2 July).

Legal Business

Boutiques: Highly evolved

Boutiques: Highly evolved

With the disputes market evolving and clients becoming more discerning, it has been a phenomenal ten years for boutique law firms focused on litigation. The pressure on generalist, mid-market dispute teams has played towards this dynamic, leaving true contentious specialists increasingly going head-to-head with the traditional London elite.

A glance at the financial results of some of the main litigation specialists – Stewarts, Signature Litigation and Quinn Emanuel Urquhart & Sullivan – shows dramatic increases in revenue amid a string of major cases.