Legal Business

Financials 2020/21: ‘Fortunate’ Macfarlanes adds 10% to top line as 26-50 LB100 firms post mixed results

Firms ranked 26-50 in the Legal Business 100 – Macfarlanes, TLT and Watson Farley & Williams – have posted a mixed bag of financials for 2020/21.

Macfarlanes has enjoyed its eleventh consecutive year of revenue growth amid a double-digit profit uptick and profit per equity partner figures that again bely fears of pandemic reversals. The robust 10% turnover increase to £260.96m builds on last year’s 9.5% rise to £237.65m, while PEP increased 9% to £2.09m, continuing last year’s solid 10% boost to £1.91m.

The results announced today (27 July) also point to a 12% increase in operating profit for the 2020/21 financial year, only a slight dip on the increase of 14% to £126m last year. The firm said it did not reduce costs over the course of the year, in fact overall costs increased, so the results reflected growth in the practice.

Senior partner Sebastian Prichard Jones (pictured) told Legal Business: ‘The last financial year was a good year for the firm despite the challenges that were clearly evident. We were fortunate that activity levels remained strong across our three areas of business – transactional, disputes and advisory work. Thank you as always to the firm’s clients and to our dedicated people for achieving what turned out to be a good result.’

Earlier in July, Macfarlanes announced it would be retaining 22 of the 25 trainees qualifying in September, giving the firm an 88% autumn retention rate.

Jat Bains, graduate recruitment partner said at the time: ‘This has been an uncertain period for many but we have continued to invest in our trainees, knowing that an investment in our trainees is an investment in the firm’s future.’

The firm also said it was increasing base salaries for both newly qualified solicitors and trainees. First year trainees will take home £48,000, rising to £52,500 for second year trainees, while newly qualified lawyers will earn £90,000.

Fee-earners will also share in an uncapped firmwide bonus – this year paid at a level of 9.78% ignoring special Covid bonus payments – and are eligible for individual bonuses, which are not geared to hours worked. The firm said it expected newly qualified solicitors to earn in excess of £100,000 this financial year, taking into account all elements of their package.

In a similarly bullish vein, TLT has smashed through the £100m revenue barrier, posting  an 11% increase in turnover to hit £110m to coincide with the launch of a new strategy that targets revenues in excess of £140m by 2025.

The 2025 strategy will focus on anticipating and delivering against future client needs, through initiatives such as its FutureLaw programme and the further development of legal and near law capabilities. Investment will continue across its seven sectors, which include clean energy; digital; financial services; leisure, food & drink; public sector; real estate and retail & consumer goods.

It will also aim to keep equality, diversity, inclusion and wellness at the centre of TLT’s plans as the core pillar of the strategy. As part of that, the firm points to a recent multimillion pound investment in its tech platform and offices to support a shift to fully flexible working.

John Wood, managing partner at TLT, reflected on a strong position in his first year in the role: ‘We’ve worked hard to help clients manage the uncertainty and continuous change, as well as constantly looking forward to the challenges and opportunities that may lie ahead for their organisations. Growth has been consistent across all our services, sectors and locations – although each of our sectors have faced very different challenges triggered by the pandemic and the ongoing disruption that it has accelerated.

‘Clients rightly continue to expect more from their lawyers and our new strategy is about meeting that need – whether through our legal advice, transforming how we deliver services or supporting clients with the wider macro issues they face as true business advisers. That includes providing non-legal support on both the sustainability agenda and how best to rise to the challenges all businesses face around EDI and wellness.

‘Pandemic aside, breaking the £100m revenue mark is another significant step forward in our journey of continued and sustainable growth. But, we aren’t even close to done yet and, with our new strategy, will focus on looking ahead and delivering an outstanding service for our clients.’

Highlights for TLT over the last year include being re-appointed to the Sainsbury’s legal panel and securing roles on the Vodafone legal panel and UK government’s newly established trade law panel.

Watson Farley & Williams also reported its financials today, with slightly less dynamic performance over 2020/21, with income declining by 1% to £177m and a 4% dip in PEP to £553,000.

In a joint statement, managing partners Chris Lowe and Lothar Wegener said: ‘We are satisfied with the result as we entered the last financial year during a strategic review of our core business aimed at consolidating and investing in our strategy of sector focus. As part of that, we have opened two new offices in Düsseldorf and Sydney, welcomed ten lateral partners and made significant investments in our workplaces and business functions across the firm.

We are already seeing the benefit of our strategic focus with a strong first quarter to the current financial year, building on the 5% growth we saw in the second half of the last year.’

Legal Business

WFW not ‘singing from the rooftops’ as it defies pandemic blues to post revenue and profit uptick

Watson Farley & Williams is the latest City firm to post robust revenue and profit figures in the face of adversity in the 2019/20 financial year. 

The firm said yesterday (29 July) that fee income was up 4% to £179.6m from last year’s £172.3m as profit per equity partner (PEP) saw a 3% uplift to £577,000 from £562,000. Profit was up a respectable 13% on last year to £53.7m from £47.5m, capping off a bullish set of results. 

Co-managing partner Chris Lowe (right) told Legal Business: ‘Sectors remain the core focus of our strategy and continue to deliver stable, manageable, quality growth.  These  are not jump-up-in-the-air and sing-from-the-rooftops numbers but we are hitting PEP and turnover increases in a consistent way.’ 

He stressed the importance for the firm’s management to keep a close eye on the direction of travel and said WFW would not deviate from its sector focus. ‘We are still a transport, energy and real estate business and that will not change. People will always need transport and energy. Renewables continues to dominate the energy sector and remains a priority for us.’ 

Fellow managing partner Lothar Wegener (left) flagged the firm’s Spanish office as one of the highest performing in terms of growth and noted the energy practice has become a cohesive, multi-office practice comparable to transport. The aviation business accounted for three of the six new partners from the latest promotion round, a reflection of the firm’s investment in that sector.  

‘We are as well positioned in a worldwide economic crisis as we were before coronavirus happened, so we didn’t think we needed to reconsider our strategy or impose salary cuts or promotion freezes,’ he said. 

He added that the Munich office adopted a fully agile working practice even before the pandemic, making it easier to roll out flexible working across other offices. He said that engagement was taking place to define how people would change their working practices to adapt for the new normal’. 

Legal Business

Sponsored briefing: Key trends in contentious construction

The team at Watson Farley & Williams discuss the latest developments in the sector

It has been a busy few years for the London contentious construction team at Watson Farley & Williams. Following the recruitment of specialist Rebecca Williams in 2015 and the relocation of former Bangkok partner Rob Fidoe in 2016, the team has gone from strength to strength, building on the capabilities of the firm’s leading non-contentious practice to make its mark in the construction market. The team, which was joined by construction hotel and leisure expert Barry Hembling in 2019, is now an award-winning practice, working for domestic and international clients operating across a range of sectors, and conducting groundbreaking litigation, which is shaping new law. This includes the landmark decision in PBS Energo AS v Bester Generacion UK Ltd [2019], where the English High Court refused to enforce an adjudication decision as there was a properly arguable defence that the decision had been obtained by fraud – the first occasion on which the court refused to order enforcement in such circumstances.

Legal Business

Revolving doors: US & City firms target Simmons & Simmons as Ashurst makes hires

US & City firms saw a steady influx of lateral hires across sectors as Latham & Watkins, Allen & Overy (A&O) and Watson Farley & Williams hired partners from Simmons & Simmons.

US firm Latham hired Simmons’ head of equity capital markets, Chris Horton, as partner in its corporate department. Horton joined Simmons in 2008 and has experience advising on IPOs, secondary offerings and M&A transactions by listed companies, investment banks, and hedge funds.

Co-chair of Lathams’ corporate department Nick Cline commented: ‘Chris has a terrific blend of transactional and regulatory experience that will be of great value to our clients in the UK and globally.’

Global vice-chair of the corporate department David Walker added: ‘Chris’s experience complements and enhances the existing strength of our ECM and corporate practices in London and globally. His arrival will further advance our goal to become the market’s leading firm for complex, cross-border transactions.’

A&O similarly hired from Simmons, bringing in employment partner Vicky Wickremeratne to its London office. Wickremeratne became partner in 2015 and was previously the managing director and senior counsel of Goldman Sachs Asia, based in Hong Kong.

A&O head of London employment Sarah Henchoz told Legal Business: ‘Vicky spent a lot of time in-house before she joined Simmons & Simmons. She’s really good at looking at what the wider objective is rather than looking through a narrow lense and it’s a very unique perspective in many ways.’

Meanwhile, Watson Farley hired capital markets partner Simon Ovenden in London. Ovenden also joins from Simmons, where he was head of the debt capital market group. Ovenden has experience in debt and equity capital markets transactions and advises both underwriters and issuers across capital markets products.

Ovenden told Legal Business: ‘It is a challenging market with intense competition. You have to show clients something that really distinguishes you from the rest of the pack. You can’t be an average player in capital markets.’

‘It wasn’t a difficult sell for me to join. I like the people and I like the vision and the fact that they see capital markets as being part of what they want to offer,’ Ovenden added.

WFW managing partner Chris Lowe told Legal Business: ‘It’s not an easy market to attract high quality talent and I think it’s a testament to the firm and to Simon to have the vision that the platform will be able to deliver on what he does.

Elsewhere, Ashurst hired partner Ruby Hamid to its dispute resolution team in London. Hamid joins from Freshfields Bruckhaus Deringer, where she was counsel, and specialises in white-collar crime, financial regulation, global investigations and risk and compliance.

Head of dispute resolution in EMEA Tom Connor told Legal Business: ‘She brings a white collar crime practice and a deep expertise in corporate and financial crime – bribery and corruption work in particular will be a strong focus for Ruby. Ruby’s hire reflects our continuing focus on international investigations, alongside complex commercial litigation and international arbitration work.’

Mishcon de Reya, meanwhile, appointed Ben Brandon to its white collar crime and investigations team. He joins from barrister’s chambers 3 Raymond Buildings, and specialises in extradition and fraud.

Further afield, Ashurst made another hire from Freshfields in the form of Andrew Craig to its corporate practice in Melbourne, Australia. Craig specialises in digital economy and technology and has experience in advising corporate, private equity firms and financial institutions on technology transactions.

Legal Business

WFW and former real estate head settle £300k High Court claim

A longstanding legal wrangle that saw Mark Prevezer, Watson Farley & Williams’ former head of real estate seek £300,000 in damages from the firm, has been settled out of court.

The move puts an end to a law suit that was expected to head to trial at the High Court in November this year, in which Prevezer alleged breaches of a consultancy agreement signed by the parties in March 2016 and for reputational harm suffered for ‘wrongful removal’ from his position of global head of the firm’s real estate practice.

The claim was filed against WFW by Prevezer, who now works as a senior consultant at Forsters, in the High Court’s Business and Property Court in August last year.

A spokesperson for WFW told Legal Business: ‘WFW and Mark Prevezer are pleased to report that they have resolved all disputes between them and in doing so they have withdrawn all allegations on the pleadings. The other settlement terms are confidential to the parties.’

Although the particulars of claim refer to an ‘apparent policy’ of age discrimination at the firm, Prevezer’s damages claim of at least £300,000 was not directly connected to that.

According to the particulars, Prevezer had claimed to have seen over the course of several years ‘many older and experienced partners in the firm being gradually and reluctantly manoeuvred by [WFW’s] management first from the status of partner to consultant and then… being asked to leave or retire before the retirement age in the [firm’s] partnership agreement.’ By 2014, the document states, it became apparent to Prevezer, who turned 60 in 2015, ‘that he had become the focus of the inappropriate manoeuvring and age discrimination’.

The document, filed with the Business and Property Court on 6 August 2018, cites an alleged incident where the firm’s managing partners [Chris Lowe and Lothar Wegener] refused Prevezer’s joining the main management committee, with all the vacancies going to ‘three much younger, and less experienced partners’.

Prevezer became global head of real estate in 2006 and was entitled to 60 equity points and an annual income of around £600,000. He claimed that during his tenure, the annual turnover of the real estate practice increased from £800,000 in 2006 to roughly £17m a decade later, making it the third biggest sector and responsible for 11% of the firm’s global turnover annually.

The claimant outlined an ‘inappropriate restriction’ on 15 March 2016 whereby Prevezer was not allowed to travel abroad without consent from the managing partners, a move which he claimed would prevent him from successfully running and driving forward the real estate sector.

The following day Prevezer had lunch with Wegener where a conversation ensued about Prevezer leaving the partnership and having a consultancy agreement instead to start at the end of March 2016.

The consultancy agreement was signed on 31 March and the role of part-time consultant took effect from 1 May 2016. The arrangement entitled Prevezer to a fixed annual fee until 30 April 2018 of £250,000 per annum as well as a ‘results based element. It also was alleged to state that it was the firm’s intention that he continued as global sector head for real estate.

The meaning of this was later disputed by the firm. In a letter dated 25 April 2018 James Penn, a consultant to WFW, wrote to Prevezer claiming that the firm was entitled to remove him from the position because ‘the wording of the consultancy agreement did not say he would continue as the global head of the global real estate sector’.

Then at a meeting on 16 February 2018 between Prevezer and Wegener, the managing partner told the claimant that he had been told that Gary Ritter [head of the London real estate group] and another partner had lobbied at a partner meeting for Prevezer to be replaced as global head of real estate and that the firm intended to replace him. Before the beginning of May 2018, corporate partner Felicity Jones was appointed to the role.

Prevezer was asked not to return to the London office and told that the firm was no longer willing to honour an agreement in December 2017 for a single fee of £250,000 for a third year, including fees due for the result-based part of the contract for the first two years.

The firm also claimed that ‘there is no results based element due to you over and above the £250,000 per annum which you have already been paid for the periods 1 May 2016 to 30 April 2017 and 1 May to 30 March 2018’.

The firm told Prevezer ‘we recognise that you may wish to terminate rather than continue the arrangement in a third year.’ The offer to terminate the consultancy agreement was rejected by Prevezer in May 2018, after which he pursued the damages claim for loss of fees and reputational damage.

Talking to Legal Business on the thorny issue of age discrimination, one employment partner said: ‘Provided the firm is managing the equity a business case can be justified – you could say it is needed for the benefit of succession and recycling the equity.’

They added: ‘Larger law firms are all aware of the challenges. It’s getting harder to justify and individual partners are becoming much more aware that they can’t just be offloaded.’

‘WFW are grateful to Mark Prevezer for his work over many years. The parties wish each other well for the future,’ the WFW spokesperson concluded.

Legal Business

Watson Farley & Williams makes major City energy play with Clifford Chance Africa director

Watson Farley & Williams (WFW) is set to hire Titus Edjua, director of Clifford Chance’s (CC) Africa group, to boost its project finance capabilities.

According to a source, one other lawyer is due to be joining WFW from CC as part of the same move, but this has not been confirmed by either firm. He is set to start at WFW on 1 April.

Edjua’s arrival will enhance WFW’s already-standout project finance practice, which in London includes heavyweight partners such as Evan Stergoulis and David Osborne, both of whom have considerable clout in the sector.

Edjua brings his own wealth of experience: in his 13 years at CC, he advised on a range of notable mandates, including representing Overseas Private Investment Corporation on the project financing of the expansion of the Olkaria III geothermal power complex in Kenya. In terms of other key work, he acted for a number of sponsors in connection with a 50MW solar PV project in Uganda.

For CC, it is another blow to its infrastructure offering. In August last year, the highly-regarded Brendan Moylan left the firm to join Latham & Watkins, after a 19-year tenure at CC.

Then in November, highly rated infrastructure private equity partner Amy Mahon left for Simpson Thacher & Bartlett in another knock to the Magic Circle firm.

As one key hire comes through the door for WFW, another exits. Latham & Watkins announced today that it has hired WFW’s employment partner Anne Kleffman in Germany. Kleffmann, who had been a partner with WFW since 2013, will join Latham & Watkins’ Munich office.

Both WFW and CC declined to comment.

Legal Business

Watson Farley management get second term as half-year revenue comes in flat

Watson Farley & Williams (WFW) has re-elected its management duo for a further five years.

Chris Lowe and Lothar Wegener (pictured right to left) have been re-elected as the UK firm’s managing partners for a second term, beginning 15 January next year. The pair have held the roles since January 2014, with WFW’s revenue up 60% over the last five years, one of the strongest performances among a top 50 UK practice.

The re-elections coincide with the 500-lawyer firm posting a 2018/19 half-year revenue of £85.9m, the same as last year. Fees paid were down slightly to £74.6m from £76.1m, however. Wegener said the firm was nevertheless on track to meet its annual growth target of at least 5%.

In July, WFW said revenue for the 2017/18 full-year was £162.9m, up 3% on the previous record-breaking period when revenue grew 20%.

Lowe commented: ‘We are energised at the prospect of a further term. Our re-election represents a strong commitment by the firm to its investment culture together with the ambition to achieve sustainable quality growth.’

WFW also announced today (14 December) that it had hired Ince & Co’s head of Greek law, George Iatridis, in Greece. He follows other former Ince partners Antonis Lagadianos and Evangelos Catsambas, who join WFW next year. The shipping and disputes specialist Ince is currently gearing up for a merger with listed law firm Gordon Dadds.

WFW, which specialises in serving the energy, transport and real estate sectors, has been one of the UK’s leading mid-tier firms in recent years, and was profiled alongside Fieldfisher and Osborne Clarke (OC) in Legal Business’ ‘Reversal of fortunes’ cover feature in 2017. Fieldfisher announced its half-year results last month, revealing a 26% uptick in revenue to £97m.

For more on Watson Farley see last year’s cover feature, Reversal of fortunes (£)

Legal Business

Watson Farley using fewer smiley emojis as revenue growth falls back following strong run

One of the UK’s leading ‘pacey’ mid-tier firms, Watson Farley & Williams (WFW), has seen its revenue growth rate fall to 3% following a record-breaking year.

The energy, transport and real estate specialist recorded an above-trend revenue growth of 20% to reach £159.8m last year. A modest 3% increase this year, by contrast, pushes WFW’s top line to £162.9m.

Despite the slowdown, co-managing partner Chris Lowe (pictured) was pleased with the result, oddly defining his sentiment with emojis: ‘If the result was an emoji, it wouldn’t be the full beaming toothy smile one, it would be slightly less smiley.’

Lowe confirmed that WFW’s PEP figure dropped from last year’s figure of roughly £600,000 but attributed this to the 11 lateral hires the firm made – nearly double last year’s number. He also noted that the revenue figure was ‘currency neutral’, unlike last year when half of the firm’s 20% growth was due to exchange rate fluctuations.

Lowe told Legal Business: ‘It’s in line with what we budgeted for and it’s off the back of a strong, record-breaking year. We recognised that as the firm is growing we needed to make investments through promotions and lateral hires.’

The firm made some key lateral hires over the last year, notably regulatory specialist Thomas Ross from Ropes & Gray in December 2017. The new hire was part of an effort to build out the firm’s finance disputes practice, with an emphasis on white-collar matters.

Conversely, WFW lost four partners to Herbert Smith Freehills in April, including aviation specialist Rex Rosales.

Other major investments over the last year included an association in Singapore, through a formal law alliance (FLA) with local firm Wong Tan & Molly Lim (WTL). The FLA allows WFW integrated marketing, billing, client and legal services. Around 25% of the firm’s business comes from Asia.

WFW, one of three firms alongside Fieldfisher and Osborne Clarke (OC) to be profiled in our ‘Reversal of fortunes’ feature, has recorded results that compare unfavourably with its mid-tier rivals.

Fieldfisher laid down another outstanding marker with a 24% revenue growth rate, while OC saw turnover jump by 14%. For OC, it confirmed a five-year average of double-digit revenue growth.

On the comparison with OC and Fieldfisher, Lowe said: ‘In many ways we do compare ourselves to them, but one of the big differences this year is that their sector focuses in IT meant they benefitted from GDPR work. We weren’t afforded the same luxury in our sectors.’

Legal Business

Partnership Perspectives

‘The Dickensian management role of closed doors is a thing of the past.’

Jonathan Kewley, partner and co-head of Clifford Chance’s tech group. Made up in 2017

What attracted you to partnership?

I’m working in tech, a space that didn’t exist 30 years ago. There are challenges facing clients that didn’t exist five years ago. The tech environment fits with the character traits of partnership. You have to be entrepreneurial, and it’s more exciting to be that way. It maintains interest.

Legal Business

Revolving Doors: Herbert Smith Freehills raids Watson Farley as firms strengthen in the City and abroad

Four Watson Farley & Williams (WFW) partners have decamped to Herbert Smith Freehills (HSF) – including aviation specialist Rex Rosales – while lateral hires in the City and abroad continue.

The four-partner hire for HSF sees two moves to London and Singapore respectively. WFW’s aviation sector head Rosales will be joined by asset finance group specialist Jahnavi Ramachandran in London, while finance expert Siva Subramaniam and aviation partner Samuel Kolehmainen leave WFW to join HSF’s Singapore office.

In a statement, HSF global head of finance, real estates and projects Jason Ricketts said: ‘With unprecedented investment levels in aviation and other transport, infrastructure and projects across the globe, strengthening our asset finance practice makes good business sense’.

Meanwhile Hogan Lovells has launched a trade practice in London with a partner hire from Squire Patton Boggs. Aline Doussin will be the firm’s first dedicated trade partner in the City. She had been a partner at Squire Patton Boggs since 2014.

Global head of Hogan Lovells government regulatory practice Alice Valder said: ‘Hiring additional experienced trade partners in Europe has been a strategic priority for us.’.’

Elsewhere in the City, Stephenson Harwood has hired Catriona Berman to the firm’s real estate group. Berman joins from Goodwin Procter, which she joined in 2015.

Arnold & Porter also strengthened in London, with the hire of Jane Wessel from Crowell & Moring. Wessel holds experience in competition damages litigation and will enhance Arnold & Porter’s antitrust litigation practice.

John Schmidt, who leads Arnold & Porter’s London competition team, said: ‘Jane brings broad experience to our firm, enhancing our existing multijurisdictional and multilingual London team, and further bolstering our ability to serve clients globally’.

International hires last week included the arrivals of Jacques-Philippe Gunther and Adrien Giraud at Latham & Watkins in Paris and Brussels from Willkie Farr & Gallagher as the firm strengthened its antitrust practice on the continent.

Gunther brings experience advising clients on complex disputes before the European and French competition authorities, the European Court of Justice and the French courts. Giraud has experience practising in New York, Paris and Brussels, advising on an array of competition matters.

In Spain, Pinsent Masons further expanded with the appointment of public law specialist Pablo Dorronsoro. Joining from Baker Mackenzie, where he spearheaded the public law and infrastructure department, Dorronsoro will head up Pinsents public law office in Madrid.

Further afield, the standout hire in the US was Kirkland & Ellis bringing over experienced litigation partner Sandra Goldstein to its New York office from Cravath, Swaine & Moore.

DAC Beachcroft has also appointed a partner to its disputes group. Pedro Claros will co-head the department’s international arbitration practicee and joins from leading Spanish independent Cuatrecasas. DAC completed two senior partner hires in the same week, also adding Graeme Bell from the London office of Irish heavyweight Mason Hayes & Curran.

In the Asia Pacific, Clyde & Co appointed insurance and cybersecurity practitioner John Moran to its Sydney office. Moran joins from Norton Rose Fulbright, and his addition will deepen Clyde & Co’s insurance footprint in Australia.

Clyde & Co senior partner, Simon Konsta said: ‘John has a standout reputation in the insurance industry and a practice that runs across the core of our insurance business in Australia.’