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More for most or less for some? Links is latest top firm to sidle towards merit pay

Even at the top of the market, the slow march towards performance-driven pay for associates continues with Linklaters this week becoming the second top City player to unveil changes to its associate remuneration.

Linklaters is to introduce a performance-based element to salaries for its London-based associates with two years or more post-qualification experience (PQE) as part of what it dubs its ‘Our Deal’ strategy.

The City firm issued a somewhat obtuse statement over the move but the new model, which kicks in from 1 May 2014, is expected to see roughly 10% of pay handed out on the basis of individual merit past the two-year PQE point. An existing bonus scheme remains unchanged.

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Supply and demands – will the cheap talent run out for GCs in 2014?

With rising demand for in-house counsel, bluechip legal teams are hunting for talented lawyers. Legal Business surveys the recruitment outlook.

‘I do get asked “Why are you outsourcing work when you’ve got such a large team?”,’ says David Symonds, general counsel (GC) for Europe, the Middle East and Africa at Tyco International.‘Of course, the reality is, when you look at benchmarking data, my team is actually two thirds of the size that it should be.’

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After Charlie’s War – can Ashurst achieve post-merger prosperity under a new leader?

A recession-weary Ashurst has finalised a long-planned but high-stakes global merger – only to eject the leader synonymous with its brand and strategy. Is Ashurst heading for peace-time prosperity or factional warfare?

The former Ashurst partner sits back in his chair and reads the text message. Having asked a friend about the mood at Appold Street in the wake of Ashurst’s expected vote for integration with its Australian ally and unexpected vote that unseated its high-profile head Charlie Geffen, the text response is succinct: ‘It’s a mess!’ The ex-partner smiles. ‘Well, it’s hardly surprising.’

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The New New Normal – a changing market beckons for 2014

The last three years have drawn to a close heralding another 12 months much like those that went before: depressing. The eurozone flirting with break-up, fiscal woes holding back Western economies and a subdued legal market. Check, check and check.

But drawing to the end of 2013, commercial lawyers are facing an outlook that is, in highly relative terms, not half bad. The word from senior City partners has been generally upbeat since the summer. The first half financial results have, if anything, exceeded those raised expectations. We are looking at the best set of like-for-like financial results seen for five years from major UK law firms. Even allowing for the weak comparison point of H1 2012/13, early numbers are robust across a wide range of firms.

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‘Mishcon’ no more but a City player at last? Wragges needs a big deal and the old magic

‘Wragge & Co was the Mishcon of its day.’ That statement from a former veteran of the Midlands giant sums it up in many ways.

In the late 1990s Wragges wasn’t just the best law firm the English regions had bred, it was a firm that broke the rules. The mix of flair, quality lawyering and an ability to astutely break away from the herd had few if any direct comparisons at the time. Wragges had a recognition and respect in the City absent from most national and regional competitors. More than that, Wragges stood out from rivals and could quicken the professional pulse in a way that Mishcon de Reya does today.

That’s not to say that the intervening years have been a disaster. The 119-partner firm remains a perfectly respectable performer. But along the way too many strategic shuffles and an uncertain crack at the City has stolen Wragges’ mystique. The firm also arguably allowed its practice to become too diffuse and lacked clarity over which section of the market it was focusing on, to the detriment of its corporate practice. Wragges’ famed morale is now, well, just like the rest.

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How to win cases and influence people – litigation funding strives to go mainstream

As third-party funders enjoy robust growth within a buoyant disputes climate, Legal Business assesses current attitudes towards litigation’s controversial bankrollers.

Third-party litigation funders have suffered bad PR for more than 40 years. Often depicted as lurking in the shadows of the courtroom, waiting to collect their share of damages, lawyers have historically been curiously wary of funders since their inception.

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Profile: Chris Newby, AIG

As AIG’s general counsel for Europe, the Middle East and Africa, Chris Newby appears extraordinarily calm for a man in charge of a burgeoning portion of a $65.7bn business, that was described as on the brink of failure a couple of years ago.

Now, happily labelled as the ‘largest turnaround in corporate history’, things could easily have turned out very differently at New York-headquartered AIG. Newby’s apparent poise masks the prolonged period of extreme uncertainty and hard work that it took to get there. It’s unsurprising that he is still cautious, commenting: ‘There is no doubt there are signs of economic recovery, but we inevitably still face challenges.’

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Punch above weight – the finance teams aiming to take on the City’s heavyweights

As confidence begins to re-emerge at City finance teams, Legal Business profiles the mid-market players intent on challenging the Square Mile’s banking heavyweights

Bernard Sharp, global chair of the banking and finance group at Baker & McKenzie, may be tempting fate when he says: ‘The market has a lot in common now with the market in 2007.’ Still, his comment certainly reflects a more bullish mood among a cadre of players operating just below the largest six or seven banking practices in the City.

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Bank of Tokyo-Mitsubishi launches first EMEA panel

Bank of Tokyo-Mitsubishi UFJ (BTMU) has announced its first-ever panel for Europe, the Middle East and Africa (EMEA), with eight leading City firms appointed after a process described as ‘extremely competitive’.

Allen & Overy (A&O), Linklaters and Ashurst won places, alongside Berwin Leighton Paisner, Hogan Lovells, Norton Rose Fulbright, Slaughter and May, and White & Case.

BTMU has also created a separate, confidential transactional panel on which the preferred firms have won a place, alongside ‘other market-leading firms in a range of different practice areas’, which the bank would not disclose.

Born of a merger between the Bank of Tokyo Mitsubishi and UFJ Bank in 2006, BTMU approached a number of firms to apply for the panel, with an initial deadline of September.

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How the dust settles – Germany’s profession is forever changed but singular still

More than a decade after international law firms reshaped the market, Germany’s singular economy and culture is still refusing to simply conform to foreign notions. Legal Business reports.

Over the last 15 years, the German legal profession has obtained the dubious honour of being one of the most fractious major markets in the world. Today, both domestic and international law firms are still trying to come to terms with the inimitable characteristics of the economy and legal market. For many, the correct strategy is still a mystery.

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BG Group slims down legal roster to three

For a FTSE 100 company operating in 20 countries, BG Group’s panel of four law firms was already slim, but it just got slimmer, with news last month that Allen & Overy (A&O) and Herbert Smith Freehills (HSF) have been dropped in favour of Clifford Chance (CC), which wins a place alongside incumbents CMS Cameron McKenna and Freshfields Bruckhaus Deringer.

The appointment of the firms – which will offer full-service advice to the energy giant – came into effect on 1 November and follows a relatively short pitch process, which began in September.

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Reed Smith set for record year in London thanks to lateral push and sector focus

David Stevenson reports on Reed Smith’s evolution into credible global contender

For a 1,500-lawyer, top-30 Global 100 firm, Reed Smith has a habit of quietly getting on with its business. This is despite having conducted three mergers since 2001; grown by around one jurisdiction a year; and made a series of high-profile City hires as it builds out from its core shipping and litigation foundations in the UK – in so doing significantly boosting its 2013 London revenues.

The resignation in October of global managing partner Greg Jordan was a rare senior departure for the nearly 700-partner law firm, which in London this year hired Clifford Chance (CC) structured finance and derivatives partner Claude Brown (after hiring his former colleague Peter Zaman in 2012); McDermott Will & Emery City energy partner Rashpaul Bahia; and DLA Piper media partner Askandar Samad.

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The City elite is ready to try something new – are clients keeping up?

Eighteen months ago I met the general counsel (GC) of a FTSE 250 company to listen to his plans to parcel up parts of his deals, based on complexity, and hand each chunk to a different panel adviser based on skillset, capability and cost.

Until very recently, this level of micro-management – and the prospect that law firms would no longer be handed a deal lock, stock and barrel – was not going down well. Not long after meeting this GC, I sat between two well-known managing partners at a dinner and listened to them assert matter-of-factly that this sort of tinkering round the edges would never become mainstream.

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Clifford Chance in line for windfall payment after PwC reaches European Lehman settlement

As latest payout confirmed to Lehman’s creditors, total US and UK costs soar to $2bn

Clifford Chance is among the creditors of the European operations of Lehman Brothers set to receive a windfall after administrator PwC announced a total payout of $7.8bn, the latest in a series of payments made to creditors of the former US investment bank as it nears the end of its mammoth winding-up process.

According to one partner at the Magic Circle firm, the payment could be as much as £10m and a spokesperson for PwC said creditors are likely to receive payment before the end of the calendar year.

Lehman Brothers filed for Chapter 11 bankruptcy in September 2008, listing $639bn of assets against $613bn of outstanding debt but within days creditors filed claims of $1.2trn, double its assets.

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A&O the first top-tier player to forge contract lawyer service

Freelance lawyers to cover fixed-term needs.

For all the talk of innovation in the profession, experimentation with new models has so far been more evident at mid-pack players like Berwin Leighton Paisner (BLP) and Eversheds than elite London or New York advisers.

However, as Legal Business revealed on 25 November, Allen & Overy (A&O) has become the first top-tier outfit to challenge that orthodoxy with the Magic Circle firm launching a high-end contract lawyer service for major clients.
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RPC abolishes flat-rate salary for newly-qualified solicitors

City firm to move junior lawyers to structure based on merit and market rates.

RPC has taken the final steps to adopting an entirely merit-driven pay model as it last month announced that it will abolish the traditional flat-rate salary for newly-qualified solicitors (NQs) in the UK and move to a system linked to merit and market rates from September 2014.

In a move said to take into account what is happening in other sectors and the pressures that clients are under to achieve value, the firm will operate a variable pay scale where the strongest NQs entering their careers ‘in the most competitive areas of the profession’, will be eligible to earn salaries above those currently offered by major City firms, a firm statement said. Continue reading “RPC abolishes flat-rate salary for newly-qualified solicitors”

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If the shoe just about fits – Wragges in merger talks with Lawrence Graham

Proposed merger promises Birmingham firm significant City presence.

The announcement last month that Wragge & Co and Lawrence Graham (LG) are in merger talks makes a lot of sense on many levels, although competitors have inevitably been quick to point out obvious pitfalls.

Both firms have been hunting for suitors for a long time and for Wragges, the talks could provide the serious London foothold that has so long eluded it, despite a series of high-profile Birmingham transfers and London hires.

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Gateway to Africa: Hogan Lovells ties-up with Routledge Modise

The queue of international firms looking to enter the South African market became one shorter in November, as transatlantic giant Hogan Lovells announced it had tied up with Routledge Modise after ten months of talks.

The 40-partner South African firm, an ally of Eversheds until October last year, will operate under the Hogan Lovells banner, but will not share the same profit pool, as local regulations prohibit it.

Current Routledge chairman Lavery Modise will retain his title in South Africa, while the directors of the firm will now be referred to as partners. The new team is not expected to take up any positions on Hogan Lovells’ board. Continue reading “Gateway to Africa: Hogan Lovells ties-up with Routledge Modise”

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Ashurst faces senior departures after key merger goes live

It’s not been the ideal launch after the final phase of its high-stakes global merger. Within days of the union between Ashurst and its Australian ally going live on 1 November, the combined firm has seen a run of senior departures and barely concealed dismay in some quarters at the surprise leadership defeat of Charlie Geffen.

Global head of corporate Stephen Lloyd resigned at the start of November, within weeks of Ashurst voting with an overwhelming 97% majority in favour of full financial integration with Australian big six firm Blake Dawson, and shortly after litigator Ben Tidswell won the vote for the firm’s new chairman role.

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Shearman settles controlling stake in Co-operative Bank for US hedge funds

Behind the scenes of the first-ever creditor bail-in of a bank in the UK.

Last month The Co-operative Group’s £1.5bn recapitalisation plan for its beleaguered banking arm unravelled as subordinated bondholder activists advised by Shearman & Sterling negotiated hard and settled on a controlling stake of 70% of the shares of the bank.

Under the agreement, bondholders including US hedge funds led by Aurelius Capital Management and Silver Point Capital – dubbed the LT2 Group as they hold subordinated bonds – will receive 70% of the shares in The Co-operative Bank plus £100m in newly-issued securities. They will also inject £125m of fresh capital into the bank while parent company The Co-operative Group will retain a 30% stake. Continue reading “Shearman settles controlling stake in Co-operative Bank for US hedge funds”