In the wake of HMRC’s tax changes which have seen fixed-share partners (FSP) contribute capital at a slew of LB100 firms and many reassess their partnership model, Eversheds has reformed its fixed share scheme by allowing some FSPs to vote in firm elections and take home an increased profit share.
Partner promotions: Watson Farley and Brodies promote seven while TLT surpasses 100 partners
Watson Farley & Williams, TLT and Scottish firm Brodies are the most recent firms to announce their partner promotions with both Brodies and TLT expanding their rounds while Watson Farley nearly halved the number of lawyers it made up.
News in brief – May 2015
WHITTAKER STEPS DOWN AS LLOYDS GC
Group general counsel (GC) Andrew Whittaker is stepping down from his role at Lloyds Banking Group with deputy GC Kate Cheetham set to replace him. Whittaker joined the bank in May 2013 after having served as the legal head of the Financial Services Authority. The bank also saw the departure of disputes chief Philippa Simmons last month and began a redundancy consultation looking at cutting up to 25 mid-level positions.
The Middle East: After the gold rush
Latham & Watkins doesn’t make strategic missteps. Or at least that appeared to be the case until March, when the firm announced that it will close both its Abu Dhabi and Qatar offices later this year, relocating staff to its Dubai operation. Bill Voge, chair and managing partner of the firm that has been by most yardsticks the standout success story of the last 20 years, said the firm had been wrong in assuming there were four distinct hubs that the firm needed to service clients in the Middle East – Abu Dhabi, Dubai, Qatar and Saudi Arabia – and so after seven years in the region, the firm was consolidating its Middle East presence into Dubai and Riyadh.
For international firms, finding the appropriate business model and strategy for the Middle East has been a puzzle. The region was never more alluring than at the height of the pre-financial crisis period of 2007 and 2008. Intoxicated by crude oil prices at nearly $150 a barrel in the summer of 2008, the Middle East could hardly have felt more prosperous. As ostentation gripped the region, Dubai powered ahead with ambitious projects such as the man-made archipelago Palm Jumeirah and the Burj Khalifa, the world’s tallest building. Naturally, the legal profession sought to capitalise.
‘Phase two’: AIG reviews UK panel and establishes 64-strong European roster
American insurance giant AIG has carried out a review of its UK-based legal panel and established a new 64-member roster to cover the company’s European operations across 12 countries.
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Hunting Dragons – Anti-corruption in Asia
Once a byword for bribery, the Asia region has toughened anti-corruption measures in recent years, but enforcement remains hard to predict. We team up with Simmons & Simmons to assess the client response.
Any multinational worthy of the label has to be in east and south-east Asia. The scale of the market, its manufacturing base, and its growing consumer population make it impossible to ignore.
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Legal boutiques: unheralded, thriving and coming after your lunch
The rise of boutiques has been yet another development shaping the legal industry that no-one predicted. Conventional wisdom for years held that law firms should go global or specialise but that was largely in the context of mid-tier players becoming more tightly defined around a handful of profitable practice areas (which pretty much hasn’t happened either).
What we have seen instead – as we address this month – is a flourishing of highly specialised and lean law firms launched or expanded since the financial crisis reshaped the market. Obviously, much of this is due to the post-
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Partners at top firms to pay £42k more under Labour tax plans
Associates are set to gain whoever wins
Law firm partners at major City firms are facing the prospect of a substantive hike in tax if the Labour Party forms a government in this month’s general election with current manifesto pledges expected to see many partners at Legal Business 100 firms with a five-figure increase in their annual tax bill.
Under Labour’s policy, the 45p rate of income tax will be raised to 50p for people earning over £150,000. According to numbers produced by Baker Tilly, this means that a partner earning £1m will pay £500,590 in income tax and national insurance – £42,060 more than the 2015/16 tax rate that currently stands at £458,530.
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‘Phase two’: AIG reviews UK panel and establishes 64-strong European roster
American insurance giant AIG has carried out a review of its UK-based legal panel and established a new 64-member roster to cover the company’s European operations across 12 countries.
Both reviews were carried out at the same time by the company’s Legal Operations Center. The UK panel review, which was primarily a housekeeping exercise around the 25-firm panel established in 2013, took three months, while the Continental roster took a year due to the size and volume of firms and the administration involved.
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US firms step up in the City with new practices
Goodwin Procter and Ropes & Gray launch in PE and ComLit
International firms in the City maintained their expansive form in April with three US-bred advisers unveiling UK law practice launches. The moves saw Boston’s Goodwin Procter launch a UK practice in private equity, New York’s Cahill Gordon & Reindel hire its first English-qualified partner and Ropes & Gray move into UK disputes work.
Goodwin Procter set up shop in London seven years ago looking to emulate the success of the firm’s property team in the States. But the firm recently announced its intention to compete in London’s private equity space, with the hire of King & Wood Mallesons co-head of corporate Richard Lever.
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‘There is no end point’: Dentons’ expansion continues with US outfit McKenna Long and White & Case Budapest team
Having already announced a mammoth combination with Chinese firm Dacheng under a Swiss verein structure this year, Dentons bolstered both its US and CEE capabilities last month by combining with Atlanta-based McKenna Long & Aldridge and hiring a 50-strong team from the Budapest office of White & Case.
Dentons had been scoping the market for a US combination for some time, and previously attempted to tie-up with McKenna Long in 2013 – though that was unsuccessful after partners at both firms rejected the move. This time, Dentons chief executive Elliott Portnoy said events ran more smoothly than had been widely reported. ‘The conversation moved with substantial speed; in 2013 we weren’t able to bring it to a final closure. It’s common for them to begin and unfold over a number of years but fade before a deal can be done. You need a high level of alignment around strategy.’
Q&A: Dechert’s Miriam González Durántez on how City firms missed a trick on EU law, the WTO legacy and ‘Inspiring Women’
Miriam González Durántez’s profile is sky-high. She’s one of the most successful EU lawyers in the City, has persuaded over 15,000 women to volunteer for her Inspiring Women campaign and is the wife of Deputy Prime Minister Nick Clegg. In an interview with Tom Moore she argues that the EU is undervalued in the City and how law can smash its glass ceilings.
Your practice is something of a rarity outside Brussels. Why have City law firms neglected EU law?
Deal watch: Corporate activity in April 2015
GE RESTRUCTURING BRINGS IN RAFT OF ADVISERS
A host of firms picked up work on General Electric (GE)’s restructuring, fielding large cross-border teams as the industrial giant sold $26.5bn of real estate assets and announced it would divest most of GE Capital’s other holdings. Hogan Lovells led for GE on the real estate sale, with buyers The Blackstone Group and Wells Fargo represented by Simpson Thacher & Bartlett and Dechert respectively.
Weil, Gotshal & Manges is advising GE on the wider restructuring, which will return up to $90bn to shareholders, alongside Sullivan & Cromwell and Davis Polk & Wardwell.
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Headlines and hype but less substance despite foreign firms’ push into Asia disputes market
Tony Lin argues that Asia’s small and politicised litigation market won’t deliver on the hopes many international law firms are pinning on it
Asia dispute resolution is happening. At least that’s what one might surmise from recent moves in the market out here in Hong Kong. In the past few months, New York’s Debevoise & Plimpton recruited litigation heavyweight Mark Johnson from Herbert Smith Freehills (HSF), while O’Melveny & Myers hired Denis Brock from King & Wood Mallesons. Several other UK and American law firms have relocated experienced disputes partners to the region.
Bakers to practise Chinese law through Shanghai joint venture
Baker & McKenzie last month gained permission to practise local law in China through a joint operation with FenXun Partners.
The firm achieved the entry through a first-of-its-kind joint venture with local firm FenXun in the Shanghai free trade zone. Founded in 2009, FenXun, which is focused on providing corporate and finance advice, currently has offices in both Beijing and Shanghai, and has around 20 lawyers, including five partners.
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EY Law agrees new alliance as Asia-Pacific growth continues
Making good on its continued efforts to grow its Asia-Pacific presence, EY Law recently announced an alliance with South Korean firm Apex Legal.
Based in Gangnam in central Seoul, the 55-lawyer practice has become a member of EY’s network in a bid to align the giant’s advisory and legal businesses throughout the region, and as part of a greater agenda to build a 200-strong team of lawyers spanning key commercial centres throughout Asia-Pacific.
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Client profile: Benoit Belhomme, British American Tobacco
BAT’s western Europe GC on the trials and tribulations of working in a controversial industry
Most general counsel (GCs) working for large multinational corporations will deal with regulation fairly frequently, but it is unlikely to be quite as stringent as that faced by in-house lawyers at one of the world’s largest tobacco groups – British American Tobacco (BAT).
‘We are working in one of – if not the –toughest regulatory environments that there is,’ argues BAT’s regional GC for western Europe, Benoit Belhomme.
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The mother of invention – why necessity and high prices will push private equity to new heights
Travers Smith’s Paul Dolman argues a reviving buyout industry will increasingly drive European deal markets
2014 was a year that saw the number and value of private equity (PE)-backed exits reach unparalleled highs globally. More benevolent economic and market conditions, including an increase in global M&A activity, created renewed confidence in the industry. With a mountain of dry powder to deploy – that’s unused equity in the industry slang – and more debt funding available than has been the case for years (and on more favourable terms), PE firms have been very busy looking for new investment opportunities. This has resulted in fierce competition for any high-quality assets that come to market. Coupled with the continued high valuations of comparable companies on the public markets and near-zero interest rates, this has inflated valuations and resulted in the purchase-price multiples for leveraged buyouts in Europe reaching an average of ten times EBITDA – highs not seen since the peak of the last cycle.
Policing the City – where do in-house lawyers fit in?
Stephenson Harwood’s Tony Woodcock argues that financial regulation has failed to clarify the status of in-house counsel
Though one is always on dangerous ground in suggesting that anything was clear or uncomplicated in the Financial Services Authority’s Handbook and its successors, one could comfortably say that in-house lawyers were not regarded as significant influence function-holders requiring approval under the Financial Services and Markets Act (FSMA) 2000. They were not specifically named as holders of a ‘controlled function’ and would not be regarded as holders of a ‘significant management function’, the characterisation of which required a person to be a ‘senior manager’ of a significant business unit reporting directly to the governing body or the chief executive or the equivalent. The in-house lawyer’s role was not managerial and supervisory, but advisory and privileged.
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Coming off the naughty step
Baker & McKenzie’s Jonathan Walsh charts the quiet rehabilitation of asset-backed lending
Securitisation has taken a battering in recent years. A complex financing technique, little understood by the public, it was an easy scapegoat as a principal cause of the global financial crisis. For a while after the crisis it seemed as if various supervisory authorities would regulate it to the point of extinction.
Thankfully, that did not happen. But over the past six or seven years (depending on when you think the financial crisis actually hit) rules aimed at stifling the securitisation market have been pumped out on both sides of the Atlantic. We have had rules on bank capital, rating agencies, investors and more. The additional regulations are complex, in some cases contradictory, and affect all aspects of securitisation transactions and the parties involved in such transactions.