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Overview
The decline in the corporate market over the last 12 months has been swift and dramatic. What started with cracks in the US sub-prime mortgage market has exploded into one of the deepest recessions in living memory. Chronic illiquidity, unstable asset prices and lack of investor confidence conspired to burst the seemingly endless bubble of top-end transactional mandates. The collapse in September 2008 of Lehman Brothers - at the time the world’s fifth largest investment bank - was a significant tipping point, with many firms seeing dealflow dry up overnight.
The City’s beleaguered corporate teams have been forced to adapt. With premium new-money transactions thin on the ground, distressed deals have come to the fore, and a lack of conventional M&A has also seen corporate lawyers working alongside finance teams on restructurings and insolvencies. Clients are exerting pressure on pricing, and reports of ‘lowballing’ are widespread as firms attempt to keep utilisation rates high.
Against this background, our corporate rankings remain largely unchanged. The City elite - Allen & Overy LLP, Clifford Chance, Freshfields Bruckhaus Deringer LLP, Herbert Smith LLP, Linklaters LLP and Slaughter and May- continue to dominate proceedings, and once again comprise the top two tiers of both Mergers and acquisitions and Equity capital markets: UK capability. However, with leveraged transactions one of the principle casualties of the credit crunch, Clifford Chance’s reliance on private equity has seen it fall back to the second tier in M&A following its promotion last year. These top firms are also increasingly dipping into the already fiercely competitive mid market.
Activity levels in the sub-£50m M&A space started to pick up in spring 2009 after a three-month hiatus, with entrepreneurs seeking investment opportunities on the cheap. The ranking for that section has grown as a result, with the seven new entrants including giant PricewaterhouseCoopers Legal LLP and Anglo-Canadian firm Fasken Martineau LLP.
On the equity capital markets side, IPO activity is at an all-time low. A spate of high-profile rescue rights offerings provided some much needed relief - with the market’s two dominant figures, Linklaters LLP and Freshfields Bruckhaus Deringer LLP, showing particularly well - but teams have mostly had to make do with (less remunerative) secondaries and private placements.
Often unfairly dismissed as corporate’s poor relations, its is the non-transactional practices that have prospered this year. That is good news for the more domestic City firms, with Ashurst LLP and SJ Berwin LLP troubling the top spots in EU and competition; Lovells LLP, CMS Cameron McKenna LLP and Travers Smith LLP achieving high rankings in financial services; and Berwin Leighton Paisner LLP making strides in corporate tax.
New to the chapter this year is the Outsourcing and procurement section, which spans both private and public sector work and covers business services outsourcing in addition to more traditional IT and telecoms work. Baker & McKenzie LLP, Bird & Bird LLP, DLA Piper UK LLP, Field Fisher Waterhouse LLP and Pinsent Masons LLP have set the bar as the firms to beat.