Editor's Selections from the Legal 500 United States...
FINANCE
Aviation finance and finance in general has had a difficult few years with restrictions on access to capital markets making life especially difficult for leasing companies and private equity investors. The disappearance of insurance companies from the lending markets also led to a virtual closure of the securitization market for aircraft lease portfolios, previously a common source of capital raising. However, clients have been able to look elsewhere for capital and, for example, capital market secured debt-related transactions have featured strongly in recent years. Several airlines have issued high-yield notes secured by certain novel assets such as international flight paths and slots, while credit agency financings have been particularly popular due to high interest rates imposed by the banks.
INDUSTRY FOCUS
Recently, it has been a busy period for energy litigation, with firms such as Kirkland & Ellis LLP, Covington & Burling LLP and King & Spalding LLP involved in various litigation arising out of the April 2010 Deepwater Horizon drilling rig explosion and the resulting oil spill in the Gulf of Mexico. This matter has involved environmental aspects and many law firms such as Bingham McCutchen LLP, ranked for environment, have also been involved. Many firms have a fully integrated approach to handle issues which bridge energy and environmental matters, and firms recognise that environmental issues are at the forefront of energy company concerns. The Trans Alaska Pipeline Project System (TAPS), which involves transactional, regulatory and litigation issues, is a notable example that involves firms prominent in both arenas.
INTELLECTUAL PROPERTY
The leading players in the intellectual property market consist of larger IP boutiques, full-coverage firms and general practice commercial firms. Full-service firms are increasingly specialising in IP to capitalize on the growing workload in global brand protection, while smaller IP boutiques continue to struggle in an increasingly competitive market. New media continues to present challenges and opportunities to dispute what and where protection rights lie.
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INVESTMENT FUND FORMATION AND MANAGEMENT
In the private equity world, 2010 kicked off in much the same fashion that 2009 ended, with an escalating downward trend in new fund launches and capital raising leading to a further 16% drop in fundraising in 2010 as compared to 2009. Banks remained reticent to release leverage to funds, once again making buyout funds a difficult proposition to sell at the highest level, although mid-market funds have proved more resilient. Funds under $1bn were more successful in capturing limited partners’ (LP) interest and amounted to over half of total buyout fundraising. In addition to the stagnation of the mega buyout funds sector in the US, venture capital (VC) fundraising hit a seven-year low in 2010. As a result, firms continued to look outside the US, chasing activity and interest in funds targeting emerging markets such as China and Brazil. Distressed debt and mezzanine funds were also bright spots in an otherwise gloomy outlook, with both types of funds attracting investor interest, while the secondaries market also experienced a slight upturn.
LABOR AND EMPLOYMENT
The recent financial crisis continues to impact the practices of labor and employment lawyers across the United States. Employee benefit plans constitute the largest sources of equity capital and undisclosed corporate liabilities in the world. Plans, their employer sponsors and their fiduciaries are being targeted at an increasing rate. The best Employee Retirement Income Security Act (ERISA) litigators must have knowledge of labor, employment, securities, healthcare and insurance law at their fingertips to be able to advise on every aspect of this highly complex area of law. Cases range from challenges to 401(k) plan fee structures and suits over plan investments in proprietary mutual funds to suits over 401(k) plan investments in company stock, including Employee Stock Ownership Plans (ESOPs) and modifications to retiree welfare benefits. Firms must deal with disputes concerning medical care reimbursement mechanisms, conversions to cash balance pension plans, severance and termination pay disputes arising from M&A and suits over defined benefit plan amendment and benefit computation. Further areas of expertise required in this field include advising on disputes concerning worker classification issues and challenges to ESOP transactions. The firms in this table have embraced the area in different ways; either as part of a wide-ranging employment litigation practice or as part of a specialist employee benefits practice. Whatever their approach, the practices listed concentrate on the defense and arbitration of ERISA claims on behalf of companies, and are assessed on their size, depth and national reputation as well as the range and complexity of caseloads.
Litigation
The leading firms in international trade are those with a global footprint who represent the interests of a variety of clients, which include multinational corporations, institutional investors and nation states. The major issues involved include export and import controls, economic sanctions, anti-bribery rules, foreign direct investment, trade agreement negotiations, antidumping and subsidy cases. There is some crossover with the international arbitration section which focuses more directly on purely contentious work.
MEDIA, TECHNOLOGY AND TELECOMS
The hi-tech and telecoms sectors are leading the way out of the recession driven by technological advances and market convergence, and 2010 was a particularly active year for firms specializing in these areas. Major themes include the digitization of content across different platforms, interactive ways of delivering, promoting and utilizing content and a sharp focus on data and security. Consumer technology trends are spilling over into business, and organizations are leveraging technology through outsourcing and joint ventures. Cloud computing is changing the way businesses and individuals are using technology. The fast-moving telecoms and broadcast sector has seen an uptick of work for transactional lawyers, focusing on big-ticket M&A and local and international joint ventures. The regulatory environment has focused on data protection and privacy, particularly online as well as ownership issues in the telecoms and broadcast sector.
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MERGERS, ACQUISITIONS AND BUYOUTS
Firms within the M&A section are generally divided up into four areas according to the type of deal that a practice typically draws in. The range is based on mega, large, and upper and low mid-market values. Mega deals means transactions in excess of $5bn, with large deals falling within the $1bn-5bn space. The middle market is split between the high-end range of $500m-$999m and the sub-$500m mark. Of course, several of the largest national practices also carry out chunks of mid-market work, more so in recent times with less of the multibillion-dollar mandates up for grabs. Consequently, the largest firms have also been chasing mid-market work they might once have turned down, while there are practices whose sweet spot may be the $25m-$500m levels, but they are occasionally mandated on billion-dollar transactions.
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REAL ESTATE AND CONSTRUCTION
The real estate market remains swamped with distressed and troubled assets, making workout and restructuring transactions a prominent part of many law firms’ practices as sub-performing and non-performing loans continue to require attention. Special servicers are still visible in the market attending to pools of CMBS loans, while lenders are beginning to take action against borrowers holding defaulted loans; as a result, more aggressive foreclosures are taking place. Transactional work has picked up and core assets in prime locations such as New York, Chicago and Washington DC are trading at higher than expected rates. Private equity investors, among others, are waiting on the sidelines to strategically deploy capital to take advantage of the weaker market conditions. Banks and financial institutions are lending again, but on different terms where loans are more closely aligned with the value of properties they are secured on. The leasing market remains resilient, but development of new office, retail and hotel space is slow, although the senior living, medical office and industrial development sectors are stronger.
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TAX
The mood in East Coast tax practices in early 2011 was cautiously optimistic. Although the aftermath of the financial crisis continues to reverberate, strategic deals have returned to market. The firms included in this section range from the leading global firms to fairly modest regional partnerships. Each of the firms offers expertise and high service standards, whether across the board or in particular areas which are highlighted in the editorial. Clients should carefully consider their own requirements before instructing. While larger firms have the capacity to form multidisciplinary groups to handle complex, large scale instructions for international corporate clients, mid-tier and privately-held companies might find a more comfortable fit with one of the smaller firms mentioned, where partner involvement is often higher and, possibly the fees lower.