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Financials 2020/21: Linklaters maintains Magic Circle resilience with double-digit profit hike

Despite the pandemic, the 2020/21 financial year proved to be an improved outing for Linklaters as revenues inched up and profits saw a robust increase.

Turnover nudged upwards by 2% to reach £1.67bn – a modest increase, but an improvement on the marginal 0.7% growth seen last year. More notable was the firm’s rebounding profits: pre-tax profit stands at £815.3m, a 12% jump from last year, while profit per equity partner (PEP) grew by 10% to hit £1.773m.

Profit per all partners, which takes into account salaried partners, was also up by 10%, reaching £1.707m.

Viewed in the additional context of Linklaters opting not to use any governmental financial support packages throughout the year, the results are a respectable upgrade.

Linklaters managing partner Paul Lewis described the figures as ‘a very strong set of financial results’. He attributed them to ‘the hard work and excellent performance of our people over that period, especially given its unique challenges’. Lewis added: ‘Our global capabilities and enduring client relationships also came to the fore as clients turned to us to help them to navigate the myriad issues arising from the pandemic.’

Lewis is still in the early days of his premiership, having been elected as successor to Gideon Moore by Linklaters’ partnership in July.

Linklaters becomes the latest Magic Circle firm to announce its financial figures this summer, comfortably keeping in line with the standards set by the rest of the group. In July, Clifford Chance similarly unveiled modest revenue growth amid pacier profit increases.

In the same month, Freshfields Bruckhaus Deringer posted solid 5% increases to both its revenue and PEP, while Allen & Overy completed the trend with a 5% growth in revenue which was outstripped by a striking 17% increase in PEP.

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This article first appeared on Legal Business.

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Financials 2020/21: HFW breaks £200m revenue barrier as profits soar by 30%

HFW has continued to perform resiliently in the face of the pandemic, on 9 August posting a 3% rise in revenue to £200m and a striking 30% increase in profit per equity partner to £683,000.

There were healthy increases across the board: net profit shot up more than 26% to £59.7m, profit per lawyer was up by 30% to £123,000 and revenue per lawyer grew 6% to £413,000.

The firm attributed the positive results to a spike in client demand across its specialist sectors, namely: aerospace, commodities, construction, energy and resources, insurance and shipping.

Asked by Legal Business if the firm’s profit hike was a reflection of reduced costs as a result of the pandemic, HFW managing partner Jeremy Shebson said: ‘We certainly saw an overall reduction in costs last year – particularly in relation to international travel, practice development and overheads – which obviously had a positive impact on our profit. But we’ve also seen the benefits of an increased focus on resource management and making sure that we are operating efficiently and effectively as a global firm.’

HFW has established an effective hedge that makes it resistant to global uncertainty –  revenue is heavily diversified, with over 60% of the firm’s income generated from outside the UK. There were some eye-catching international performances too – HFW’s Kuwait office grew 40%, Abu Dhabi was up 38%, Geneva was up 24% and Shanghai expanded by 18%. London, meanwhile, saw revenue increase by 7%.

The firm also benefited from its contentious practice bias, with 70% of the business underpinned by disputes matters.

Richard Crump, HFW senior partner (pictured), concluded: ‘Becoming a £200m business is a major milestone in our continued growth as a firm, and to have recorded what is our best ever year under such extraordinarily challenging circumstances is a real testament to the talent and dedication of the people we are fortunate to have at all levels across HFW.’

In other results, at the end of July fellow insurance specialist Clyde & Co unveiled a similarly solid set of financials. Revenue at the firm grew 2% to £639.6m, while both overall profits and PEP grew by roughly 8% each to £153.5m and £715,000 respectively.

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This article first appeared on Legal Business.

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Coronavirus update: The Legal 500 pushes back research schedule to ease pressure on clients and firms

The Legal 500 is pushing back its research schedule in response to the coronavirus pandemic, suspending all client contact for the next four weeks.

At a time when law firms and their clients are under unprecedented pressure, we have taken the decision not to add to the burden. All client feedback surveys for the UK Solicitors Guide, the UK Bar and Latin America will be suspended for four weeks, until the end of April. For the UK this will affect first-time contact with London clients and client survey re-sends for everywhere outside London.

Our reason is clear: in-house legal teams have more than enough to deal with now with the impact coronavirus is having on their businesses and infrastructure. Neither they, nor the firms they instruct, need us to add to this strain.

For the same reason, we will also be extending the interview period for both London and Latin America research. It will now be possible for firms to speak to our London research team until 26 June, and to our Latin America researchers until 22 May. Interviewing for London will not start until after 30 April.

Our relationships with law firms, and their clients, are fundamental to The Legal 500’s ethos, and critical to our research. For this reason it is vital that we are as flexible as possible during this crisis.

We will continue to assess the on-going impact of the coronavirus outbreak on future research projects such as Asia Pacific, EMEA, Deutschland and the US over the coming weeks and will be equally flexible. Research for everywhere in the UK outside London is unaffected as most interviews have already taken place.

If you have questions or concerns, please do get in touch. Stay safe.

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Georgina Stanley is UK editor at The Legal 500, the sister brand to The Lex 100

Click here to see The Legal 500 statement in full

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Freshfields and Slaughters drafted as Government reveals details of Covid-19 business support package

The UK Treasury and Bank of England (BoE) have called in their go-to counsel Slaughter and May and Freshfields Bruckhaus Deringer as they iron out details of the multibillion-pound support scheme to underwrite British business through the coronavirus crisis.

The UK Government announced last week the Covid-19 Corporate Financing Facility to help companies with cash flow as the rapid spread of the virus has forced governments to put a third of the world’s population in shutdown.

Under the scheme, the BoE will buy short-term bonds to ensure businesses making a material contribution to the UK economy can continue to pay staff and suppliers, upon the condition that they demonstrate they were financially-healthy before the crisis. The facility will operate for an initial period of 12 months.

Slaughters’ finance partners Matthew Tobin, Oliver Storey and Guy O’Keefe are advising the Treasury alongside corporate partner Nilufer von Bismarck (pictured) and state aid partner Isabel Taylor. Slaughters’ core role to Whitehall echoes its high-profile mandate during the financial crisis when it advised the Treasury on a wide-ranging bank bailout.

A Freshfields team led by financial services chief Michael Raffan is acting for the BoE, the Magic Circle firm’s most celebrated client.

The scheme is one of several unprecedented economic measures disclosed by the Government in response to the unfolding crisis. UK Chancellor Rishi Sunak announced on Friday (20 March) a coronavirus job retention scheme to offer all employers access to a grant covering up to 80% of the average wage to prevent widespread layoffs.

Businesses will not be expected to pay VAT for a quarter until the end of June and will not be liable for VAT deferred during that period until the end of the 2020/21 financial year.

Speaking to Legal Business about the measures, Hogan Lovells head of public law and policy Charles Brasted said they were ‘directly feeding into what our clients are thinking about in terms of how they can maximise what they retain over the next few months’.

‘It’s almost inevitably not the end of it, it’s not a one-off package,’ he added, saying that new measures will be likely to address the self-employed: ‘A lot of the measures at the moment work easily if you are on pay as you earn but not so easily if you are self-employed, and the government is looking closely about what it can do [on that front].’

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This article first appeared on Legal Business.

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Guest post: Coronavirus tears up competition regimes for foreign investments as Europe struggles to shield reeling economies

COVID-19 continues to wreak havoc with the global economy, disrupting all manner of business throughout the world. Stock markets have plummeted and many companies are having to grapple with economic damage that seemed unimaginable at the start of the year.

This unprecedented environment could afford opportunistic buyers the chance to acquire or invest in companies that have been weakened by the crisis. In addition, creditors may unintentionally find themselves in a position where they acquire control over a business.

Before the crisis, the world was already de-globalising with rising national protectionism driving calls for stronger screening of foreign investment across the globe. Now, COVID-19 has prompted some countries to take an even more drastic approach. Some national governments, notably in Europe, are now taking steps to protect companies that have become vulnerable as their economies are struggling from being taken over by foreign investors.

The Spanish government has just introduced a new temporary requirement that ex-ante approval will be required for foreign (non-EU) direct investments in strategic sectors in Spain.

This affects investments in Spanish companies by non-EU/EFTA entities where the foreign investor would (i) hold a stake of 10% or more in the share capital of (ii) acquire the right to participate in the management of or (iii) acquire control of a Spanish company, and applies to a broad range of sectors, namely:

• energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure and sensitive facilities;

• critical technologies and dual-use items, including artificial intelligence, robotics, semiconductors, cyber-security, aerospace, defence, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies;

• supply of key inputs, in particular energy, raw materials and food security; and,

• sectors with access to sensitive information, in particular personal data, or with the ability to control such information.

The French Minister of Economy has stated that the government is ready to protect important French companies by recapitalising them, buying shares or even taking them over. The government has also stated that nationalisation of strategic companies will not be ruled out.

The Italian government, meanwhile, is considering qualifying all Italian companies listed on the Milan Stock Exchange as ‘strategic’ for the purposes of applying the existing Special Powers rules under the foreign investment review regime. This would mean that the Special Powers, which allow the Prime Minister to veto or impose conditions on certain transactions in the defence/homeland security, telecoms, energy, and transportation sectors, could be extended to foreign investment in all Italian-listed entities.

The Hungarian government is able to prevent acquisitions by non-EEA entities in certain strategic industries (eg, finance, telecommunications, energy, defence) for public reasons, including national safety, energy supply, and financial stability. COVID-19 has prompted the government to take control of 140 strategically-important companies in various sectors.

In summary, some countries are using foreign investment screening to protect wider economic and social concerns triggered by COVID-19. At present, this approach seems to be limited to Europe, which makes sense as this region has been declared, for now, as the ‘epicentre’ of the global pandemic. However, as the virus continues to spread, it is possible other countries could take a similar stance to protect their national interests and economies.

These developments highlight the need for investors to carefully consider foreign investment review risks at this highly-sensitive and volatile time both for deals currently underway and transactions being contemplated. Cross-border transactions in strategic sectors will likely encounter tougher scrutiny and face a prolonged approval process. Taking time to understand the rules and identify a regulatory strategy – including calibrated communication with the relevant governmental authorities and thinking about the impact on deal documentation – early in the bid process will minimize the risk of delays, last-minute changes to the deal structure, or failed transactions.

For potential bidders the basic message is that the environment for corporate transactions has already been transformed in Europe by this crisis, and perhaps soon the world. Never has it been more relevant for companies to keep in mind the age-old advice for acquirers: buyer beware.

Samantha Mobley is a partner in Baker McKenzie’s competition and trade practice in London.

This article first appeared on Legal Business.

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Coronavirus latest: Supreme Court goes virtual as junior lawyers plea against postponing exams

For the first time in its history, the Supreme Court conducted a case entirely through video conferencing this morning (24 March), after taking the decision to close its building to the public due to the spread of Covid-19.

The move saw the matter of Fowler (Respondent) v Commissioners for Her Majesty’s Revenue and Customs (Appellant) conducted virtually, with all cases and judgment hand-downs set to continue via video conferencing until further notice. The measures will see legal teams and counsel, as well as each of the justices, located separately.

The first judgment handed down under the new arrangements will be Elgizouli (Appellant) v Secretary of State for the Home Department (Respondent)  tomorrow morning, with the hand-down set to be streamed by the Supreme Court before becoming available through an on-demand service.

Though the new measures will remain for the foreseeable future, the Supreme Court has stated it will be keeping them under ongoing review. The move towards video conferencing comes after the Lord Chief Justice, Lord Burnett, was among those to intervene last week calling for courts to adapt amid the worsening crisis. On Monday, Lord Burnett also revealed that no new trials will start, and ongoing trials will be paused as arrangements are put in place to ensure they can continue safely.

Elsewhere, the Junior Lawyers Division (JLD) has written to the Solicitors Regulation Authority (SRA) raising concerns about the regulator’s response to the Covid-19 outbreak, in particular the decision to defer Legal Practice Course (LPC) exams until the autumn.

The letter read: ‘We understand the SRA’s need to maintain the integrity of exams. However, we are concerned about the implications of delaying LPC exams until autumn 2020, as was the SRA’s initial response. Importantly, there is no known timescale for this virus and its implications on society. It therefore seems unworkable to suggest a later timeframe to simply postpone exams until. An alternative solution needs to be found now.’

The JLD also raised concerns that further clarification was required for trainee solicitors on issues such as working from home, sick leave, access to supervision and the availability of newly qualified positions.

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This article first appeared on Legal Business.

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Revolving doors: Orrick adds four-partner WFW projects team as Taylor Wessing invests in employment bench

After an eventful week and with many lawyers  working from home until further notice, City firms and US rivals continue to ramp up hires as Orrick, Herrington & Sutcliffe, Taylor Wessing and Pinsent Masons all made hires in London.  

Orrick appointed a four-partner team to its energy and infrastructure practice in London from Watson Farley & Williams. The team includes energy and infrastructure partners Evan Stergoulis, Simon Alsey and Ravinder Sandhu, as well as real estate partner Simon Folley. Stergoulis will co-head the firm’s global renewables practice. 

The team advises investors on mergers and acquisitions, project development and financings involving offshore wind, onshore renewable energy and gas and power projects in the UK, Europe and Asia.  

Orrick’s energy and infrastructure sector lead Blake Winburne told Legal Business: ‘London is an incredibly important market for our energy & infrastructure practice. Our strategy in London is to field a team of highly-collaborative, market-recognised practitioners that connect with our global platform. We have certainly achieved that objective with the team led by Evan Stergoulis and we will continue to invest in our global practice with that same strategic objective.’ 

Meanwhile, Taylor Wessing recruited employment partner Helen Farr to its London office. Farr joined from Fox Williams and advises on financial and professional services, private equity and FinTech with a focus on workplace discrimination, equal pay, team moves and boardroom disputes. 

Executive board member and partner James Goold told Legal Business: ‘Helen’s appointment enhances our employment offering by bringing together experience in the financial and professional services sectors. She is known for her advice on strategic matters, TUPE and boardroom disputes, and her expertise in FinTech also complements our sector focus on technology. The continued growth of our international employment capability is essential and Helen is an important part of our offering.’ 

Elsewhere, Pinsents added Totis Kotsonis from Eversheds Sutherland to lead the firm’s state aid and public procurement team within its competition, EU and trade group in London. Kotsonis acts on compliance and contentious matters, including litigation, in national courts and the Court of Justice of the EU. 

Head of competition, EU & trade Alan Davis told Legal Business: ‘Totis’ experience across the energy, TMT, infrastructure and transport markets aligns well with the firm’s sector expertise. His experience working across public procurement and state aid matters, both contentious and non-contentious, strengthens our capabilities and offering to clients.  

‘The demand for procurement and state aid advice in the UK will increase. Totis’ expertise will enable us to respond to the rapidly changing requirements of the government as it manages the existing procurement and state aid regimes and develops new policy and legislation in a post-Brexit era,’ Davis added. 

Pinsents also hired in Paris, appointing project finance partner Eran Chvika from Norton Rose Fulbright. Chvika advises banks, international financial institutions, sponsors, investment funds and developers on domestic and cross-border complex financing and acquisition transactions in France and Francophone Africa. 

Elsewhere, McDermott Will & Emery hired commercial litigation partners Josh Simon, Warren Haskel and Dmitriy Tishyevich to its healthcare litigation practice in New York.  

Global head of McDermott’s litigation practice group, David Rosenbloom, said: ‘Josh, Warren and Dmitriy are all precisely that kind of lawyer – they understand the ever-changing health law and regulatory landscape and are well equipped to respond to complex matters, even before they result in litigation. The foresight and synergy between the members of this group already exists, and we look forward to advancing that using the McDermott platform.’  

Finally, in an unusual departure for Slaughter and May, corporate partner Susannah Macknay left the firm’s London office to join the Sydney office of Australian firm Gilbert + Tobin. Macknay joined Slaughters in 2007 and became a partner in 2014. She acts for corporate and private equity clients on public and private M&A and equity capital market transactions.  

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This article first appeared on Legal Business.

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‘Under-funded and ill-served’ courts face pressure to adapt as coronavirus hits the justice system

Courts in England and Wales have made changes to their practices as the Lord Chief Justice joins those dismissing claims the courts can operate as normal as the spread of coronavirus widens.

The justice minister Chris Philip said this week courts would be ‘operating as normal’ despite guidance from the Prime Minister Boris Johnson warning people to avoid unnecessary journeys and to work from home where possible.

But in response, Lord Burnett of Maldon, the Lord Chief Justice, on Tuesday (17 March) said it was not realistic to suppose that it will be business as usual: ‘But it is of vital importance that the administration of justice does not grind to a halt.’

To avoid stasis at the courts, lawyers have called for the use of technology to allow remote hearings where possible, with the government currently drafting emergency legislation to broaden the use of such technology throughout the justice system.

‘The most sensible thing is the use of telephone and video hearings,’ Allen & Overy litigation partner Andrew Denny told Legal Business. ‘People will have invested a lot of funds and resources into cases, and there is the economic impact of that, courts have the same delicate balancing act to do as everyone else. The key mitigating factor is with telephone and video hearings. There are aspects of the justice system – particularly in criminal justice – which will just have to continue.’

One major change was revealed when the Lord Chief Justice confirmed that all trials set to last over three days listed before end of April are to be adjourned, with trials under three days set to continue. The measure comes after Amanda Pinto QC, chair of the Bar Council, gave a barbed statement, saying ‘being in a jury trial should not be a game of Russian roulette with the participants’ health.’

There are widespread concerns that criminal courts are likely to be impacted more heavily than their civil counterparts. One veteran litigator told Legal Business: ‘I don’t think the courts are equipped for it. The idea any half-complicated part of a case can be done over video is a dream. Criminal cases are over, the courts are so underfunded and ill-served by technology that this is the sort of crisis they can’t deal with.’

Elsewhere, the Legal Aid Agency (LAA) has set out its plans amid the coronavirus outbreak, with the main priority ensuring ‘legal aid services from solicitors, barristers and the not-for-profit sector remain available to the public.’ The LAA also stressed legal aid applications for clients are continuing in the usual way.

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This article first appeared on Legal Business.

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Kirkland remains world’s highest-grossing law firm in becoming first to surpass $4bn

Kirkland & Ellis has added $390m to it top line to trounce Latham & Watkins once again as the world’s highest-grossing law firm, as global turnover surged to $4.15bn.

The Chicago-bred giant on 18 March revealed results for the 2019 financial year, revealing a 10% hike in revenue from $3.76bn last year. Profit per equity partner (PEP) reached $5.2m, up 3% on the $5.04m for 2018. Kirkland’s head count grew 13% in 2019 with revenue per lawyer dropping 2% to $1.6m from $1.63m the previous year.

The firm did not disclose regional breakdowns but London is believed to have slightly outpaced global growth at around 12%, growing revenue from around $380m to $425m.

The stellar year has been on the back of thrusting fund formation, restructuring and transactional private equity practices. Kirkland also last year unveiled its largest partner promotion round ever seen by a top legal practice, making up 141 partners, including 16 in the City. The move was an increase of 19 on the previous year’s eye-catching 122-strong round, with the hefty numbers of promotions a statement of intent that moving lawyers up the ranks internally remains a mainstay of the firm’s strategy.

Kirkland has an unusual model in that it makes up large ranks of salaried partners before considering promotions to its tightly-held equity. Operating a fast-track system, associates can make salaried partner six years after qualification – bucking the wider trend of pushing back promotions. Last year’s promotion round meant the firm had made up 531 partners in the last five years.

The Chicago-bred giant now has more than 350 lawyers in London and has forged something of a private equity powerhouse operating across Europe. It started 2019 on a high when it lured the much sought-after private equity partner Adrian Maguire from Freshfields Bruckhaus Deringer. The high-profile hire paid dividends last month when Maguire acted for long-standing client Cinven for the first time since making the move, along with Advent International and the RAG foundation, on their €17.2bn acquisition of Thyssenkrupp’s elevator business.

Kirkland’s success also comes on the back of a number of bumper lead mandates including on the $63bn acquisition of Allergan by US biopharmaceutical company AbbVie and the acquisition underpinning the $90bn merger between Bristol-Myers Squibb and Celgene.

Observers have grown accustomed to the two-horse race between Kirkland and Latham to attain the status as the world’s highest grossing law firm. Last month, Latham reported its second consecutive year of double-digit growth as its revenue surged to $3.77bn in 2019 while profit per equity partner (PEP) hit $3.78m.

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This article first appeared on Legal Business.

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Slaughters makes up seven in the City with bulked-up promotion round

City blueblood Slaughter and May has promoted seven partners in the City and one in Hong Kong following an increased promotion round, with corporate receiving the lion’s share.

The promotion round sees London land four additional corporate partners, with one apiece going to the firm’s infrastructure and natural resources, investigations and financing practices respectively. In Hong Kong the one promotion came in corporate.

The promotion round is a significant increase on last year when the firm only made up one associate, with finance lawyer Harry Bacon receiving the nod. However, his promotion was announced alongside a rare hire for the firm, with Jing Chen joining as a partner in Hong Kong from the listing division of Hong Kong Exchanges and Clearing.

Slaughters senior partner Steve Cooke commented: ‘Each of these talented individuals has already established a strong track record of providing excellent advice to our clients and will make an important contribution to the continuing growth of our business. The fact that we have promoted lawyers from a broad spread of practice areas in these uncertain times reflects the underlying strength of the firm.’

Meanwhile, all associates at Slaughters received a boost earlier this year, as the firm revealed a salary boost for associates with 2.5 years post-qualified experience or more, following a significant bump in newly-qualified pay last summer.

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Slaughter and May promotions in full

London

  • Tim Blanchard (investigations)
  • Oliver Moir (infrastructure, energy, natural resources)
  • Samay Shah (financing)
  • Alexander Dustan (corporate)
  • Natalie Cook (corporate)
  • Harry Hecht (corporate)
  • Claire Jackson (corporate)

Hong Kong

  • Ben Heron (corporate)

This article first appeared on Legal Business.