From a big bang to a whimper – infighting and calls for reform of regulatory framework

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Caroline Hill and Sarah Downey assess the agendas in the MoJ’s review of regulation

The Ministry of Justice (MoJ)’s decision to conduct a review of the profession’s regulatory landscape comes just a little over a year since the landmark Legal Services Act (LSA) came fully into force. The irony is that barely has the radical reform been enacted that was supposed to sort out fundamental problems with professional standards and all parties seemingly now believes it’s time to once again go back to the drawing board.

Since justice minister Helen Grant announced in June that the government would look at ‘what could be done to simplify the regulatory framework and reduce unnecessary burdens on the legal sector’, the MoJ has received submissions from the City of London Law Society (CLLS), the Solicitors Regulation Authority (SRA), the Law Society, the Legal Services Board (LSB), the Legal Services Consumer Panel (LSCP), the Bar Council and the Bar Standards Board (BSB).

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Lloyds sees knock-on effect of GC for group legal hire

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In-house promotions and moves often have a domino effect across the wider legal function and Lloyds Banking Group (LBG) is no exception. The major British financial institution has recently announced that former corporate M&A head Hugh Pugsley will take over as general counsel (GC) for group legal from Kate Cheetham, who was promoted to deputy GC this January.

Pugsley, a former associate at Allen & Overy, has moved up the ranks of the 60-strong team and will now be responsible for advising the banking giant on financial reporting, M&A, corporate development, HR, and property-related issues.

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Barclays £5.8bn rights issue sees CC, Sullivans and Freshfields in the lead

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Barclays has begun the biggest capital raising by a UK bank since 2009, under which Clifford Chance (CC), Sullivan & Cromwell and Freshfields Bruckhaus Deringer led on its initial £5.8bn rights issue, as the global financial institution moves to plug a £12.8bn funding gap.

A team from CC, led by London corporate partner Patrick Sarch and capital markets partner Simon Thomas, advised on English law for Barclays, while a Sullivan & Cromwell team in London advised the bank on US law, led by client relationship partners George White and John O’Connor.

Deputy general counsel Michael Shaw led the Barclays team.

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Life During Law: Lord Goldsmith QC

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I’ve been really fortunate. I’ve had extraordinary opportunities in my career. I’ve had the opportunity not just as a hands-on lawyer, but also to do some politics, to take part in the affairs of the country… I’d like to think also that I’ve helped some people in a number of ways.

There have been a lot of memorable cases. The Afghan warlord we got convicted at the Old Bailey. I suppose Caparo in the House of Lords – a huge case on auditors’ negligence. That was a tremendous result – we happened to get the result on the day of my wedding anniversary. That was quite nice.

The favourite part of my job is being in court. It shouldn’t be but it is. I like being there, I like arguing, I like winning. It doesn’t always happen. I want to put on a good show, to do a good performance, and to solve the problem. I don’t like not solving legal problems.

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Merger frenzy hikes LB100 income but growth masks another tough year

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Lawyer count passes 60,000 but profits fall at top UK firms

The latest Legal Business 100 results show the total revenue of the UK’s top 100 law firms has topped £19bn for the first time, while the number of lawyers across those firms has passed the 60,000 mark, also a first. However, this top-line growth is largely the result of another year of fervent merger activity, masking the fact that on a granular level many firms are struggling to achieve revenue and profit growth.

Total revenue for the LB100 for 2012/13 is £19.1bn, an increase of 8%, while total lawyer headcount swelled 10% to 61,299. However, average revenue per lawyer (RPL) is down 2% to £312,000, while profit per lawyer (PPL) and profits per equity partner (PEP) are down 2% and 4% to £95,000 and £622,000 respectively.

The primary cause for this year’s drop in RPL and PPL is the swathe of mergers over the past year, particularly among firms in the top 25.

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SJ Berwin’s high stakes tie-up with KWM dares to bring a new equation to global law

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David Stevenson and Alex Novarese assess SJ Berwin’s audacious Asia-Pacific tie-up and ask if the union can truly propel the firm into the global premier league

‘This isn’t about doing anything with our backs against the wall,’ says Jonathan Blake, the former senior partner of SJ Berwin, and one of the architects of his 165-partner firm’s impending tie-up with King & Wood Mallesons (KWM).

Despite some well publicised reverses in recent years for the mid-pack City player, Blake’s comment is undoubtedly true. But as to what the deal that goes live on 1 November does signify, well, opinion is sharply and starkly divided. Continue reading “SJ Berwin’s high stakes tie-up with KWM dares to bring a new equation to global law”

Return of the accountants: KPMG and EY consider ABS

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Global accountants including KPMG and EY have the UK’s legal sector firmly in their sights as they consider their options under the Legal Services Act (LSA) in a move said by one tax partner at a leading City law firm to be ‘clearly a threat’.

Last month it emerged that KPMG is looking at an alternative business structure (ABS) conversion in a bid to expand its legal services capability. EY, meanwhile, has the position ‘under review’ and PwC is also understood to be considering its position. Deloitte was the only one of the Big Four accountants to deny any plans to set up an ABS.

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Redundancy woes: Bond Dickinson and Watson Farley are latest major law firms to review support staff roles

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Redundancy consultations continue to dog the City’s top 100 firms as Bond Dickinson and Watson, Farley & Williams last month became the latest to reveal they have placed a number of support roles under review.

In August, Bond Dickinson began a consultation process that will see up to 7% of its support staff made redundant. The newly-merged 700-lawyer firm – a combination of Newcastle-based Dickinson Dees and Bristol-headquartered Bond Pearce that went live on 1 May – said it intends to ‘discuss a proposal to review the support teams and how they should be shaped to best support the needs of Bond Dickinson’.

It added that ‘the proposals, if accepted, would see approximately 7% of support staff roles being made redundant and voluntary redundancy enhancements have been offered to all affected staff’.

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Private equity: CVC gifts Clifford Chance and Cleary with two major European mandates

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Followers of the tussle between UK and US private equity practices for European mandates were last month rewarded with an instruction to both camps by leading buyout house CVC Capital Partners in its acquisitions of Domestic & General (D&G) and Campbell Soup.

Advent International agreed to sell extended warranty provider D&G to CVC in a deal thought to be worth about $1.2bn, according to The New York Times, although this sum has not been officially disclosed.

Clifford Chance (CC) advised CVC, with a team led by Kem Ihenacho, co-head of the firm’s Africa practice and one of its private equity stars. He was assisted by M&A partner Brendan Moylan and insurance partner Hilary Evenett.
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European M&A: Big ticket summer mandates scooped by Allen & Overy; Clifford Chance; Freshfields and Macfarlanes

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Despite corporate partners attesting to a summer lull (if only by their absence from the office), the past month brought with it a number of headline European M&A deals, including a €17bn (including €9.8bn of net debt) bid for Dutch telecoms company Koninklijke KPN (KPN), which turned to Allen & Overy (A&O)’s Netherlands office on the deal.

The bid by Mexican billionaire Carlos Slim’s telecoms company América Móvil for the remaining 70% in KPN saw longstanding adviser A&O field a team led by Dutch corporate partner Jan Louis Burggraaf.

Clifford Chance, led by Amsterdam M&A partner Hans Beerlage, advised América Móvil alongside Cleary Gottlieb Steen & Hamilton, led by New York capital markets partner Nicolas Grabar and corporate partners Neil Whoriskey and Amy Shapiro.

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