International rescue – the advisers winning the key work for multi-national clients in Ireland

Rescuing Ireland’s banks was a portentous decision in the aftermath of the global financial crisis. It has resulted in crippling consequences for the country, with the Irish government having to receive an €85bn bailout from the EU and the International Monetary Fund in November 2010. However, what the move hasn’t changed is the league of established Irish law firms which have diversified core practices and picked up some hefty post-crisis work at home and abroad.

Pockets of the Irish economy are clearly surviving, as evidenced by the restructuring of distressed assets that has generated unprecedented work for the ‘Big Five’ and those catching up behind. Upon visiting Dublin, the overwhelming consensus among the firms that spoke to Legal Business – including the top and mid-tier players – was that firms specialising in corporate restructuring, insolvency and professional indemnity have held strong in this fiercely competitive market. Foreign direct investment (FDI) has also been a pillar for economic and law firm survival, as attractive tax rates and a lowered cost base maintains global interest from major corporates.

With over 1,000 overseas companies currently operating in Ireland, the weathered economy has notched up multiple prominent names across technology, pharmaceutical and telecoms industries. Facebook, PayPal, Google, Twitter, Apple, eBay and LinkedIn are just some of the tech giants that base their EMEA headquarters in the region, while telecoms is equally impressive with Ericsson, Three, Blueface, BT, O2, Vodafone, and Liberty Global (UPC Ireland) having all established a presence there. For Ireland, the pharmaceutical companies that operate in the region, including Elan and Shire, make it a world player in the industry – acting as one of the driving components for its exponential growth in the boom years.

Irish Legal Advisers by value: 1 July 2008 – 30 June 2013

Rank	Firm	Value (€m)	No. of deals
1	Arthur Cox	54,296	122
2	A&L Goodbody	53,797	106
3	Matheson	33,313	111
4	Davis Polk & Wardwell	25,656	9
5	Cleary Gottlieb Steen & Hamilton	19,020	9
6	Latham & Watkins	18,844	13
7	McCann FitzGerald	14,294	48
8	Clifford Chance	14,067	17
9	Slaughter and May	13,988	8
10	Linklaters	12,981	24
11	Skadden, Arps, Slate, Meagher & Flom	12,029	8
12	Simpson Thacher & Bartlett	11,842	6
13	Milbank, Tweed, Hadley & McCloy	11,549	2
14	Freshfields Bruckhaus Deringer	11,441	16
15	Nagashima Ohno & Tsunematsu	10,659	1
16	Cadwalader, Wickersham & Taft	9,935	6
17	O’Melveny & Myers	9,371	3
18	Blake, Cassels & Graydon	9,342	3
19=	Hughes Hubbard & Reed	9,342	1
19=	Kinstellar	9,342	1
19=	Wachtell, Lipton, Rosen & Katz	9,342	1
			Source: mergermarket

 

Leading from the front

Having been heavily affected by the five-year downturn, there are a variety of Irish firms which lead the charge for multinational clients. McCann FitzGerald and Simon McAleese are considered leading firms in the media and telecoms sector according to The Legal 500, as clients include Vodafone and Mirror Group Newspapers respectively, while A&L Goodbody attracts household name clients, including Google, BSkyB and MTV, as well as YouTube, which the firm recently advised on injunction defamation proceedings brought by Dublin college student Eoin McKeogh. Arthur Cox works for Hollywood royalty Paramount Pictures while Mason Hayes & Curran, which ranks tier one in the sector, currently represents Facebook as a co-defendant in the High Court defamation case brought by McKeogh.

The last year has featured an array of international M&A deals for firms, including A&L Goodbody and Arthur Cox, which acted for US industrial manufacturer Eaton Corporation and electrical products manufacturer Cooper Industries respectively on Eaton’s $11.8bn takeover of Cooper in May 2012 – the largest public takeover in Irish history. A&L Goodbody also advised Sumitomo Mitsui Banking Corporation on its €7.2bn purchase of RBS Aerospace, the latter of which was advised by McCann FitzGerald, in early 2012. This was the largest-ever sale of an aircraft leasing business and RBS’s biggest disposal since the UK government bailout.

In April this year, A&L Goodbody was involved in another household name deal, advising Irish pharmaceutical company Elan on its successful defence of a $6.7bn hostile bid by Royalty Pharma, while Mason Hayes advised on the financing arranged by Merrill Lynch, Pierce, Fenner & Smith and J.P. Morgan Securities.

Elsewhere, Matheson has had its share of M&A activity too, having acted for a company controlled by Hong Kong tycoon, and Asia’s wealthiest individual, Li Ka-Shing. In June, the Dublin-headquartered law firm advised Three Ireland, owned by Hutchison Whampoa, on its €780m acquisition of Telefónica Ireland – which trades as O2 Ireland – as the Spanish-based company attempts to reduce its debt.

It’s not just M&A activity, however. Those with a formidable disputes practice reaped the rewards of former American stockbroker Bernard Madoff’s $65bn Ponzi scheme in the Madoff litigation – the largest claim ever to arise before the Irish courts. The Madoff case’s connection to Ireland was initially based on two funds, Thema International and Alternative Advantage (AA), both of which launched proceedings against HSBC, the custodian of their funds, in December 2008.

William Fry is acting for both Thema International and AA in ongoing proceedings against HSBC in which the claimants are seeking a collective return of over $1.235bn that both claim had been entrusted to HSBC. Arthur Cox were instructed by UBI Banca and ABJ Vermögensverwaltung GmbH & Co KG, while Matheson is representing HSBC.

Irish Legal Advisers by deal count: 1 July 2008 – 30 June 2013

Rank	Firm	Value (€m)	No. of deals
1	Arthur Cox	54,296	122
2	Matheson	33,313	111
3	A&L Goodbody	53,797	106
4	William Fry	7,925	93
5	McCann FitzGerald	14,294	48
6	Mason Hayes & Curran	7,710	38
7	Eversheds	428	26
8	Linklaters	12,981	24
9	DLA Piper	7,255	23
10	Allen & Overy	4,950	23
11	Maples and Calder	1,465	22
12	Pinsent Masons	544	18
13	Clifford Chance	14,067	17
14	Freshfields Bruckhaus Deringer	11,441	16
15	LK Shields	237	15
16	Latham & Watkins	18,844	13
17	Norton Rose Fulbright	2,640	11
18	Ropes & Gray	6,288	10
19	Herbert Smith/Gleiss Lutz/Stibbe	5,298	10
20	Davis Polk & Wardwell	25,656	9
Source: mergermarket

Not alone

While the Big Five have managed to maintain an impressive monopoly on substantial chunks of major corporate matters and large disputes, the market is open for smaller players to collect high-profile mandates too.

Take Eversheds – which to some degree has had it tough of late – having to cut 116 staff from its UK, Asia and Copenhagen offices this year but whose clients in Ireland include Amazon and Microsoft. Alan Murphy, managing partner for the Dublin office and chairman of Eversheds International Ltd, however, views some mid-tier players as being squeezed hard.

‘The perception is that the bigger firms in the Irish market have remained well positioned despite the financial crisis,’ he says. ‘All five firms have good client bases and to a varying extent have benefited from legal work arising from the downturn in the Irish economy. When you look outside these firms there has been a substantial change in the market – a number of firms have unfortunately lost their position which has inevitably benefited others.’

Those that haven’t lost their place include Eugene F. Collins, which recently acted for the sellers of a two-thirds stake in Louth-based energy equipment provider Suretank to Norwegian investor HitecVision for €52m in early July. Other notable offshore clients for the firm include energy giants Shell and Repsol.

LK Shields, meanwhile, receives its fair share of pensions and employment work, having advised the trustees of financial group Merrill Lynch’s employee benefit plan, and has also attained overseas bank panel work including Bank of Scotland and Dunbar.

LK Shields managing partner Hugh Garvey says: ‘Whatever the perception as to the structure of the Irish legal market, the reality we continue to experience is that the domestic and international corporate market, and other large purchasers of legal services, are increasingly recognising that our firm, and no doubt firms of similar size to us, have highly skilled resources (comparable to those in larger firms) and are well capable of delivering the legal solutions they seek.

‘Our experience is that no matter what their size, all clients are increasingly focused on value and service, areas in which we continue to successfully compete, including with those few firms that are larger than us.’

Maples and Calder is noted by competitors in Dublin for aggressively working its offshore credentials, particularly in the investment funds area. Ranked first in investment funds and construction by The Legal 500, the firm holds a roster of big-name clients including longstanding Irish group John Sisk & Son and Balfour Beatty. Where it matches the Big Five is in its collection of bank panel appointments, with Bank of Ireland, AIB, Ulster Bank, and Bank of America Merrill Lynch all adding the firm to their rosters. The offshore firm also closely matches that of McCann’s strong offering in aviation, and acts for aircraft leasing company Avolon on its Irish activities, including advising alongside Freshfields Bruckhaus Deringer on its raising of $1.4bn in equity capital in May 2010.

Funds hotspot

It would be fair to say that Ireland’s investment fund lawyers haven’t really felt the pain of recession. FDI in Ireland remains a core stimulus of the nation’s economic growth due to the region’s competitive corporation tax of 12.5% as well as the huge number of assets that have come under domestic management.

‘The international financial services industry in Ireland remains strong and is targeting further significant growth in a number of key areas,’ explains Conor Houlihan, banking and capital markets partner at investment funds-focused firm Dillon Eustace.

‘More generally, Ireland is seen as a strong destination for foreign investment and our increased cost competitiveness has contributed to very significant FDI activity for the past number of years. Again, our international profile has helped us to capture our share of this business. Certain of the legal, regulatory and other responses to the financial crisis in Ireland over the past number of years have also generated work and are contributing to transactional activity.’

Indeed, Dillon Eustace has acted for the purchaser of the so-called Project Kildare portfolio of Irish real estate-backed loans from AIB and EBS. Notably, it advised a global asset manager on the participation by a number of its funds, as part of a consortium, in the €1.1bn purchase of common stock in Bank of Ireland over the past 12 months (representing 34.96% of the total issued ordinary stock of the bank). The project has been a significant milestone in the Irish government’s proposed restructuring of the Irish banking system, as it signified that lenders were accelerating their distressed debt programmes and would likely generate interest from international private equity investors.

There is an inherent sense of optimism among many Dublin-based firms. Despite continued economic disruption, and with the exception of those unfortunate enough to place all their eggs in the real estate basket, Irish firm activity appears more consistent than that of similar counterparts in England and Scotland. While the illusory Celtic Tiger years have come and gone, many firms have effectively evolved to focus on a sustainable run of strategic work for the kind of international companies most mid-pack English law firms would kill to act for.

Eversheds’ Alan Murphy concludes: ‘The distinguishing factor for firms who have adapted and availed of opportunity in the financial crisis is their ability to respond to the market, think differently and adapt to changing client needs and expectations. As Darwin is attributed with saying: “It is neither the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”’ LB

sarah.downey@legalease.co.uk