Francesca Fanshawe talks to Addleshaw Goddard’s senior partner ahead of big strategic decisions
There is a lot riding on the strategy Addleshaw Goddard will finalise this year, with the national thoroughbred still struggling to regain its form five years after the banking crisis severely hit its practice.
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I wrote recently of the need, when commenting on the firms and individual lawyers we cover, to give the benefit of the doubt, and I meant it, but sometimes it’s hard to find that silver lining or constructive slant. Addleshaw Goddard, unfortunately, has become a case in point.
Recent years have seen materially below-trend financial performance, indications of tension between its City arm and northern offices and an international strategy that looked just too little, too late. Perhaps more damaging has been the uncertain tone that has emanated from Addleshaws about where it sits in the market and wants to go.
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Global drinks brand Diageo has appointed Slaughter and May, Addleshaw Goddard and Pinsent Masons as its ‘general preferred suppliers’ for the UK following a four-month long review.
Confirmed today (31 March), Diageo has since December been reviewing its legal suppliers for the UK (excluding Northern Ireland), resulting in a ‘material consolidation’ of its legal services suppliers. Firms that have previously been reported to be on the FTSE 100 company’s main panel include CMS Cameron McKenna and legacy SJ Berwin.
The trio of LB100 firms will formally take up the role tomorrow (1 April) – tasked with a broad range of commercial services – with the role running to 30 June 2016.
In addition, a number of ‘specialist approved suppliers’ will be appointed to cover areas such as intellectual property, and specialist commercial and contentious work.
In a statement, Diageo said: ‘We do not intend to publicise a list of the “specialist approved suppliers” or comment further on the process or outcome of the review.’
Corporate lawyer Moriarty stepped into the role in mid-July last year, having taken over the 76-lawyer team from Tim Proctor who retired from the company after 13 years. Moriarty previously worked in private practice in London and Dublin before joining Diageo’s in-house team in 1997, where she also worked as corporate M&A counsel and regional counsel for Ireland.
Diageo last carried out a review of its external advisors in 2009.
Slaughters’ well-established relationship with the Diageo team includes corporate partner Simon Nicholls’ role in 2012 advising on the drinks company’s £2.4bn transaction to acquire up to 53.4% in United Spirits Limited, India’s leading spirits company.
Sarah.downey@legalease.co.uk
The tally of City firms calling on salaried partners to increase their capital investment in response to new HM Revenue & Customs (HMRC) rules is growing as Weightmans and Addleshaw Goddard this week confirmed they are in the process of significantly raising contribution levels.
Partners at Addleshaws voted in favour last Thursday (20 March) of 60 fixed share partners (FSPs) making a cash investment of just over 25% of their salary, the minimum stipulated by HMRC in order to be considered a partner as opposed to an employee.
The firm called for investment of a few percentage points above the minimum to allow room for error, with the definition felt to be unclear, according to head of employment Michael Leftley, who led the top 25 firm’s response to the new legislation.
Meanwhile, at LB100 top 50 firm Weightmans, following a consultation with partners into how the firm should meet the new taxation rules, almost all the FSPs chose to put more capital into the firm with each FSP contributing on average around £30,000 to the firm, totalling £3.8m.
The amount collected – which will be invested in the firm’s development according to managing partner John Schorah – varied among partners depending on their seniority, with those who chose not to add to the pot regarded as employees under the new rules.
In response to the overhaul, which was confirmed in Chancellor George Osborne’s budget as going ahead as planned in April 2014, despite protests from the industry, firms including Herbert Smith Freehills, Ashurst, TLT, DWF and Trowers & Hamlins have all confirmed to Legal Business that they are reviewing their partner remuneration arrangements.
The new rules will mean partners with under 25% of their salary attached to profits will be regarded as having a ‘disguised salary’ and treated as employees by tax authorities in a move expected to add thousands of pounds onto firms’ tax bills.
Of the firms that have announced substantive changes so far, TLT has requested that each of its 60 fixed-share partners contribute £20,000, a move that will boost its funds by a minimum of £1.2m. ‘We will put in place external funding for fixed-share partners if needed, to support any capital contribution,’ a spokesperson for the firm said.
francesca.fanshawe@legalease.co.uk
Addleshaw Goddard has started the week with news that managing partner Paul Devitt is to step down early, while partners are up in arms over miscalculated partner profit points and it has resigned itself to losing out on recovering a signifcant success fee.
The top 25 LB100 firm confirmed this morning (17 March) that Devitt is to stand down a year before his tenure is due to end on 30 April 2015, kick-starting an election process to ‘coincide with the next iteration’ of the firm’s strategy.
Devitt has informed the firm’s board that he will not stand for re-election. He was re-elected managing partner for a second three-year term in May 2012, following an uncontested election.
According to a firm statement: ‘bringing forward the election process to coincide with the next iteration of our strategy allows for a constructive discussion about the next phase of the firm’s strategy, helps to build momentum entering that phase, avoids a drawn out hustings, and provides certainty over our managing partner for the next three years, from the beginning of the coming financial year.’
The firm added: ‘[Devitt] has made an outstanding contribution to our firm and been enormously influential in helping us to build the strong and growing business we enjoy today. We understand and respect Paul’s decision not to stand for re-election and look forward to the continued and valuable contribution he will make to our business as a partner in the corporate division.’
Nominations have not yet been invited from the partnership, and the firm has refused to comment further until the election process is completed. The firm has previously refused to comment on claims by former lawyers that real estate head Adrian Collins and business support and restructuring head John Joyce have put themselves forward for the role.
It has been a difficult period for Addleshaws performance-wise in recent years, with the firm posting a 15% fall in revenue between 2008 and 2013, while its latest limited liability partnership results revealed that its bank borrowing increased by £4m as 2012/13 audited revenue at the firm fell 2.4% from £168m to £164m.
This situation has not been helped by a recent miscalculation of partner points. The firm has confirmed it reviewed the administration of its partner remuneration system following an error in calculations at the start of the current financial year, which related to the number of points by reference to which profit is distributed to partners, which will result in a slightly lower than forecast end-of-year pounds per point.
The firm said: ‘The miscalculation of total number of points awarded does not in any way affect the overall profitability or financial stability of our business which remains healthy and financially stable and sound.’
‘We have reviewed and introduced improvements in how we administer the pointage system to ensure it cannot happen again.’
Also this week, it has emerged that the firm has decided to write off a large success fee on the basis that it would be extremely difficult to collect. That fee is understood to relate to litigation brought by the late Russian oligarch Boris Berezovsky.
sarah.downey@legalease.co.uk
For Addleshaw Goddard the timing could have been more flattering. On the day that national rival Wragge & Co confirmed a new look management line-up in anticipation of its tie-up with Lawrence Graham (LG) in May, uncomfortable attention has been focused on the leadership of national rival Addleshaws.
In the wake of Wragges’ announcement in December that its £171m merger will go ahead, with Wragge Lawrence Graham expected to edge ahead of Addleshaws in the LB100 top 25 for the first time, the firm today (17 February) confirmed that its five core practice group heads have now been decided, all who will sit on the management board, with four of the appointments coming from Wragges and one from LG.
Wragges; current head of residential development Richard Bate will head real estate in the merged firm, and current dispute resolution head Davinia Gransbury will retain her role.
Wragges’ pensions partner Jason Coates will lead the new combined and renamed human resources team, while current group leader for corporate, commercial, finance and projects Michael Luckman will head the new abridged commercial and projects group.
LG managing partner Hugh Maule will assume the role of group head of corporate, finance and private capital.
All five practice heads will sit on the board alongside Wragges’ managing partner elect David Fennell (whose title will change to chief executive of the combined firm); current Wragges senior partner Quentin Poole, who will stay in that role, and LG senior partner Andrew Witts, who will become chairman.
Two non-executive directors complete the new board line-up, with former president and chief operating officer for global businesses at Thomson Reuters, Helen Owers appointed alongside KPMG’s Alastair McLeish, who most recently held the role of UK head of tax and pensions and head of KPMG ELLP’s tax practice.
The board will run a firm of 1,300 staff including 770 lawyers, operating out of 10 offices, after a majority vote of more than 75% from both partnerships secured the deal.
In comparison, Addleshaws’ current prospects look more mixed. While Wragges and Addleshaws often been compared to each other as arguably the two most high quality institutional firms bred in the UK regions, Addleshaws has struggled for growth since the boom.
On current trends, WLG looks set to this year push past its old rival in revenue terms.
Addleshaws saw its revenue drop by 15% between 2008 and 2013, one of the worst performances in the LB 100, and Addleshaws looks set to face another a contested election when current managing partner Paul Devitt’s second term comes to an end in April 2015.
While the firm refused to comment on claims by former lawyers that real estate head Adrian Collins and business support and restructuring head John Joyce have put themselves forward for the managing partner role, the firm is set to see an election this autumn. This comes amid a period in which there have been questions asked over the firm’s progress.
Addleshaws latest limited liability partnership results filed by the firm revealed that its bank borrowing increased by £4m as 2012/13 audited revenue at the firm fell 2.4% from £168m to £164m.
francesca.fanshawe@legalease.co.uk
Addleshaw Goddard and Linklaters will sit alongside incumbent advisers Allen & Overy and Eversheds on Nationwide‘s new legal panel as the building society today (31 January) concluded its first review since putting together its first-ever roster in 2009.
Burges Salmon, Nabarro and Olswang have all lost their place on the group-wide legal panel for the building society, which started its review process last summer, led by group general counsel Liz Kelly, after plans to start the review in early 2013 were delayed.
In a statement, the building society said: ‘Nationwide…has consolidated the work undertaken by its core panel so that the panel is able to provide full support across the range of legal and compliance services required by the Society going forward. Crucially, these firms will forge close relationships with Nationwide, becoming an extension of the in-house function and partnering business success.
‘The review follows a strategy of ensuring the panel suitably reflects the nature of the work being undertaken by the business now and in the future.’
GC Kelly, who is due to leave Nationwide at the end of the financial year to spend more time with her family, said: ‘Following a rigorous tender process, we have really challenged firms to showcase their ability to deal with a wide range of issues.
‘We have selected those firms which demonstrated that they were not only able to respond to the work and challenges we face as an organisation, but additionally offered the best value to our members and were a natural fit to Nationwide’s culture and business.
‘We would like to thank our outgoing panel members for their valued experience, particularly during such an exciting, and challenging time, for Nationwide.’
Kelly was appointed as general counsel in 2009 and has since pulled together what was a fractured legal department, creating a risk-based blueprint for areas where it needed to grow and building it up to around 50 lawyers, including seven litigators.
Her innovations include rolling resource planning, under which the legal team provides a formal two-year partnering plan to show how it will support the business based on discussions with key stakeholders.
The forward-thinking lawyer also introduced terms of reference for each project, which sets out at the outset the agreed project objectives.
The building society was one of five financial institutions identified in June by the Prudential Regulation Authority as having a capital shortfall. Kelly said: ‘What we are looking for in our panel review is how firms can support us on the regulatory side.’
Kelly says she will also play a role in the ongoing process of appointing her successor.
Francesca.fanshawe@legalease.co.uk
Penningtons Manches is the latest top-100 UK firm to file its limited liability partnership (LLP) accounts for 2012/13, which in keeping with a host of leading City firms, reveal that its highest paid member took more than a £52,000 cut, taking home £286,642 compared with £338,759 in 2012.
The firm posted a turnover figure of £32.1m, down very slightly from £32.3m in 2012, with the firm’s profits more or less flat at £11.53m compared to £11.50m.
Long-term loans at the firm, which acquired Manches from administrators PwC in October 2013, increased from £3.7m to £7.7m.
Penningtons employed a total of 283 members of staff in 2013, up from 260 the year before, of which administrative staff grew by 14 heads and client service staff increased by nine.
Elsewhere, Addleshaw Goddard’s LLP filing has revealed that the firm’s highest-paid partner took home £583,173 compared to £592,789 the year before.
Staff headcount at the firm is down to 978 this year from 1,016 last year, with its fee-earner and support staff count down by 23 and 15 heads respectively. As a result, salary costs reduced from £48.2m to £46.9m and social security costs were also down by around £1m. However, a rise in pension costs led to an overall increase in staff costs from £54.7m to £55.2m.
Nonetheless the firm reported no change in its average of 152 partners for the financial year ending 30 April 2013.
The firm posted a dip in turnover from £167.5m to £164.4m in 2013. Operating profit at the firm was also down from £57.7m to £54.3m, while partner profits fell from £55.5m to £52m.
The firm also increased its bank loans to £17m in 2013 with a 2.6% interest rate, compared to £13m in 2012 at 3.2%.
jaishree.kalia@legalease.co.uk
The New Year lateral hiring spree has gathered momentum, with Addleshaw Goddard, Irwin Mitchell, Bristows and Field Fisher Waterhouse all announcing new acquisitions today (7 January).
Leeds-based Bill Gilliam will join Addleshaw’s commercial litigation team as a partner after 20 years at Eversheds, where he was head of healthcare and life sciences. His experience includes a secondment as acting head of legal in the commercial directorate of the Department of Health, and cases include procurement disputes for Covent Garden Market Authority and Roche Diagnostics, as well as assisting with the Mid-Staffordshire Inquiry.
Elsewhere, the appointment of tax investigations partner Phil Berwick from Pinsent Masons into Irwin Mitchell’s business legal services (BLS) division takes the number of new hires by the national giant to 20 in two years, and follows on from the high- profile hire of Pinsents’ former dispute resolution and litigation head Nigel Kissack in October. He is joined by Nick Dawson, a legal director in the corporate team at DWF, who joins Irwin Mitchell as partner, and senior corporate associate, Rob Laugharne, who moves to Irwin Mitchell in Birmingham from Shoosmiths.
As a former head of the tax investigations team at McGrigors, now Pinsents, since 2009, Berwick will join Kissack in Irwin Mitchell’s London office. Having left the Inland Revenue 18 years ago where he was an inspector of taxes, Berwick has worked in the investigation teams of various accountancy and consultancy firms, including four years as head of tax investigations at Tenon.
He deals with a range of HMRC’s specialist units, but is principally involved in investigations instigated by HMRC’s specialist investigations and local compliance fraud teams with expertise in advising clients on international disclosure facilities.
Chief executive for BLS, Niall Baker, said: ‘Last year, Irwin Mitchell’s turnover exceeded £200m for the first time and our BLS division played a hugely important role in this success.
‘These latest appointments speak volumes for our determination to keep expanding and are a further sign that senior advisers, not just lawyers, are excited about what we are doing and want to be part of it.’
Meanwhile, shortly after its partners voted in favour of the tie-up with Birmingham heavyweight Wragge & Co last month, Lawrence Graham will see its head of EU, competition and regulation, Rosemary Choueka, leave to join Bristows to become a partner in its competition team.
Head of competition at Bristows Pat Treacy commented: ‘We are delighted to welcome Rosemary to our very busy team. Having gained experience at the European Commission and having subsequently advised businesses on all areas of competition law, she is also experienced in general EU law and on regulatory issues in sectors including technology, healthcare and waste.
‘Our team has grown significantly over the past few years to cater for increased workload, so her arrival is very timely as increased competition focus on high technology industries seems likely to lead to greater demand for sector specialists with a deep understanding of competition issues.’
This comes as Bristows announces the promotion of three associates Dominic Adair and Jeremy Blum (intellectual property); and Adrian Sim (IT) to partnership in May.
Finally, Field Fisher Waterhouse’s corporate team has been bolstered by the arrival of Mayer Brown corporate partner Mark Walker. Walker, who joined FFW yesterday (6 January) had been a partner at Mayer Brown since 1996 and spent six years in the firm’s Frankfurt office. FFW managing partner Michael Chissick said that Walker’s experience in private M&A, venture capital, family office and private equity investments in the UK and Germany, would fit particularly well with the firm’s strategic focus, as does his experience in technology transactions.
francesca.fanshawe@legalease.co.uk
Having launched in Hong Kong last summer, Addleshaw Goddard has forged ahead with a number of developments in the region including adding a third partner, Daniel Wan, and rebranding following the arrival of Nigel Francis at the end of 2013.
Wan, who joins from Jun He and previously worked at Herbert Smith Freehills, specialises in M&A and equity capital markets, particularly pre-initial public offering (IPO) investment and restructuring and post-IPO regulatory and compliance matters.
He brings with him two associates, Simon Wong and Yen Yum, and the trio will work alongside corporate partner Brett Stewien, who joined Addleshaws from DLA Piper in August last year to launch the new office.
Wan’s arrival follows that of Francis, the former head of litigation and employment at Minter Ellison, which has seen the local office change its name from Stewien & Co to Francis & Co.
Francis was hired at the same time as Stewien and Andrew Carpenter, Addleshaws international division managing partner, said: ‘Nigel is very well known in the local market and it was always the intention that the practice would adopt his name once the various regulatory requirements were completed. Daniel is similarly well known in Hong Kong and the PRC for his corporate finance practice which has continued to thrive even in difficult markets.’
The Hong Kong team recently re-located to new premises in Citibank Tower in the heart of Hong Kong’s business district as part of immediate plans to grow the office to 12 full time lawyers.
Carpenter added: ‘The combination of Nigel, Brett and Daniel in Hong Kong and Jamie Harrison in Singapore is opening up new markets in Greater China for us. The combination of that platform with our capability in the GCC, and increasing focus on Africa, Korea, Japan and Malaysia, is an exciting proposition and we are very encouraged by the early opportunities flowing from our investment and increasing capability.’
Addleshaws’ other international offices include Dubai, Oman and Qatar.
caroline.hill@legalease.co.uk
