Legal Business

Latham hires New York playmaker to bolster M&A team in significant loss for A&O

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Strategic recruitment Allen & OveryLatham & Watkins

Latham & Watkins has secured a senior hire from a Magic Circle competitor in New York, recruiting Allen & Overy (A&O) corporate veteran Peter Harwich.

Harwich specialises in advising public companies on complex public and private M&A transactions. He was established as one of A&O’s leading US deal advisers having handled $1bn-plus deals for Thomson Reuters, SAP, Deutsche Börse, Misys and GE.

He joins a list of high-profile M&A partners to sign up for Latham in recent months, including last year’s recruitment of A&O partner Ed Barnett in London and Linklaters’ Germany private equity head Rainer Traugott . Other senior hires have included Nikolaos Paschos in Düsseldorf and Aldo Piccarreta in Milan.

Latham’s global M&A co-chair David Allinson told Legal Business: ‘In New York we felt it would make sense to add some more bench strength. New York is still seen as one of the global centres of M&A. We never take on a lateral unless there’s a strategic reason. But Peter’s client-base of public companies and his strong skillset means he really fits the bill.’

With Harwich’s arrival, the firm’s New York office now consists of 17 M&A partners.

Harwich has previously acted opposite Latham on the $3.6bn transaction which saw Thomson Reuters’ intellectual property and science business sold to private equity houses Onex and Baring Private Equity Asia. Harwich acted for Thomson Reuters while Latham partners Paul Sheridan and Shaun Hartley advised Onex and Baring.

The departure underlines the challenge for leading London law firms of maintaining their New York practices in the face of more profitable US rivals. A&O, which outpaced its key London peers in 2016/17 with revenues up 16% and average partner profits rising by 25%, has cut a number of above-lockstep pay deals in the US in recent years to bolster its New York expansion.

Nevertheless, Latham’s PEP of $3.06m compares to A&O’s current tally of $2.04m, while the Los Angeles-bred giant is generally viewed as the most successful entrant to New York’s ultra-competitive legal market.

tom.baker@legalease.co.uk

Legal Business

Legal Business 100: Case study – Allen & Overy

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Legal Business 100 2017 Allen & Overy

While Clifford Chance and Linklaters both recorded impressive increases in revenue and profit per equity partner (PEP) in 2016/17, Allen & Overy (A&O) blew its closest rivals away with a 25% rise in PEP, which jumped from £1.21m to £1.51m, while revenue saw a 16% increase to £1.52bn from £1.31bn. On a constant currency basis, A&O saw a 6% increase in its revenues and a 14% rise in PEP.

A&O is now the second-largest Magic Circle firm in revenue terms, overtaking Freshfields Bruckhaus Deringer in the Legal Business 100.

Speaking to Legal Business, managing partner Andrew Ballheimer says its offices in the UK, Africa, Middle East, Australia, the US and Hong Kong had been significant successes for the firm this year with a strong performance across litigation, arbitration, capital markets, banking, leveraged finance, M&A, restructuring regulatory and project finance.

Making a splash in automation, Ballheimer adds the firm’s derivatives-focused product, MarginMatrix, has performed particularly well after A&O teamed up with Deloitte in the first joint venture between a Magic Circle firm and a Big Four accountant.

We are proud of the results, given the volatile backdrop. Our real growth appears higher than the legal market and that’s pleasing.
Andrew Ballheimer, Allen & Overy

In terms of talent investment, the firm made several lockstep-breaking hires in the US, bringing on a five-lawyer finance team led by leveraged finance partner Scott Zemser from White & Case, and a three-partner Paul Hastings team led by the US firm’s leveraged finance head Bill Schwitter.

A&O also made a substantial investment in IP, picking up three partners from Simmons & Simmons this year, including its former IP head Marc Döring following the hire of former colleague Marjan Noor, who moved to the firm in June last year.

There were, however, some high-profile losses, with Latham & Watkins picking up heavyweight banking lawyer Stephen Kensell and M&A partner Edward Barnett, while Milbank, Tweed, Hadley & McCloy also took on a three-partner team in New York, including the firm’s US senior partner, Kevin O’Shea.

LB: How do you view your performance?

Andrew Ballheimer: We are proud of the results, given the volatile backdrop, especially Brexit, the election of President Trump and stock market uncertainty. Our real growth appears higher than the legal market and that’s pleasing.

LB: Have you had any big pay days to bring revenues up?

Ballheimer: Nothing material. All of our practice areas and offices have done well in a challenging market. It’s a combination of our investments over the years, our geographies and our product base. Our footprint is now broader than our peer group.

LB: Headcount has stayed the same. Were there any partnership changes that would explain a 25% increase in PEP?

Ballheimer: If your question is asking whether we have played around with our denominators, the answer is absolutely not. It’s exactly how it’s always been; it’s full equity partners as a divisor of our profit and in the financial year we’ve achieved a significant growth of profit before tax with a small increase in the average number of full equity partners.

LB: You’ve had a number of impressive hires over the last year, how has that contributed to the firm’s success?

Ballheimer: The Americas has grown, our IP team has hit the ground running and we’ve made some other hires. We have made 31 lateral hires net and that has helped. It’s a constantly evolving business offering, adding on high-quality people with a cultural fit and we will continue to do that.

LB: What is the firm going to do over the next 12 months?

Ballheimer: We have to stay close to our clients and deliver at the highest standard in terms of what our clients require. The period ahead is going to be equally as uncertain, but our business is broad based, well hedged, and ultimately it’s about the quality of our offering and our client proposition. You have to evolve all the time because the demands are changing. It’s challenging, but if we continue doing all the things that we’re doing across all fronts, at least our business is in the best position that it can be in an uncertain world.

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Legal Business

Bean bags primed – A&O buffs up disruptive cred as eight companies join its innovation hub Fuse

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Innovation Allen & OveryMishcon de Reya

Having already carefully cultivated an image as the most free-thinking City law firm in its weight class, Allen & Overy (A&O)has taken another step to recast itself for the age of disruption after choosing eight companies to join its ‘tech innovation hub’ Fuse.

The City giant is offering companies space in its London HQ which will work together with the firm’s lawyers, technologists and clients to create services and products for companies, financial institutions and law firms.

From 80 applications those chosen by the firm to take up places in the hub include legal AI specialist iManage – previously RAVN; digital legal services innovator Avokka; regulatory risk intelligence outfit Corlytics; legal technology innovator Legatics; legal management software company Opus 2 International; and AI company Vable. The first company to sign up for Fuse was fintech outfit Nivaura.

The Magic Circle firm has also taken on not-for-profit enterprise Ithaca, which aims to create a mobile online technology platform to assist asylum seekers gain access to pro bono legal advice.

The companies, which will move into A&O in September, are expected to spend four months using the facilities. After that time the firm will look to invite others to Fuse.

Fuse is the latest attempt by a prominent law firm to adapt the Palo Alto-style incubator model, with Mishcon de Reya and Dentons currently pursuing broadly similar ventures.

The tech companies were invited to pitch to Fuse’s selection committee, which included JP Morgan’s Oli Harris, Funding Circle legal counsel Robert Kerrigan, Amazon corporate counsel Alex Wong and Balderton Capital principal Sam Myers.

Fuse’s chairman, A&O partner Jonathan Brayne, said the selection process had been an ‘extremely interesting and rewarding experience’. He added: ‘We’re looking forward to welcoming the companies into the space next month, introducing people from A&O and our clients’ businesses to it and, ultimately, helping shape what emerges from the Fuse environment.’

The project is the latest in a string of innovations for A&O which last year teamed up with Deloitte for the first marquee joint venture between a Big Four accountant and a Magic Circle law firm. The firm eventually closed the doors to new clients following the launch of MarginMatrix, a tech-driven service to help banks handle regulation of the $500trn over-the-counter derivatives market.

While Fuse and its legal counterparts are billed as a means of bringing in new ideas and collaboration to the profession, the industry’s many luddites will be waiting to see if such ventures ultimately prove to be more vapid marketing exercise than brave new world.

madeleine.farman@legalease.co.uk

Read more: If it ain’t broke… Do A&O’s New Law business lines live up to the hype? (£)

Legal Business

Gibson Dunn continues lateral hiring spree with hire of A&O arbitration partner Jeffrey Sullivan

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Strategic recruitment Allen & OveryGibson, Dunn & Crutcher

Gibson, Dunn & Crutcher has added to its growing European offering with the appointment of London-based arbitration partner Jeffrey Sullivan from Allen & Overy (A&O).

Described by the Legal 500 as a leading individual in public international law, Sullivan also specialises in both commercial and investment treaty arbitration. His practice has a particular focus on clients in energy, infrastructure and private equity sectors.

Sullivan joined A&O from Foley & Lardner, where he was based in the US firm’s Washington DC office, in 2006. He was made up to partner at the Magic Circle firm in 2013.

Gibson Dunn’s international arbitration practice group co-head Penny Madden QC told Legal Business: ‘We are very busy, particularly in the investment treaty space, and the hire of Jeff is the perfect fit for us. He has a thriving practice, we have a thriving practice and the synergies between the two look to be very strong. We are growing in this area.’

Sullivan’s appointment is the latest in a string of notable European appointments for Gibson Dunn, with the firm taking on a group of five lawyers from Ashurst’s Paris office led by litigation and restructuring partner Jean-Pierre Farges in June.

He was joined by fellow disputes partners Pierre-Emmanuel Fender and Eric Bouffard, corporate partner Bertrand Delaunay and finance counsel Amanda Bevan, who will be made up to partner in the move.

This January, Gibson Dunn’s Paris office brought in a team of four from A&O. Technology and digital transactions partner Ahmed Baladi joined alongside counsel Vera Lukic and two associates.

The US firm also took on Herbert Smith Freehill’s global energy co-head Anna Howell last month, bolstering its fast-growing global energy practice after launching a new Houston office this May.

Madeleine.farman@legalease.co.uk

Legal Business

City’s big four rides churning forex markets as A&O leads the Magic Circle on results

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Financial results 2016/17 Allen & Overy

Double-digit fee growth for A&O, Links and CC but Freshfields stalls

Dramatic swings in foreign currencies against Brexit-battered sterling have lifted reported results from London’s big four, with double-digit growth rates for Allen & Overy (A&O), Clifford Chance (CC) and Linklaters. Freshfields Bruckhaus Deringer’s growth, however, has stalled in what has been a record year for the Magic Circle.

Legal Business

‘Hugely complicated’: Watson Farley, White & Case, A&O line up on $14bn shipping deal

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Finance Allen & OveryWatson Farley and WilliamsWhite & Case

Watson Farley & Williams has advised a group of 27 international and local banks acting as financiers on a $14bn merger between shipping giants Hapag-Lloyd and United Arab Shipping Company (UASC).

The tie-up will create one of the five largest container shipping lines in the world, with 230 vessels and a combined turnover of around $12bn.

Legal Business

Allen & Overy posts pace-setting 25% rise in PEP with top line reaching £1.52bn

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Financial results 2016/17 Allen & Overy

Allen & Overy (A&O) has soared ahead of its Magic Circle competitors, increasing its revenues by 16% to £1.52bn, while profits per equity partner (PEP) also rose by a significant 25%.

Despite a year which the firm described as a ‘challenging’, and as a result of a ‘concerted drive’ by management to expand A&O’s client base beyond banking, revenue rose £209m from last year’s £1.31bn.

A&O is now the second largest Magic Circle firm in revenue terms. Alongside Linklaters, the firm has now overtaken Freshfields in revenue size.

PEP jumped from £1.21m to £1.51m for this financial year. Profits at the firm, which has grown substantially in revenue from a position below its rivals a decade ago, also shot up 27% to £716m.

On a constant currency basis the firm increased its revenues by 6% for the 2015/16 financial year while PEP saw a 14% percent increase.

The firm’s highest paid partner will receive 25% more than figures for the previous year, taking home £3.519m, including a retirement payment which averaged £2.808m last year. In this financial year, a one-off foreign exchange gain meant the reported average PEP increased by around £109,000.

Managing partner Andrew Ballheimer (pictured) pointed to the UK, Africa, Middle East, Australia, the US and Hong Kong as stand out regions for the firm this year.

He highlighted its strong performance across litigation, arbitration, capital markets, banking, leveraged finance, M&A, restructuring regulatory and project finance.

Ballheimer told Legal Business: ‘It’s a combination of things: all of our practice groups have done extremely well; over the last ten years or so we’ve opened a net of 20 offices, when other firms shrunk their footprint.’

‘Our alternative areas of businesses like Aosphere, MarginMatrix, Peerpoint, our legal services centre in Belfast’ also performed well, Ballheimer said. He attributed this to ‘having made these investments early on. These businesses are now scaling up and maturing, and it’s paying off.’

He also cited demand for multijurisdictional work as a driver for growth, with 74% of revenue deriving from matters involving two or more countries and 30% of revenue from five or more countries.

The firm has made a number of high-profile appointments in the last year, including the lockstep-breaking hire of a five lawyer US finance team, led by leveraged finance partner Scott Zemser from White & Case. The team was made up of two further partners from the US firm, one from Proskauer Rose, an associate from Milbank, Tweed, Hadley & McCloy, who was promoted to partner in the move.

Just seven months later, A&O broke its lockstep again, hiring a US-based three-partner Paul Hastings team led by the US firm’s leveraged finance head Bill Schwitter.

However, high-profile banking lawyer Stephen Kensell and M&A partner Edward Barnett both departed for Latham & Watkins during the year. Milbank, Tweed, Hadley & McCloy also raided the Magic Circle firm for a three-partner team in New York, including the firm’s US senior partner Kevin O’Shea.

A&O is the fourth Magic Circle firm to post its financial results, following Clifford Chance, which on 5 July recorded revenues up 11% to £1.54bn and a £1.37m leap in PEP.

Linklaters’ increased its revenues 9.8% over the last year to £1.44bn, while its PEP rose 8% to £1.51m. Freshfields Bruckhaus Deringer posted a stable turnover for 2016/17, with a top line of £1.33bn. Its PEP, however, grew 5% to £1.547m, an increase from £1.473m.

Madeleine.farman@legalease.co.uk

Legal Business

Skadden and A&O act on Vantiv’s £9bn buyout of UK payment processor Worldpay

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Corporate Allen & OverySkadden, Arps, Slate, Meagher & Flom

An Allen & Overy (A&O) team is advising UK company Worldpay on its £9bn sale to US payment processor Vantiv, the largest US merchant acquirer by transaction volume, in its bid to cover the global market.

The A&O team is led by corporate partner Duncan Bellamy, who also led A&O on London Stock Exchange (LSE) listed Worldpay’s 2015 initial public offering (IPO), and is joined by M&A partner Seth Jones.

Skadden, Arps, Slate, Meagher & Flom represented Cincinnati-based Vantiv on the deal. In 2016, the company processed 25 billion transactions with a combined $930bn value.

In a joint statement, Worldpay and Vantiv said they saw a ‘compelling strategic, commercial and financial rationale’ for the combination, which will create a global company with a ‘strong position’ in the four core regions: the US, Europe, Asia-Pacific and South America.

Worldpay was subject to an offer from US banking giant JPMorgan Chase yesterday, but the company announced today that an agreement had been reached with Vantiv.

The deal values Worldpay’s shares at £3.85 each, with shareholders entitled to 55p per share. A Worldpay spokesperson confirmed that the value of the merger was subject to share price change, but that the ultimate value will be around £9bn.

Vantiv chief operating officer Charles Drucker will lead the group as executive chairman and co-chief executive while Vantiv’s Stephanie Ferris will assume the role of chief financial officer.

Worldpay chief executive Philip Jansen will continue as a chief executive for the combined company.

Following the merger’s completion, Worldpay shares will be delisted from the LSE. Common stock in Vantiv, which will be the ultimate holding company of the combined group, will continue to be listed on The New York Stock Exchange.

A&O, Weil, Gotshal & Manges and Freshfields Bruckhaus Deringer advised Worldpay on its 2015 IPO. The float was the largest of the year. It gave Worldpay a market value of more than £5bn.

At the time, Bellamy, David Broadley and US securities partner Jeff Hendrickson advised Worldpay. Weil’s team advising Advent International and Bain Capital was led by London partner Marco Compagnoni, with Peter King, Samantha McGonigle and Simon Lyell. Freshfields advised underwriter Goldman Sachs, led by capital markets partner Mark Austin.

tom.baker@legalease.co.uk

Legal Business

DLA Piper and A&O lead firms on Link’s £888m buyout of UK business services group Capita

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Corporate Allen & OveryDLA Piper

Eversheds Sutherland, Macfarlanes, DLA Piper and Allen & Overy (A&O) are advising on Australia-headquartered Link Group’s £888m purchase of UK-based Capita Asset Services (CAS), in an European expansion bid by the business services firm.

DLA Piper and A&O are acting for the Australian financial data expert buyer Link Group on the deal, which is subject to regulatory approvals. It is expected to complete by 31 December.

Eversheds partner Jon Cox-Brown led the team assisting CAS, with corporate and M&A partner Stephen Drewitt headed Macfarlanes’ team, which advised CAS on their options as a result of the deal.

Capita chief executive Andy Parker said in a statement the company had achieved what he considered an attractive price and the deal would mean a ‘significant’ reduction in leverage.

CAS operates in four major business segments, fund solutions, shareholder solutions, corporate and private client solutions, banking and debt solutions, said its estimated expenses on the deal were around £72m. These included separation related costs, such as a £17m one-off pension contribution.

The company said would use the net cash proceeds from the sale to reduce indebtedness, including the company’s receivables financing facility.

CAS administers around £600bn of assets and in 2016 managed circa £45bn in annual payments for its customers.

Link, which provides technology to manage financial ownership data, serves large asset companies and trustees. The group said it would use CAS’s market positions and client relationships to expand across Europe.

Marco.cillario@legalbusiness.co.uk

Legal Business

Ashurst and A&O score roles on Saudi Aramco’s JV with Lamprell to develop $5.2bn maritime yard

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Corporate Allen & OveryAshurst

Ashurst and Allen & Overy (A&O) are acting on Saudi Aramco and oil rig construction business Lamprell’s new joint venture to develop a $5.2bn maritime yard in Saudi Arabia.

The development will create the largest maritime yard in the region, located at Ras Al-Khair on the east coast of the country.

Saudi Arabia’s national shipping company Bahri, and South Korea’s Hyundai Heavy Industries, have also partnered with Saudi Aramco as part of the project.

Lamprell instructed Ashurst on the deal, with a team led by London-based corporate partner Nick Bryans. Europe and US banking head Martyn Rogers, London-based real estate partner Jamie Chapman and corporate partner Faisal Baassiri in Jeddah are also providing advice.

Saudi Aramco was advised by a joint team from A&O and its Saudi Arabia relationship firm Khoshaim & Associates (K&A) led by K&A structured finance partner Zeyad Khoshaim and A&O corporate finance partner Stephen Mathews.

Earlier this year, A&O and K&A advised the arrangers and dealers on the establishment of the SAR37.5bn sukuk issuance programme for Saudi Aramco. The two firms also advised on the debut issuance of SAR 11.25 billion sukuk due 2024.

A&O capital markets partner Bilal Ahmad led A&O’s team. K&A advised on the structuring and coordination with the banks. A separate team advised Riyad Capital as sukukholders’ agent, led by A&O partner Morgan Krone.

madeleine.farman@legalease.co.uk