Legal Business

Trainee retention round up: Slaughters leads Magic Circle as A&O keeps on 82% of trainees

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Trainee retention Allen & Overy
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All of the Magic Circle firms have unveiled their trainee retention rates for the September 2014 intake with Allen & Overy (A&O) being the last to announce a retention rate of 82%, giving Slaughter and May the highest rate of the pack at 97% with Clifford Chance at the back with 75%.

A&O made 43 offers to a total intake of 50, of which 41 accepted, which is a significant boost from last year when the firm posted a retention rate of just 72%. A&O was also the last Magic Circle firm to announce its rates last year when it made offers to 45 out of 51 applicants, of which 39 accepted.

A&O’s rate puts the firm on par with rival firm Freshfields Bruckhaus Deringer, which also posted an 82% retention rate earlier this month. Group leader Slaughter and May’s level of 97% however, was closely followed by Linklaters which posted 93%.

Clifford Chance (CC) had the lowest trainee retention rate in the Magic Circle, and one of the lowest among City firms, keeping on 75% or 40 out of 53 of its autumn intake; a 5% decrease on the firm’s 80% rate this time last year.

Other City rivals also posted strong retention rates. Herbert Smith Freehills retained 41 qualifiers out of a cohort of 47 trainees for the autumn intake, giving it a retention rate of 87%. The result follows strong results posted by the top-ten firm in January, when it announced it would keep 38 out of 42 trainees, giving it a spring retention rate of 90%.

Berwin Leighton Paisner kept pace with HSF, posting an 83% retention rate. The firm, which posted bumper financial results this year with a 35% rise in profit per equity partner to £542,000, retained 15 out of 18 final-seat trainees. In the spring intake, the firm also matched HSF keeping hold of 16 out of 18 newly qualified lawyers, a retention rate of 89%.

City firm RPC kept on all 15 trainee solicitors this summer who applied to qualify this year, constituting the second time the firm has achieved a 100% rate since 2010. On the other hand, Norton Rose Fulbright kept on 17 of its 22 September trainees or 77%, down from 92% in this year’s May qualification round. While, CMS Cameron McKenna posted more modest results with a retention rate of 67.2%, with the firm’s London office keeping the lion’s share of trainees.

Of the US firms, Mayer Brown retained ten or 67% for its September 2014 intake, from a total of 15 applicants, while fellow private equity specialist firm Weil, Gotshal & Manges continued in the same manner it has adopted in recent years, and kept on all 11 London trainees in its autumn 2014 cohort.

Mayer Brown also announced in July that it will cut its September 2016 trainee intake by half, taking in just ten applicants compared to their usual intake of 20.

Jaishree.kalia@legalease.co.uk

Legal Business

Wachtell, A&O and Gibson Dunn lead on Walgreens acquisition of Boots

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Corporate Allen & OveryWachtell, Lipton, Rosen & Katz
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The largest drug retailer in the US, Walgreens, has instructed Wachtell, Lipton, Rosen & Katz and Magic Circle firm Allen & Overy to handle its full combination with Nottingham-based chemist Alliance Boots.

Walgreens board of directors has exercised an option to complete the acquisition of the remaining 55% of Alliance Boots after an initial 45% investment completed in 2012. The $9bn deal will create a pharmacy-led retailer with more than 11,000 stores in 10 countries. Walgreens expects to close the transaction in the first quarter of 2015, with the combination also set to establish the world’s largest pharmaceutical wholesale and distribution network with more than 370 distribution centres delivering to more than 180,000 pharmacies, doctors, health centres and hospitals in 20 countries.

Walgreens Boots Alliance will be headquartered in Chicago, declining to carry out a tax inversion that would have added to the $1bn in savings planned by end of 2017. Walgreens said in a statement that the combined size and scale of the companies will help the two to expand supply while addressing the rising cost of prescription drugs in America and worldwide.

The A&O team was led by Amsterdam corporate partner Justin Steer, alongside the office’s head of competition Paul Glazener.

Stefano Pessina, executive chairman of Alliance Boots, said: ‘The expected creation of the new enterprise will represent the most significant milestone in the history of Alliance Boots and, importantly, a very positive step for the health care industry as a whole. Together with Walgreens, we have already made good progress over the past two years and I strongly believe that the merger will bring significant growth opportunities for both mature and emerging markets.’

Investment banks Goldman Sachs and Lazard acted as financial advisers on the transaction. Gibson Dunn’s New York corporate partners Eduardo Gallardo and Dennis Friedman were enlisted by Lazard.

Tom.moore@legalease.co.uk

Legal Business

Slaughters and Links lead on £3bn Carillion/Balfour talks; HSF and A&O advise on BSkyB’s £7.4bn European acquisitions

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Corporate Allen & OveryHerbert Smith FreehillsLinklatersSlaughter and May
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Construction group Carillion has instructed Slaughter and May’s corporate heavy hitter William Underhill and fellow corporate partner Kathy Hughes to advise on a proposed £3bn merger with UK rival Balfour Beatty, which has turned to Linklaters’ M&A veteran and longstanding adviser Iain Fenn.

The deal comes as today (25 July) also saw BSkyB conclude a £7.4bn deal to buy European sister companies Sky Deutschland and Sky Italia from 21st Century Fox, with Herbert Smith Freehills (HSF) leading for BSkyB and Allen & Overy (A&O) for Rupert Murdoch’s multinational media corporation.

If the Carillion Balfour talks are successful the merger, which is likely to be scrutinised by the UK’s Competition Commission, will create the largest construction and engineering company in the UK.

Carillion is also a longstanding client of Underhill (pictured), adviser to Royal Mail on its high profile IPO, who has handled a large slice of Carillion’s corporate work over the past decade, including its £291m acquisition of civil engineering firm Mowlem in 2005.

Slaughter and May have formed a close client relationship with Carillion, which in 2013 turned over £4.1 billion, including offering the services of Carillion’s low-cost legal arm to key client Vodafone.

Fenn, meanwhile, last year advised Balfour Beatty on its £190m sale of its UK facilities management arm to French energy group GDF Suez Energy in an attempt to reduce debt and focus on major infrastructure projects. He is well known for his work for Vodafone and advised the company on its £6.6bn acquisition of German cable group Kabel Deutschland last year.

Confirming the talks today (25 July) Balfour Beatty and Carillion said in a joint statement that they are working on a strategy and business plan for a combined entity, which will be ‘underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting workstreams’.

The construction duo now have until 21 August to complete the deal under the UK Takeover Code.

Elsewhere, BSkyB has turned to relationship partner Stephen Wilkinson to advise on the acquisition of Rupert Murdoch’s pay TV companies in Germany and Italy, creating one of Europe’s largest pay TV providers. Wilkinson, who also advised BSkyB in the £481m sale of its stake in ITV to Liberty Global earlier this week, was flanked by M&A partner Malcolm Lombers, equity capital markets partner Chris Haynes, Brussels-based competition partner Kyriakos Fountoukakos and IP partner Joel Smith.

HSF teamed up with Hengeler Muller’s Klaus-Dieter Stephan to complete the £2.9bn purchase of Sky Deutschland, acquiring a 57.4% stake from US media group Fox, with an offer put in for the outstanding shares to the remaining minority shareholders. On the £2.45bn acquisition of Fox’s 100% stake in Sky Italia, HSF worked alongside Bruno Bartocci of Italian firm Legance on local law.

BSkyB’s in-house team was spearheaded by deputy general counsel Andrew Middleton and principle legal adviser Sianne Walsh.

Wilkinson told Legal Business: ‘The deal was a complex, marrying the German public offer system with a private acquisition and stitching the transactions together as an integrated deal.’

For 21st Century Fox the A&O team was led by London corporate partners Andrew Ballheimer and Simon Toms, with a team made up of London corporate partners and German corporate partners Oliver Seiler and Hans Diekmann and the firm’s co-head of competition Antonio Bavasso. Milan-based corporate partner Paolo Ghiglione worked alongside Italian firm Duccio Regoli of Mazzoni e Associati to complete the Italian end of the deal.

Tom.moore@legalease.co.uk

Legal Business

A&O, Addleshaw and Hogan Lovells line up on Co-op’s £620m pharmacy spin-off to Bestway

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Corporate Addleshaw GoddardAllen & OveryHogan Lovells
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As the Co-operative Group moves to reduce its £1.2bn capital deficit and focus on core business lines it has turned to longstanding advisers Allen & Overy (A&O) and Addleshaw Goddard to lead on the £620m sale of its pharmaceutical business to Bestway Group, advised by Hogan Lovells.

Addleshaw corporate finance partner Richard Thomas led the deal for the Co-op, supported by corporate partner Richard Fleetwood and associates Andy Green, Ryan Barber, Dean Cox. The Co-op is a longstanding client of Thomas, who is also a member of Addleshaw’s healthcare group and counts as clients Lloyds Pharmacy and Capita, which he advised on its acquisitions relate to its Medicals Direct Group.

At A&O, banking partner David Lines and pensions partner Dana Burstow led for the Magic Circle firm, which last year advised the Co-op on a capital generation plan in the aftermath of it unveiling a hole of in excess of £1bn, and which saw finance partner Alistair Asher join as Co-op Group’s general counsel.

Tom Brassington, a corporate partner at Hogan Lovells who counts Johnson and Johnson among his clients, advised Bestway.

This latest transaction is due to complete in October 2014.

The deal sees 774 pharmacies transferred to Bestway in a move that will mean the group, run by Asian tycoon Sir Anwar Pervez, will own the third largest chain of pharmacies in the UK and have an annual turnover of around £3.4 billion.

Brassington said: ‘Hogan Lovells has worked with Dawood Pervez and the Bestway team for a number of years and we were extremely happy to assist with this major acquisition for the group. The Co-op Pharmacy’s focus on supporting and servicing the needs of local communities makes it a natural fit with Bestway’s existing portfolio of businesses.’

Richard Pennycook, interim group chief executive of The Co-operative Group, said: ‘The proceeds will enable The Co-operative to reduce debt and invest in our business and is part of the focused delivery of our clear strategic plans and priorities.’

Tom.moore@legalease.co.uk

Legal Business

A&O and Davis Polk London line up on €7bn IPO of NN Group

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Corporate Allen & OveryDavis Polk & Wardwell
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Billed to be the largest initial public offering (IPO) in Europe to date this year, Allen & Overy (A&O) and the London office of Davis Polk & Wardwell are advising on the sale of up to 77m ordinary shares in NN Group, valuing the Dutch insurer at €7bn and bringing in proceeds of €2bn for ING.

The spin-off, required as part of the terms of the €10bn public bailout ING received in 2008, is being led for ING by A&O Netherlands-based corporate partner and longstanding legal adviser to the Dutch-founded financial services company Charles Honée, as well as corporate partners Tim Stevens and Gerbrand Visser.

Davis Polk is representing the underwriters JP Morgan, Morgan Stanley and Deutsche Bank, led by the US firm’s London-based European financial institutions group head Jeffrey Oakes.

The Wall Street firm’s London office has secured a role on a number of recent IPO’s including the £1.2bn float of esure Group, where Oakes also advised.

Oakes said: ‘I’ve been doing work for ING since 1997 and have a long-standing relationship. We were very pleased to be involved in what has turned out to be a very successful transaction.’

The sale of 77 million shares in the IPO and the exchange of the €450m subordinated notes into NN Group shares reduces ING’s ownership in NN Group to 71.4% at the settlement of the IPO.

A&O can expect further work from the spin-off as after the IPO, ING intends to reduce its shareholding in NN Group to below 50% before 31 December 2015 and divest the remaining stake before 31 December 2016.

Jaishree.kalia@legalease.co.uk

Legal Business

Financial results 2013/14: A&O’s PEP up by 7% to £1.12m as turnover rises 2% to £1.23bn

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Financial results 2013/14 Allen & Overy
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The second of the Magic Circle firms to disclose its 2013/14 financial results, Allen & Overy (A&O) has reported an increase in profit per equity partner (PEP) of 7% to £1.12m from £1.05m, with global revenues up by a more conservative 2% to £1.23bn.

Profits before tax were up by 7% to £532.1m.

While the firm has been outpaced by rival Clifford Chance, which yesterday (1 July) disclosed a revenue increase of 7% to £1.36bn, A&O’s global managing partner Wim Dejonghe told Legal Business that he is happy with the increase, particularly given its year-on-year revenue growth. Since 2010, revenue has grown by £168m while profits have increased by 24%.

Dejonghe said the increases are largely due to strong performances in London, Germany, Luxembourg, Singapore and its UAE offices, driven by increasing activity in its banking and litigation practices, while the firm has also made decent inroads in project finance.

The London office currently contributes around one third of global revenues – a jurisdiction where the firm is expecting further growth in this year. ‘There was a nice pick up in London over the last year,’ said Dejonghe. ‘Banking and litigation was very strong, corporate is recovering, capital markets were busy up until the end of 2013 and were softer in the first quarter of 2014, but has now picked up again.’

He added that the firm’s operational support and legal services office in Belfast also significantly contributed to its overall profits.

‘The firm has focussed on efficiency and this has led to the increase in profits. Belfast was a two-year project and is now delivering to the bottom line,’ said Dejonghe.

Launched in February 2011, the Belfast office currently houses 370 staff, including around 310 non-lawyers and 60 lawyers, making it the firm’s third largest office worldwide. Dejonghe added that the legal services centre in Belfast, headed by Jane Townsend, is performing well, and that the number of client matters has doubled to over 300 since last year.

‘The centre does a lot of big volume work such as banking and regulatory litigation, corporate and due diligence. In this market, we compete with second tier firms. We can offer clients the same work under one brand,’ Dejonghe said.

During the last year, A&O opened a new office in Myanmar and announced earlier this year that it will launch new offices in Barcelona and Toronto, with structured finance partner François Duquette set to launch its first Canadian outpost this autumn, to advise on mostly outbound investment for its global clients across the finance and energy markets.

The firm also confirmed it is currently discussing whether to open its first office in Malaysia.

Jaishree.kalia@legalese.co.uk

Legal Business

‘Hundreds of thousands of pounds are earmarked’: Linklaters’ senior partner Robert Elliott talks new diversity targets

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Gender diversity Allen & OveryLinklaters
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As Linklaters yesterday (9 June) became the second Magic Circle firm after Allen & Overy to put in place gender diversity targets, senior partner Robert Elliott explained to Legal Business why partners have voted to set a target of 30% of all partner promotions to be made up of women and how they plan to double their female management figure to that ratio by 2018.

Elliott, who has been a member of the women into boardrooms initiative The 30% Club for two years ‘in a personal capacity’, is the highest ranking lawyer at Linklaters with a hands-on role in helping the firm meet its new diversity targets. He will be flanked by London-based projects partner Fiona Hobbs and Spanish litigation partner Francisco Malaga.

The firm, at its annual partner conference in Barcelona in April, adopted gender-related targets for 30% female membership of the executive committee and international board by 2018, up from the 15% of women that currently make up the 26 board members at the firm. That figure was lower before the board promotions of litigation partner Christa Band and corporate partner Aedamar Comiskey in February this year, appointments that increased the number of women across the firm’s two boards from two to four.

But while Linklaters has shied away from the hard total female partner constituency targets set by other firms such as Magic Circle rival Allen & Overy, which last month introduced a 20% female partnership target by 2020, what measures will it put in place to ensure the diversity objectives in place are achieved?

Elliott says the first step has been to find out why women aren’t making partnership. ‘It has been difficult, given how for a number of years the number of women we’ve been bringing into the firm and training as lawyers has been approximately 50-50 for some time but the actual number coming through to partnership has been a lot lower than that. You’ve had this attrition and understanding the reasons for that attrition has been part of the challenge. It’s not as simple as saying women are leaving for family reasons. Is it about the work allocation? Is it about the way women are assessed? Is it about the way they self-assess? Is it the way they look at their prospects? Understanding those reasons has been part of our objective and I think we do understand those reasons better.’

Improved gender diversity is one of Linklaters’ global priorities and Elliott says ‘it will be a serious investment with hundreds of thousands of pounds earmarked’. The firm has launched a tailored training programme for those in leadership roles to ensure progression is based on merit and is rolling out the Linklaters’ Women’s Leadership Programme, in association with Cranfield School of Management, to target the strongest potential as early as possible. Training has to be applied for and the courses will run twice a year with around 30 spaces on each run.

Elliott explains: ‘When you talk about aspirational targeting, it’s different from quotas, nobody is in favour of quotas, but we believe the talent is available and it’s about ensuring it comes through. We’re talking about experience and talent and this is not something that is tokenistic, this is substantive.’

The gender initiative, rolled out globally this year, consists of a series of events, structured learning on topics such as unconscious bias and coaching sessions. Nine of the firm’s 21 partner promotions were women this year, with three of those coming from Asia, where competition partner Fay Zhou and banking partner Xiaohui Ji were promoted in Beijing along with banking partner Pornpan Chayasuntorn in Bangkok.

The training is available on a global scale, and Elliott says the initiative will be pushed with more vigour in some regions due to cultural and educational differences that has led to lower number of female partners. ‘Our highest proportion of women partners is in our Asia region, which is somewhere around 28% and our lowest is in continental Europe, where some of the jurisdictions are quite tough as there is more conservatism around this than in the UK or the US. In those jurisdictions you have to be more active in your sponsorship and targeting. The scheme cannot be the firm’s headquarters issuing dictates about such matters, it’s about winning hearts and minds.’

tom.moore@legalease.co.uk

Legal Business

Slaughters, A&O and Linklaters announce associate pay increases

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Salaries Allen & OveryLinklatersSlaughter and May
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Trainees, NQs and PQEs to receive salary boost.

Setting the bar for trainee, newly-qualified (NQ) and associate pay last month were early Magic Circle movers Slaughter and May, Allen & Overy (A&O) and Linklaters, as Ashurst, Hogan Lovells and Shearman & Sterling were among other firms to announce changes.

Linklaters’ decision to increase pay pushes it ahead of the Magic Circle pack, with first-year trainees’ pay up by £500 to £40,000, and NQ salaries by £1,000 to £65,000. One-year post-qualified experience (PQE) associates also took home an extra £1,000 to £70,500, while two and three-years PQE saw more substantial increases, up by £3,750 and £4,500 to £82,000 and £93,500 respectively. These increases are significantly higher than last year, when pay rose by £2,250 and £1,000 respectively for two and three-year PQE associates.

Legal Business

In need of sponsors – can a bank-dominated A&O get the hang of this private equity thing?

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Corporate Allen & Overy
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Jaishree Kalia assesses A&O’s latest attempt to break into the buyout game.

There was never any obvious reason for Allen & Overy (A&O) to largely ignore private equity. While a circular debate simmered in the City about the problems of combining deal finance and corporate, its arch rival Clifford Chance (CC) had long made hay in both leverage finance and private equity. A finance-centric law firm should on paper be in tune with private equity houses, while the lack of a public M&A heritage to rival a Linklaters would suggest the buyout barons would have made good clients to build its corporate brand.

Legal Business

Back in the machine: A&O strengthens high yield practice with Cahill Gordon hire

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Finance Allen & Overy
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With competition between US and UK firms for dominance in key European finance markets intensifying each month, Allen & Overy (A&O) has laid down a significant marker. It has boosted its US-qualified lawyer ranks in London with the hire of Cahill Gordon & Reindel counsel Jake Keaveny, a high yield specialist, as partner.

Keaveny is relocating from the US firm’s New York office, where he was counsel after being promoted from senior associate in January this year. He has experience of working on US bank and bond deals across capital markets and corporate finance, with a particular focus on leveraged finance transactions, term loan B facilities and high yield transactions.

Keaveny joins A&O’s high yield City practice as a partner following a significant surge in the European high yield market and a period of record issuances.

A&O finance partner and high yield specialist Kevin Muzilla said: ‘Jake is an excellent addition to our existing high yield and leveraged finance capability and he joins us at exactly the right time. It is clear that this market is here to stay, as confidence in the high-yield asset class in Europe matures and continues to build.

‘Clients want firms that can cover both the bank and bond side of transactions under both English and New York law. Jake covers New York law bank and bond transactions equally well. With Jake’s hire, A&O is one of the few firms in Europe that can cover all four bases at a high level here on the ground in London.’

jaishree.kalia@legalease.co.uk

For more detailed analysis on the resurgent debt markets and the opportunities for heavyweight US and UK finance firms, see our recent feature ‘Back in the machine – opportunity and threats amid much-changed debt markets‘