Changes could mean a one-third increase for City offices
With bank debt and real estate costs two of the most common causes of law firm distress, increases in business rates were met with concern by real estate professionals and lawyers in the Square Mile last month.
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Herbert Smith Freehills (HSF), Berwin Leighton Paisner (BLP) and Mayer Brown are leading as Chinese Investment Group CC Land is in advanced talks to buy one of London’s landmark buildings, the Leadenhall building (known as the Cheesegrater) for over £1bn.
If completed, the deal will be one of the largest Chinese purchases of UK real estate.
The HSF team is advising joint owner Oxford Properties with a team led by real estate partner Richard Forsdyke.
Mayer Brown is acting for the other 50% owner, British Land, through real estate partners Jeremy Clay, Caroline Humble and corporate partner Richard Page.
BLP team is advising the potential buyer, CC Land, with a team led by head of real estate Chris de Pury.
Forsdyke said: ‘We are delighted to have helped Oxford over the last five years on its participation in this venture. This sale is important and shows the enduring strength of the central London business district real estate.’
HSF also advised Oxford Properties in 2011, when the £340m development of the Cheesegrater started, while SJ Berwin advised British Land.
In 2015, British Land unveiled its first panel, listing firms including Freshfields Bruckhaus Deringer, Addleshaw Goddard, HSF, Jones Day, King & Wood Mallesons, Mayer Brown and Simmons & Simmons as advisers. Last month, it added also Hogan Lovells to its roster of firms.
georgiana.tudor@legalease.co.uk
Berwin Leighton Paisner (BLP) has revealed the weakest trainee retention rates for spring so far, with the firm holding on to just 55% of its trainee cohort. Only 11 out of 20 trainees are to join BLP as newly-qualified (NQ) lawyers, after 70% were kept on in spring 2016, 61% in 2015 and 89% in 2014.
The lower rate comes after in 2015 it was widely reported that BLP attempted to manipulate the figures for its spring intake, trying to portray its 61% rate at 70% as three of its initial trainees left on qualification.
BLP partner and training principal Anthony Lennox said: ‘We’d like to have been announcing a higher proportion of qualifiers. However, our NQs will continue to be a huge asset to our firm, across the teams that they will shortly qualifying into.’
Meanwhile, Clifford Chance (CC) announced the next lowest retention figures this spring, keeping only 31 of 46 trainees, which shows 67% of its cohort will join the firm. CC had 43 out of 46 apply for a contract, it made 33 offers and retained 31. Comparatively, CC retained 91% of its trainees in spring 2015, and 80% in spring 2016.
Slaughter and May and Mayer Brown retained 100% of their trainees, with Slaughters keeping all 25 trainees due to qualify in March 2017. Mayer Brown kept on four of four.
A spokesman at Slaughters said: ‘Our consistently high retention rates demonstrate that the long-term future of the firm, as well as its distinctive culture and ethos, is in good hands.’
georgiana.tudor@legalease.co.uk
A round-up of retention rates so far:
Berwin Leighton Paisner: 11 out of 20 (55%)
Clifford Chance: 31 out of 46 (67%)
White & Case: 15 out of 17 (88%)
Trowers & Hamlins: 11 out of 12 (92%)
Slaughter and May: 25 out of 25 (100%)
Mayer Brown: 4 out of 4 (100%)
In a margin-conscious environment it is tough for advisers to catch a client’s eye, but according to flagship research into GC attitudes, a group of quality City law firms are standing out from the crowd through cutting-edge service delivery.
Drawing on responses from more than 9,000 buyers of legal services, the Client Intelligence Report (CIR) found Berwin Leighton Paisner (BLP), Osborne Clarke (OC), Travers Smith and Hogan Lovells, among the standout City players for adopting innovative working methods.
BLP was the highest-ranked law firm for innovation out of the UK top 50, scoring a 7.66/10 in the poll of in-house counsel, against a group average of 6.84/10.
The firm has turned heads with its Lawyers On Demand (LOD) business, which has pioneered the flexi-lawyer model in the UK. LOD last year expanded into Asia with the acquisition of AdventBalance and launched an Uber-style online platform dubbed Spoke.
‘For LOD, and NewLaw generally, innovation has to be a constant process rather than the occasional big bang. It’s something where the whole team has to contribute,’ said LOD co-founder Simon Harper.
Other highly-ranked City firms include OC, Travers Smith, DLA Piper and Hogan Lovells. Allen & Overy and Clifford Chance both scored above the top 50 average, though elite City firms were generally indifferent performers on the innovation front. Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May all clustered together moderately below par.
Other top 50 law firms scoring poorly on innovation included Trowers & Hamlins, Charles Russell Speechlys and Fieldfisher.
In contrast, a number of regionally-bred players posted strong results, with Shoosmiths, Weightmans and Hill Dickinson all securing high scores.
Innovation – top-ranked City firms
Client score out of ten
NB: UK top 50 average score: 6.84/10
Telefonica UK law chief Ed Smith (pictured) said that he wants to see innovation focused on better service rather than cost. ‘I am GC of a company that turns over £5.7bn a year. Legal fees in the scheme of that are very low [but] the issues that lawyers advise on are hugely important to us. Innovation I would like to see only in terms of better outcomes. If a law firm could tell me that I could generate better management information or make better decisions, then I’m interested.’
The annual client report, a major initiative from Legal Business sister brand The Legal 500, is based on responses from 9,096 buyers of legal services globally including more than 4,000 general counsel (GCs) or heads of legal. The survey – the largest poll of the buyers of legal services ever undertaken – includes responses from 79% of the FTSE 100 and 81% of the Fortune 100.
The risk agenda
In a wider context, key findings in the report underline the subdued state of the corporate legal market as GCs come under intense pressure to contain costs.
Clients in the UK, Europe and US all reported narrowly rising legal spend in the aggregate. In the UK, 24% of GCs said they were increasing their external budgets over the next year, against 16% expecting a decrease and 60% forecasting stable spend. Similar proportions were evident across Europe and the US.
The research indicates that clients in western economies are still routinely bringing work in-house via expanding legal teams to cope with high demand for legal services. Only 6% of 2,453 respondents in the UK said their teams were expected to decrease in size over the next 12 months, against 23% set to increase and 71% forecasting stable headcount. The pattern was closely repeated across European teams as a whole.
Complexity and corporate risk are still driving the client agenda. Asked to cite the greatest challenge for their companies over the next 12 months, the biggest concern was ‘increased regulation’, cited by 30% of UK clients. Likewise, the most popular class of matter to outsource was litigation.
Telefonica’s Smith echoed the finding commenting: ‘I would say sectorial regulation is my number one concern, I would massively agree with that.’
Charlotte Heiss, group chief legal officer at RSA Group, commented: ‘It doesn’t surprise me to see regulation featuring as the top concern. It can be easy to underestimate how much work it can be to properly embed compliance with a new piece of legislation into a business and it always necessitates leaning on already stretched resource.’
Only one in five UK clients intend to use a non-traditional provider in the next 12 months. But if law firms feel complacent, they should note that larger clients are more progressively minded; 25% of clients with revenues over $500m were planning to trial an alternative provider over the next 12 months. This rises to 27% for companies with revenues of $1bn-plus.
Heiss cited pressure on many large companies to more robustly manage legal budgets. ‘RSA has been going been through a turnaround with a strong focus on cutting costs; every department plays its part in this and we have reduced both headcount and external spend.’
The findings come from a wealth of online data produced in the CIR, which asked clients 47 questions to produce an interactive grid map of client attitudes and law firm benchmarking data.
alex.novarese@legalease.co.uk
For more information on the Client Intelligence Report, email dominic.williams@legalease.co.uk
Simmons & Simmons, Berwin Leighton Paisner (BLP), Bond Dickinson and Reed Smith are among 24 firms to win a place on Lloyds Banking Group’s (LBG) specialist sub panel, which sits below the bank’s main core roster of eight firms.
It is understood that the firms on the specialist panel can be supported at times by the bank’s core firms on more specialist pieces of work. The bank’s core firms are: Addleshaw Goddard, Allen & Overy, Ashurst, CMS Cameron McKenna, Eversheds, Herbert Smith Freehills, Hogan Lovells and Linklaters.
In addition, firms are gearing up to pitch for Lloyds’ commercial banking panel, which is due to start shortly and is expected to include about 80 – 100 firms.
Speaking to Legal Business, one law firm partner said: ‘The main panel allows us to do work for pretty much everything. There are sub panels within the main panel and if you are appointed to the main panel you know which sub panels you are on. But then there are additional firms that are not on the main panel, which also get appointed to sub panels.
‘The banking pass through panel is different – it is much bigger and that process hasn’t started yet although it is due to start shortly.’
In a statement, a spokesperson from LBG said: ‘Following a rigorous and competitive tender process, the list of the group’s specialist legal panel was finalised in December 2016. The panel will include 24 firms which have been designated as specialist because they are able to offer services which are fully aligned to the needs of our group’s businesses. As previously announced, we will be announcing our specialist firms for our commercial banking division during the first half of 2017.’
LBG finalised its UK legal roster in October last year with DLA Piper and Norton Rose Fulbright losing their spots as the bank’s core panel shrunk from ten to eight firms.
kathryn.mcann@legalease.co.uk
Read more: ‘A buyer’s market – The trends and traumas in adviser reviews.’
Berwin Leighton Paisner (BLP) posted a 2% drop in revenue and profitability while paying £6.25m for its 50% stake in flexible legal resourcing business AdventBalance, according to the firm’s latest filings with Companies House.
The firm’s LLP reports offices in the UK, Continental and Eastern Europe, Asia and the Middle East and contributions from all other BLP subsidiaries, including Lawyers on Demand (LOD) and Australian firm AdventBalance.
The accounts show turnover for the 2015/16 financial year was down to £253.9m, a decrease of around 2% on the £259.2m posted last year. Profitability also took a hit with profits before distribution falling 2% from £76m in 2015 to £74.2m last year, while operating profit was down 3% from £78m to £76m.
Profit per equity partner (PEP) withheld the fall in revenue to hit £687,000, a 4% increase on 2014/15 when PEP stood at £661,000. In contrast, the profit share of highest paid member was £1.5m, down from £1.54m the year before. This figure in LLP accounts does not necessarily equate to the highest paid equity partner and can relate to ‘golden handshakes’ to retiring members.
Staff costs fell to £107.8m from £108.2m, while the number of legal staff remained at 639 and support staff numbers fell from 606 to 598.
According to the accounts, BLP’s February 2016 acquisition of a 50% stake in Australian freelancing business AdventBalance cost £6.25m, and post acquisition revenues amounted to £2.3m, while profit after tax was £0.3m.
In July 2016, BLP managing partner Lisa Mayhew (pictured) told Legal Business: ‘We’re happy. It’s our second highest PEP achievement ever and to end the second year in a row with cash in the bank was particularly pleasing. We would rather that was different but in the environment we were operating in, and with the investments we’ve made, we were pretty pleased with revenue as well.’
Mayhew added that costs associated with the merger between freelance lawyer service LOD, which it majority owns, and Australasian counterpart AdventBalance ‘run into the millions of pounds’ so made the rise in PEP ‘even more pleasing’.
Plans to merge BLP with Miami legal giant Greenberg Traurig last year in a deal that would have made BLP part of a £1bn firm, were abandoned in March 2016. Most recently, BLP landed the lucrative Crown Estate mandate for its £7bn Central London property portfolio from King & Wood Mallesons.
georgiana.tudor@legalease.co.uk
Following a review process announced last year, The Crown Estate has given Berwin Leighton Paisner (BLP) the sole mandate for its £7bn Central London property portfolio.
BLP will now offer advice for this specific portfolio, which comprises of eight million square ft of commercial property across Regent Street. The portfolio is currently delivering a £1.5 billion investment and redevelopment programme in the area, regenerating historic blocks and the surrounding public realm.
A review of The Crown Estate’s legal advisers commenced last summer, overseen by general counsel Rob Booth. Firms used by the Crown Estate, which has £13bn of assets under management, include Hogan Lovells, King & Wood Mallesons, Norton Rose Fulbright, Burges Salmon, Bond Dickinson, Forsters and Gowling WLG.
Booth (pictured) commented: ‘We are delighted to add BLP to the roster of market leading firms that comprise our panel. We are very excited to be working with the team at BLP to take customer focus and legal service delivery forward, across our Central London portfolio.’
Chris de Pury, head of real estate at BLP, added: ‘We are well aware how competitive it is to win such a prestigious mandate, so you can imagine how thrilled we are to be appointed. It is a privilege to be able to play a part acting for The Crown Estate on such a high profile and groundbreaking portfolio.’
The high-profile appointment is a strong endorsement of BLP’s leading commercial real estate practice, which performed well in 2015/16 despite a 2% fall in revenues to £254m. Almost a year ago, BLP was in merger discussions with Miami-based Greenberg Traurig, which ultimately collapsed.
tom.baker@legalease.co.uk
Long-time Playtech adviser Alex Latner, a partner at Berwin Leighton Paisner (BLP) has moved in-house, taking up the role of general counsel at the publicly traded gaming company.
Latner (pictured) replaces former general counsel David McLeish, who also moved from BLP to the Israeli gaming firm, back in 2013. McLeish joined Wiggin last year, with an interim legal head taking over before Latner was appointed at the start of 2017.
Corporate finance partner Latner joined BLP in 1998, and was made partner in 2008. He has been advising Playtech since 2005, commencing with its original offering on AIM in 2006.
The newly-announced GC has advised Playtech through a slew of important transactions, including the formation of William Hill Online in addition to the acquisitions of GTS, Virtue Fusion and Ash Gaming.
Latner said: ‘It was a difficult decision to leave BLP after nearly 20 years having grown up there and cultivated many strong relationships but I am very excited by the new challenge.
He added: ‘Playtech is at another significant stage of its continued growth and development, which will provide some fascinating challenges for me and my team as the company’s strategy is implemented.’
BLP maintains its relationship with Playtech with partners Gareth Jones and Benjamin Lee now overseeing the relationship.
Other recent in-house moves include Wordpay promoting Ruwan De Soyza to group general counsel following the exit of Mark Edwards after two years in the role. While, Dugout has appointed its first in-house counsel from Perform Group as it gains backing from some of the sport’s biggest clubs. The company has appointed Adam Lovatt as its first in-house lawyer from Perform where he was group legal counsel.
tom.baker@legalease.co.uk
After being the first known firm to freeze pay after the Brexit vote, Berwin Leighton Paisner (BLP) has gone ahead with salary reviews.
In July BLP froze pay for all UK-based staff following Brexit concerns, with managing partner Lisa Mayhew (pictured) stating in an email it was ‘the prudent thing to do’. The freeze included salaries for associates, paralegals, business development, marketing and other back office staff.
A spokesman said the freeze was over and the firm will now revert to the ‘usual review timeline’ which means the next review is due in July 2017.
BLP is only one of the firms which chose post-Brexit caution after Britain voted to leave the European Union. Addleshaw Goddard also froze salary reviews for staff and delayed its annual review of partner remuneration for both fixed-share and full-equity partners in August, and then restarted its salary review for all staff last month, pledging to backdate increases.
After a similar move in the summer, Gowling WLG also informed its staff on 20 September that it will restart the delayed salary review, as did Trowers & Hamlins.
Trowers had placed the freeze on fee earners’ pay in August, citing the ‘economic uncertainty’ following Brexit, and then reversed it in September following a management board meeting.
Similarly, national law firm Bond Dickinson also chose to ‘defer’ pay increases in September, citing Brexit as a reason and referring to a November review. The firm said it could not comment on the freeze at press time.
On top of the salary woes, Simmons & Simmons laid off lawyers in its commercial, banking and real estate practices after the vote. A senior partner at the firm would not be drawn on the number of redundancies, but said: ‘The numbers are not big. It’s largely in real estate.’
Real estate practices have experienced a marked slowdown since the Brexit vote, with many citing cancelled deals. The vote resulted in an exodus of capital that has caused some funds to halt trading, with retail investors withdrawing £1.4bn from property funds in June according to the Investment Association.
georgiana.tudor@legalease.co.uk
Pinsent Masons and Berwin Leighton Paisner (BLP) have advised Heathrow Airport on the planning process up to the government’s decision yesterday (25 October) to approve a third runway, with more legal advisers likely to be appointed as the scheme is taken forward in the form of a national policy statement (NPS) for consultation.
Pinsents, which has a place on Heathrow’s panel, advised the airport on its plans with a team led by head of infrastructure planning and government affairs Robbie Owen. BLP confirmed it has also advised the airport’s in-house team.
Meanwhile the government has appointed former senior president of tribunals Sir Jeremy Sullivan to oversee the process of the NPS on aviation, covering the Heathrow runway. The process will take one year and will be subject to a vote of parliament.
In addition, there are likely to be several legal challenges to the decision, including a joint legal action already mounted by Greenpeace UK alongside Hillingdon, Richmond, Wandsworth and Winsor and Maidenhead councils.
Greenpeace UK and the councils are jointly instructing Kate Harrison of Harrison Grant Solicitors, specialists in public, environmental and planning law and human rights. In 2010, the campaigners worked together to successfully overturn the Labour governments backing for a third runway in the High Court.
Commenting on the government’s decision, Liz Jenkins, an infrastructure partner at Clyde & Co said the announcement was a ‘false dawn.’
‘Even if the House of Commons does back [Heathrow] then there will still be a number of legal hurdles to overcome before any shovels can break ground. Apart from the political opposition, there will be opposition from activist local residents, local authorities and environmentalists on a host of legal, planning and regulatory issues, such as noise and emissions.’
Speaking to Legal Business in 2014, Heathrow’s legal chief Carol Hui said: ‘The political aspects of this involve local community engagement, master planning, designing and environmental issues. It also concerns local residents if there are issues of noise and blight. We listen to people.’
‘We always have to work to make our case and help people see expanding Heathrow is the answer to connecting the UK to growth so we don’t fall behind our competitors in Europe and increasingly emerging airports like Dubai and Doha. We have to make our case effectively.’
Heathrow has a team of around 30 in-house lawyers and typically instructs Freshfields Bruckhaus Deringer for finance and corporate, Allen & Overy (A&O) on financing for lenders, Herbert Smith Freehills for litigation, Eversheds for employment and Berwin Leighton Paisner for planning.
A&O, Hogan Lovells and Freshfields led on Heathrow’s final airport disposal in 2014 as Aberdeen, Glasgow and Southampton airports were sold to a consortium formed by Ferrovial and Macquarie for £1.05bn.
kathryn.mccann@legalease.co.uk
