Legal Business

Financial results 2013/14: Clifford Chance unveils highest-ever results as turnover up to £1.36bn and PEP £1.14m

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Clifford Chance (CC) has drawn a line under last year’s disappointing financials, unveiling its highest-ever financial results, with revenue up 7% to £1.36bn while profit per equity partner (PEP) leapt by 16% to £1.14m.

Announced today (1 July), partnership profit at the Magic Circle firm came in at £459m, an increase of 14% on the previous financial year, and all regions and practices experienced growth.

A regional breakdown of the results for the year end 30 April 2014 saw the UK and Continental Europe take the lion’s share of income at £469m and £503m respectively, while Asia Pacific generated £195m and the Americas £152m. The firm’s Middle East operations brought in the lowest income at £40, constituting just 3% of overall revenue.

Investment made by the 3000-lawyer firm in the last year saw it launch a joint Saudi and foreign-owned law firm in Saudi Arabia in January with a team of 30 permanently based Saudi and foreign lawyers, becoming the first international firm to do so. That same month the firm announced it had entered into an association with Indonesian boutique firm Linda Widyati & Partners (LWP) as part of its growth strategy for the Asia Pacific region.

Major advisory work included leading on the latest high profile listing to hit the London Stock Exchange (LSE) as bargain store chain B&M moved ahead with an initial public offering (IPO) valued at £2.7bn.

The firm also secured high profile investigatory work in which the Financial Conduct Authority appointed its senior commercial litigator Simon Davis to conduct an independent inquiry into the handling of the body’s botched announcement of an investigation into the insurance industry. The Royal Bank of Scotland in November also appointed CC to look into the treatment received by small business customers in financial distress.

The firm this year underwent a managment shake up with the election of new leader Matthew Layton, who took over the post as global managing partner from David Childs on 1 May.

The latest results mark a turnaround for the Canary Wharf-headquartered firm which last year underperformed its Magic Circle rivals in its 2012/13 results, after revenue declined 2.5% to £1,271m alongside a 9% drop in PEP to £1m.

Layton said: ‘These are a strong set of results. They reflect the definite uptick in transactional markets we saw starting in the US over a year ago, and which has since extended to Europe and Asia Pacific. Market and corporate confidence is just part of the picture; we are also benefiting from our long-term strategy of investment in the geographies and areas of expertise that are most important to our clients. These more recent additions to the firm’s offer are performing well, alongside our more established practices.’

‘We’re ambitious for what we want to achieve and we’re far from being complacent. The fundamental shifts in the global business environment have huge implications for many of our clients, for the global legal industry and for us. I’m absolutely determined that we are not only going to stay at the forefront of the leading international firms but that we will set the standard for the next phase of the industry’s development.’

Sarah.downey@legalease.co.uk

Legal Business

Clifford Chance’s Australia office leads on Shell’s $5.7bn Woodside disposal

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Clifford Chance’s (CC’s) Sydney office has been given a vote of confidence in taking the lead on Royal Dutch Shell’s $5.7bn sale of a majority stake in Woodside Petroleum as the energy major moves to develop its own gas assets in Australia.

Sydney-based CC M&A partner Lance Sacks is leading the deal alongside Shell’s London-based corporate and commercial solicitor Sean Ashley, in a deal that reduces Shell’s holding in the asset to 4.5% from 23.1%.

Shell is a major global client of CC, which last year advised on its acquisition of Repsol’s portfolio outside of North America for $4.4bn. However earlier this year when the Magic Circle giant advised on the sale of Shell’s Australian downstream business, including its Geelong Refinery to Vitol for A$2.9bn, the deal was led out of London by Kathy Honeywood alongside Geraint Hughes in Singapore and Tracey Renshaw in Australia.

On this latest deal Sacks was assisted by Sydney-based counsel Amelia Horvath, associate Marcus Ap, and special counsel Jane Ann Gray, alongside Hong Kong-based partner Crawford Brickley, who advised on US securities law aspects of the transaction.

Woodside was advised by Herbert Smith Freehills Sydney-based corporate partner Philippa Stone and Perth-based capital market partner David Gray.

Clifford Chance launched in Sydney in 2011 through a double tie-up with Chang Pistilli & Simmons in Sydney and Cochrane Lishman Carson Luscombe in Perth, creating a 14-partner presence in the country.

However, the mergers failed to project CC into the same league as Ashurst’s merger with big six Australian firm Blake Dawson or Herbert Smith with Freehills, with the firm rated by the Legal 500 as fourth tier for corporate and energy and resources work in Australia.

The local team has grown to 16 partners and over 60 lawyers and advises clients on matters from cross-border M&A and complex financial and capital-markets transactions to Australian antitrust and regulatory matters.

Recent examples of high profile deals the Australian office has advised on include Sumitomo Corporation’s joint US$1bn purchase with Glencore Xstrata of a 50.1% interest in Australian coal assets from Rio Tinto, and a consortium of 80 lenders on the Australian aspects of the US$17bn refinancing of Glencore Xstrata.

Tom.moore@legalease.co.uk

Legal Business

Leadership overhaul for Clifford Chance as partners prepare to vote on Manco cut

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Clifford Chance (CC) is expected to vote next month on cutting down its 16-strong management committee as part of newly-appointed global managing partner Matthew Layton’s election manifesto.

Having officially taken the reins on 1 May 2014 from longstanding head David Childs who had been in the role since 2006, Layton has made the first move towards executing his plans by scheduling a vote to significantly reduce the size of the committee – although it has yet to be decided which and precisely how many roles will be scrapped.

With partners currently in discussions over the proposals, it is understood that the entire partnership are entitled to vote on the move.

The management committee is made up of partners including Continental Europe representative Yves Wehrli – who stood against Layton during the elections – London and Middle East regional managing partner David Bickerton, global head of finance Mark Campbell, global head of corporate Guy Norman, and global head of disputes Jeremy Sandelson. 

The other members include second Continental Europe representative Charles Adams; global head of real estate Alfonso Benavides; global chief operating officer Amanda Burton, Asia Pacific managing partner Peter Charlton; Americas managing partner Evan Cohen; Germany managing partner Andreas Dietzel; head of capital markets David Dunnigan; global head of tax, pensions and employment Chris Davies; general counsel Chris Perrin and chief finance officer Stephen Purse.

Chaired by Layton, the committee is responsible for the firm’s strategy, finances and profitability and monitored by the partnership council.

According to various sources, Layton is perceived as very popular amongst the partnership and is expected to bring in a fresh approach to leading the firm, as other suggestions put forward included potentially scrapping salaried partner bands and bringing all partners into the equity.

On the looming vote, a CC spokesperson said: ‘We are consulting on some changes to the firm’s governance, with a view to ensuring that the way we manage our firm is designed to help meet the evolving needs of our clients, and to reflect the reality of the changing markets.’

Sarah.downey@legalease.co.uk

Legal Business

FCA sets aside £1.7m for Clifford Chance’s insurance industry probe

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The Financial Conduct Authority (FCA) has set aside £1.7m for the independent inquiry being conducted by Clifford Chance (CC) into the regulatory body’s botched announcement of an investigation into the insurance industry, a freedom of information request has revealed.

The FCA in March commissioned an independent inquiry into events leading up to and following the publication of its intention to review certain long-term life assurance products on the 27 and 28 March – a plan that was revealed to The Daily Telegraph, causing billions of pounds to be wiped off the share price of some of the UK’s largest insurance firms.

The review was included in the FCA’s business plan, which was published on 31 March 2014 and is being led by CC’s senior commercial litigation partner Simon Davis.

A freedom of information request submitted by the BBC and broadcast on Radio 4 on Saturday 14 June revealed that the FCA set aside a provision of £1.7m for the costs based on a preliminary estimate. Clifford Chance (CC) has so far invoiced the body £116,845, excluding VAT, to carry out the review.

With the body’s annual accounts due to be published next month, the FCA will publish a final figure on total costs once the inquiry is completed.

The FCA has stated the aim is to publish the final report ‘as quickly as is reasonably possible, bearing in mind the time needed by Davis to complete his investigation and allow any individuals subject to potential criticism an opportunity to make representations in response to the inquiry’s proposed findings’.

Other recent high profile investigations run by CC include an independent inquiry for the Royal Bank of Scotland on the treatment received by small business customers in financial distress, following allegations that the bank deliberately drove them to collapse for its own gain.

Another high profile win saw Travers Smith lead the investigation into allegations of forex manipulation at the Bank of England alongside One Essex Court silk Tony Grabiner QC.

Sarah.downey@legalease.co.uk

Legal Business

Clifford Chance, Covington and Skadden lead on £930m AA IPO

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Clifford Chance (CC), Covington & Burling and Skadden, Arps, Slate, Meagher & Flom are advising on the £930m flotation of over two thirds of vehicle breakdown group the AA to City investors.

CC, led by M&A partner David Pearson is advising the AA on the accelerated stock market listing. Covington and Burling’s corporate partner Paul Claydon is advising Cenkos Securities as sole co-ordinator and bookrunner.

The Covington team also includes partners Simon Amies, Natalie Walter, Kristian Wiggert and Charlotte Hill.

Daniel Tricot, of Wall Street’s Skadden, Arps, Slate, Meagher and Flom, is acting for Greenhill, financial advisor to the transaction.

Speaking to Legal Business, Clayton said: ‘Cenkos are a regular client and we have [also] worked together on a few IPO’s in the last twelve months. The last one involved the flotation of Rightster Group. We acted for Rightster Group and Cenkos acted as the broker, separately represented.’

The AA announced its intention to proceed with a sale and flotation on 6 June, with 69% of shares sold to a management buy-in team led by executive chairman Bob Mackenzie and backed by leading institutional cornerstone investors, including Aviva, Blackrock, Invesco and CRMC. A share price of £930 million has already been agreed, with the admission total expected to reach £1.4bn in the second half of June.

In a statement Mackenzie said: ‘The AA is a very successful organisation with a strong record of serving its members and the needs of the UK motorist. We believe there are significant opportunities to grow the business, a sentiment shared by the high quality leading cornerstone investing institutions who have already committed over £930 million to the transaction.’

Kathryn.mccann@legalease.co.uk

Legal Business

Associate pay 2014 – ‘A good year’ sees CC boost salaries and bonuses across the board

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Magic Circle firm Clifford Chance (CC) has significantly raised its salary package for its newly qualified (NQ) lawyers and junior ranks.

Salaries will be raised across the board, with first year trainees seeing an increase from £39,000 to £40,500 while year two trainees will receive an extra £1,500 to £45,500.

NQs will see their salary rise to £67,500 from £63,500, with the maximum bonus awarded potentially bringing the total to £81,000 for the 2014/15 year.

First year post-qualification experience (PQE) lawyers have been given a raise from £69,500 to £72,500, with their salary including bonuses reaching a possible £94,250, while second year PQE lawyers will take home a salary of £84,000 with a maximum bonus bringing the total to £109,200. Third year PQEs have received a £5,700 rise to £93,500 with maximum bonuses leading to a total of £121,550.

London managing partner David Bickerton, said: ‘The London office has had another good year, which has seen us instructed on some of the most high-profile work in the market. Our people are achieving exceptional results for clients, helping us once again to take more top directory rankings than any other law firm. These salary increases and bonus awards reflect our appreciation of the consistently high-quality work of our lawyers.’

The firm last year announced a rise in associate and trainee pay as well as bonuses for the year ahead, adding an extra £2,000 to NQ lawyers’ pay packets.

CC’s unusual decision to set out its bonus packages in detail last year was viewed as a bid to gain a recruitment advantage against City peers and US rivals, which often do not disclose the details of the bonuses.

Last month Magic Circle rivals Linklaters and Freshfields Bruckhaus Deringer unveiled changes to their associate pay, with Linklaters pushing its salaries up across the board and Freshfields announcing a significant pay hike for its newly qualified (NQ) and junior ranks, with trainees in line to take home £1,500 more after a pay freeze in 2013.

Sarah.downey@legalease.co.uk

Legal Business

Deal Watch: Freshfields advises Blackstone on €1.8bn NAMA loan; CC and A&O close €2.8bn offshore wind financing

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Freshfields Bruckhaus Deringer has led on the latest major European mandate for Blackstone, advising the New York Stock Exchange-listed private equity group on its acquisition of a €1.8bn portfolio of cross-border loans and swaps from the National Asset Management Agency (NAMA) in Ireland.

Referred to as Project Tower, the portfolio acquired is supported by assets primarily in the UK, Ireland, Germany and Spain and, commenting on the transaction, lead partner Michael Steele said: ‘It was a pleasure to work alongside Blackstone on this highly significant and complex transaction – one of the largest loan portfolio sales to have taken place in Europe. We look forward to continuing to support Blackstone throughout its investment in Project Tower.’

Blackstone, traditionally perceived as being wedded to Simpson Thacher & Bartlett, opened an office in London in 2000 and has in recent years given a significant number of mandates to Freshfields.

Steele has over the past year to eighteen months advised Blackstone on its 2014 refinancing (as lender) of the Invista Group; its investment in the Cosgrave Group, its investment in French real estate investment trust Gecina and its 2013 acquisition of European shopping centre owner Multi Corporation.

Elsewhere, Magic Circle duo Clifford Chance (CC) and Allen & Overy (A&O) towards the end of last week closed what is said to be Europe’s largest offshore wind financing, ‘Project Gemini’, valued at €2.8bn.

The wind farm, owned by Canadian Northland Power (60%), Siemens (20%), Van Ord (10%) and HVC (10%), will consist of 150 wind turbines providing a capacity of 600 megawatts, creating one of the biggest offshore wind farm’s globally.

The longrunning project has seen CC act as legal advisor with regard to the structuring of the project, including project documentation for Van Oord and Siemens. In addition, the 3,017-lawyer firm acted as advisor on the subordinated financing of €200 million by the Danish pension fund PKA and Northland Power and acted as the borrower’s advisor. As project counsel the team also set up the corporate and shareholder structure and governance for the project sponsors.

The Magic Circle firm fielded a multi-disciplinary team led by asset finance counsel Hein Tonnaer in Amsterdam.

A&O represented the lenders consortium including ABN AMRO Bank; the Bank of Tokyo-Mitsubishi UFJ; BNP Paribas, Bank of Montreal; London Branch; Caixabank; CIBC World Markets; Deutsche Bank; Export Development Canada; Natixis; Banco Santander; Bank Nederlandse Gemeenten; Sumitomo Mitsui Banking Corporation and the European Investment Bank (EIB). A&O’s team was led by energy practice head Werner Runge in the Netherlands and counsel Frédérique Jacobse.

Over 22 parties were involved in the project, including 12 commercial creditors, four public financial institutions, one pension fund and an equity consortium.

The project reached financial close on 15 May 2014 and the wind farm is expected to reach commercial operations in the summer of 2017.

CC’s Tonnaer said: ‘We are very pleased to have been involved as a legal adviser for the project from the beginning. It is the largest ever project within the Dutch offshore wind energy sector and provides an excellent framework for future renewable energy projects. Despite there being so many different types of parties involved we were able to conduct harmonious negotiations and achieved the full consensus needed to make this project a success. For the last couple of years we have been able to work on this project as a fully integrated team consisting of a wide range of disciplines within our firm, from project management to financial expertise and corporate law.’

A&O’s Runge added: ‘The volume and complexity of this project underlines the challenges and opportunities in the offshore wind sector.

‘We are excited that our projects team was involved in this largest-ever European offshore wind financing, another “first” in the Dutch market.’

Jaishree.kalia@legalease.co.uk

Legal Business

Election fever: Clifford Chance corporate head Tinkler steps down as Nabarro prepares for first MP elections in 15 years

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Clifford Chance (CC) private equity partner Simon Tinkler has stepped down from his role as London head of corporate after a four-year term, as top 30 LB 100 firm Nabarro gears up for its first managing partner elections in 15 years this summer, with current head Andrew Inkester expected to stand again.

CC is expecting to start the soundings process for Tinkler’s replacement in the next two months, with the successful candidate due to take over in August. However, it is understood that no one has yet put themselves forward for the job.

Tinkler took the reins following an uncontested election in 2010 after David Pearson had completed two terms.

The news follows this morning’s announcement (13 May) that the firm’s Munich finance partner Barbara Mayer-Trautmann will join its partnership council, replacing Robin Abraham who relinquished his role following his election as regional managing partner for the firm’s Middle East offices.

Meanwhile, Nabarro will hold its first voting process for managing partner in either July or August, having changed the process last year, when senior partner Graham Stedman proposed that his term be reduced and run parallel to the term of the managing partner. Both positions now run for a four-year period.

Once the election process gets underway, the 424-lawyer firm will set a date for nominations to be made followed by hustings and a final vote.

While Inkester has not formally made an announcement, many of the partnership expect him to run again. The election comes three years after he was nominated by former senior partner Simon Johnston, when longstanding head Nicky Paradise stood down in 2011 after 12 years in management.

Under Inkester’s leadership, the firm enjoyed a considerable uptick in profitability in the 2012/13 financial year, with operating profit rising 22% to £42.5m from £34.7m the previous year.

Fee income rose more modestly by 4% to £117m from £112.4m in 2011/12. The firm also unveiled a 31% pay increase for its top fee earners against a 13% drop in partner numbers.

The firm’s LLP accounts filed at Companies House further showed that the highest pay taken home by a member for the year was £635,000; up from £486,000 in the 2011/12 financial year.

The elections come as the firm prepares to move to new City offices at 125 London Wall in November, when its current lease at Lacon House in Holborn expires.

Sarah.downey@legalease.co.uk

See here for an interview with Simon Tinkler on CC’s private equity practice

Legal Business

Asia: CC’s Charlton on high Asian promotion rate; Winston takes on DLA team; BLP enters Indonesia; Wragge LG ends Singapore tie-up

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In a fortnight that has so far seen Winston & Strawn hire a four-strong corporate team from DLA Piper in Hong Kong; Berwin Leighton Paisner enter into an association in Indonesia; and Wragge Lawrence Graham end its association in Singapore with PK Wong & Associates, Clifford Chance’s Asia managing partner Peter Charlton also spoke to Legal Business about the firm’s heavy promotion rate in the region.

The Magic Circle firm’s latest partner promotion round of 21 saw a third of those promotions fall in the Asia Pacific region, with two in Singapore, two in Hong Kong, and one in Beijing, Bangkok and Perth.

It puts Clifford Chance marginally ahead of Magic Circle rival Linklaters, which made up six of its 21 new partners in Asia, and Allen & Overy, which also promoted a third of its smaller 16-strong round in the region, with three in Hong Kong, one in Perth and one in Sydney. Freshfields Bruckhaus Deringer promoted one partner in Perth, while Slaughter and May’s only promotions outside of its London office were the two associates made up in Hong Kong.

Charlton told Legal Business: ‘Thirty percent of our promotions were in Asia as it is strategically very important. We have doubled in size in five years from 50 to 100 partners and also doubled our revenues.

‘Asia now makes up for 15% of the firm’s revenues, but our aim is for it to be 20%.’

Elsewhere, in Hong Kong, Winston & Strawn’s four-strong corporate team hire last week from DLA includes DLA’s local office chief and Asia head of corporate Mabel Lui. Lui moves across to the US firm with senior associate Daniel Tang, who joins Winston & Strawn as a partner, of counsel Polly Chu and associate Natalie Tsang.

David Hall-Jones, Asia managing partner of the firm said: ‘The addition of this group is in line with our growth strategy for specific practice areas in Asia and significantly expands our capabilities within the corporate practice globally.’

The team focuses on cross-border M&A transactions, and general commercial and corporate matters. It represents further Asian expansion this year for Winston & Strawn, which opened an office in Taipei last month.

Meanwhile at newly-merged Wragge Lawrence Graham, which went live on 1 May, the firm has ended its formal law alliance (FLA) originally entered into by Lawrence Graham (LG) and Singapore’s PK Wong. The FLA began in 2010, creating Lawrence Graham PK Wong Alliance and was LG’s only Asian office.

In contrast BLP, following a tie-up with Myanmar’s Legal Network Consultants in March, has entered into a more recent alliance with Mataram Partners in Jakarta.

Mataram is based in the Jakarta stock exchange building and is led by senior partner Andi Zulfikar, with the firm practising a wide range of civil and commercial law with expertise in mining, an area of focus for BLP.

‘Indonesia is a key market for the firm and this relationship will provide the local knowledge that is key for the work we are doing in the country, especially in the mining sector,’ said Alistair Duffield, head of the firm’s Singapore and South East Asia practice.

BLP now has offices in Beijing, Hong Kong and Singapore, which in addition to the firm’s growing network of Asian alliance firms gives the firm a credible presence in the region.

The tie-up comes as Appleby, following its launch in Shanghai in 2012, since when it has only been licensed to offer fiduciary services, has become the first offshore firm to be awarded a Chinese legal practice certificate, with most of its direct competitors servicing China from Hong Kong. The firm’s greater China team includes over 15 partners and fee-earners based in Hong Kong, although current managing partner of the firm’s Mauritius and Seychelles office, Malcolm Moller, will now lead the development of the firm’s offering in China, supported by fee-earners in Shanghai.

‘Being able to practise from within China will catapult our strategy for Asia and China forward, and we are very excited about this prospect,’ said Frances Woo, the firm’s chairman.

david.stevenson@legalease.co.uk

Legal Business

Clifford Chance and Freshfields advise on Bridgepoint’s sale of German chemicals company to Permira

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Magic Circle firms Clifford Chance (CC) and Freshfields Bruckhaus Deringer have taken the lead on the latest big corporate transaction to come out of Germany, the sale of speciality chemicals and manufacturing company CABB International to private equity firm Permira Advisers, providing an exit for Bridgepoint Capital, with the asset reported in the financial press to be valued in excess of $1bn.

The deal, which was announced on Tuesday and is expected to complete in June this year, sees CC advise London-based Permira and Freshfields represent Bridgepoint, which acquired CABB from AXA Private Equity for an undisclosed sum in March 2011 when it employed 750 people with 2010 sales of €311m.

The manufacturer, which supplies chemicals used in pesticides, cosmetics and food, now has around 1000 employees and a circa €440m turnover.

Leading the Freshfields team on the transaction is Frankfurt-based co-head of the firm’s global financial investors group, Markus Paul, supported by environmental and regulatory of counsel Marcus Emmer, M&A counsel Christian Zeppezauer and associates Hendrik Braun, Christoffer Bortz, Marius Fritzsche, Olga Gurman and Sherry Xu.

Freshfields also advised Bridgepoint last year as it acquired Austrian commercial refrigeration equipment manufacturer AHT Cooling Systems from Quadriga Capital for €585m, which completed in October.

Clifford Chance lawyers working on the deal are understood to include Dusseldorf-based employment partner Thomas Hey, antitrust partner Marc Besen, Frankfurt-based M&A counsel Joachim Hasselbach and Jörg Futter, litigation and dispute resolution counsel Jochen Pörtge, senior associates Christoph Crützen, Amrei Fuder, Achim Gronemeyer and Frederik Mühl, and lawyers Paul Bock and Florian Lechner.

Leading the in-house team on the other side is former Clifford Chance lawyer and Permira partner Ulrich Gasse.

Last October, CC advised key private equity client Permira on its £300m acquisition of iconic footwear brand Doc Martens, which completed in January 2014, led by heavyweight corporate partner Jonny Myers and global corporate head Matthew Layton, who will take over as the Magic Circle firm’s managing partner on 1 May.

Layton also advised Permira on its €3bn (£2.5bn) sale of frozen foods business Iglo Group in 2012, while Myers previously led on its €220m acquisition of a majority stake in Irish healthcare equipment manufacturer Creganna.

francesca.fanshawe@legalease.co.uk