Legal Business

Financials 2017: Clydes breaks £500m barrier with another year of double-digit growth

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Financial results 2016/17 Clyde & Co

Following another expansive year, led by a new global senior partner, Clyde & Co has again posted a double-digit rise in its global revenue, passing the half-billion-pound mark to reach £508.1m.

Turnover is up 14% on the £447.1m reported for 2015/16, although the firm said currency movements accounted for 5% of this year’s revenue growth.

Total profit grew by 9% to £127.6m, however profit per equity partner (PEP),  decreased by 2% to £650,000 down from the £665,000 reported last year. Partner numbers grew by 40, of which 31 were lateral hires – to nearly 400.

The latest revenue growth means that since 2011/12 – the year Clyde & Co merged with insurance rival Barlow Lyde & Gilbert – revenue at the firm has grown 77% from £287m.

This year’s results are the first to be overseen by senior partner Simon Konsta, who took up the lead job in November following James Burns’ decision in September to become head of Americas.

Global chief executive officer Peter Hasson told Legal Business that ‘outside the UK we grew by about 25%’, some of which related to new office openings, some of which was currency-related, he added. 

The firm has maintained sustained geographic expansion of recent years over the last 12 months, opening new offices in Düsseldorf, Chicago, Washington and Miami, with a new Mexico hub expected to launch this quarter pending regulatory approval.

‘We’re now back to a situation where our business is nearly split 50/50 between the UK and our international business, which is good for us,’ Hasson said.

‘We grew in all of our major regions, obviously not as much in the UK where conditions have been a bit tougher, and we’ve seen pretty balanced growth across sector areas.’

‘One of the factors that helps us deliver growth year after year is the fact that we have got a good balance geographically and we have a good balance in the practice areas that we’re offering,’ he added.

As part of its growth strategy, the firm merged with Miami-based litigation firm Thornton Davies Fein in May, adding five partners and 35 lawyers and staff. It also completed a tie-up with four-partner Mexican firm, Garza Tello & Asociados.

The firm hired a ten-partner team from Troutman Sanders to open its Chicago and Washington DC offices; recruited a two-partner team from Noerr to launch its Düsseldorf arm; and, most recently, acquired a two-partner marine team from Eversheds Sutherland in Newcastle.  

In terms of high-profile mandates, Clydes acted on two of the largest insurance deals in 2017 – the $1bn acquisition of AGR Capital Holdings, and Arch Capital Group’s $3.4bn purchase of AIG’s mortgage business.

madeleine.farman@legalease.co.uk

Read more: Sideways – A lateral move in leadership and big US ambitions for Clyde & Co 

 

 

Legal Business

‘Cavalier’: former Clyde & Co litigator struck off roll after string of misleading failures

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Legal regulation Clyde & Co

The Solicitors Disciplinary Tribunal (SDT) has struck off former Clyde & Co senior associate Rajpal Ahluwalia from the solicitor’s roll and ordered him to pay over £41,000 in costs after a series of failures starting in 2013 when he omitted to file a defence in a client’s case.

The SDT’s 8 June judgment followed a three-day hearing on 9-11 May, during which Ahluwalia admitted to failing to ensure that a defence to a claim in January 2013 was filed in good time on behalf of his client, an insurer. The omission resulted in a default judgment and £500,000 in damages and costs.

Ahluwalia, formerly an insurance litigator, also admitted that after the judgment was entered in May 2013, he failed to have the judgment set aside until March 2014. Ahluwalia also failed to notify his client of two offers of settlement made on 28 January 2013.

The former Clydes solicitor also signed a statement of truth in May 2013 on the defence, knowing that he had not seen the facts pleaded and had neither sought nor obtained the defendant’s authority to sign the defence.

Among the allegations, the SDT stated that Ahluwalia made statements in letters to a solicitor’s firm which he knew were untrue. In 2014, he signed a statement of truth on a witness statement in which he had neither sought nor obtained authority.

In 2013 and 2014, Ahluwalia had purported to send misleading emails to the insurer and to an insurance broker, in breach of SRA principles.

Clydes suspended Ahluwalia in November 2014, who resigned a week later.

‘The defendant had cavalierly allowed the matter to go from bad to worse and in doing so had displayed that he lacked integrity,’ the tribunal noted.

It was also claimed that Ahluwalia’s conduct in respect of certain allegations was dishonest. Dishonesty was not an essential ingredient of any of those allegations, however, leaving it open to the tribunal to find the allegations without making findings of dishonesty.

Ahluwalia had only been in practice for ‘three or four years’ when he started at Clydes. He worked for the firm from July 2010 to November 2014.

In October 2014, the case was transferred to another partner at Clydes, at which point Ahluwalia’s actions became known. Clydes sought legal advice on having the default judgment set aside.

The SDT found that Ahluwalia had also failed to contact his client due to sending an email to an incorrect address, ensuring the client was not updated on the progress of the case.

The Solicitor’s Regulation Authority brought the case before the SDT.

The Ahluwalia case is Clyde & Co’s second run-in with the SDT this year, after it was handed one of the largest fines ever to a law firm, in April. Clyde’s was fined £50,000 while three of its partners also received individual £10,000 fines for breaching accounting and money laundering rules.

Corporate partners Christopher Duffy, Simon Gamblin and projects partner Nick Purnell all received fines after admitting they used a client bank account as a banking facility, in violation of the SRA’s accounting rules.

Ahluwalia was represented RadcliffesLeBrasseur. He instructed 39 Essex Chambers’ Robert Lazarus. The Solicitors Regulation Authority (SRA) was represented by Penningtons Manches, who instructed Edward Levey of Fountain Court Chambers.

A Clydes spokesperson told Legal Business regard to the judgment that ‘as a senior member of the team, Rajpal was responsible for setting an example to others and, like everyone at the firm, for upholding our code of conduct and client service standards.’

The firm added that Ahluwalia ‘resigned from the firm following his suspension for the matter, which we identified and reported to the SRA.’

‘As the judgment makes clear, Rajpal had an otherwise unblemished record and this was an isolated incident, out of keeping with his previous character.’

tom.baker@legalease.co.uk

Legal Business

‘In acquisitional mode’: Clyde & Co takes on five-lawyer marine team from Eversheds Sutherland

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Strategic recruitment Clyde & CoEversheds Sutherland

Clyde & Co has picked up a five-lawyer marine team from newly-merged Eversheds Sutherland, including the firm’s head of shipping.

Eversheds Sutherland’s shipping head Stephen Mackin and shipping litigation partner Jessica Maitra have led the team to ever-expanding Clydes. The group will be based in the firm’s 23 lawyer Newcastle-Upon-Tyne office.

Mackin joined legacy Eversheds from Shell Tankers, where he was a navigating officer, in 1992. He was made up to partner in 2001.

Maitra has spent her career at Eversheds and joined the firm’s partnership in 2011.  

The team’s clients include Shell, North of England P&I Club and a number of Greek ship owners.

Clydes’ commercial litigation, shipping and trading disputes partner Andrew Preston told Legal Business that the firm had ‘known Steve for many years – we’ve identified him as the right person with the right practice who will add value of our business.’

‘The driver and the catalyst for all of this is that this is not a Greenfield site for us, we already have a Newcastle office following our merger with Simpson & Marwick a few years ago. It’s a tough marine market, but we’re doing well in a tough market and we are in acquisitional mode,’ Preston said.  

Mackin had ‘proved adept at leading, managing and nurturing the team’, Preston added.

Last month Clydes announced its third office opening this year, merging with four-partner local law firm Garza Tello & Asociados in Mexico. Clydes took on insurance, marine and energy firm Garza Tello’s 23 lawyers based in Mexico City, and its satellite presence in the Gulf of Mexico port city of Ciudad del Carmen.

This January, the firm continued its US expansion spree, launching in Chicago and Washington DC. The firm recruited a team of ten partners from US firm Troutman Sanders. The Washington DC office opened its doors with a six partner insurance litigation team, while four partners joined the firm’s Chicago offering, giving Clyde’s capacity across the general liability and professional liability, mass tort, environmental and product liability claims and insurance litigation markets.

Clydes also took on London based procurement partner David Hansom from Veale Wasbrough Vizards, this February.

However, the firm lost four casualty partners to DAC Beachcroft late last year.

At around the same time, it emerged the firm would downsize its aviation team by three senior associates in a bid to streamline its offering.

Madeleine.farman@legalease.co.uk

Legal Business

Clyde & Co’s Tait voted Scottish region head replacing legacy Simpson & Marwick’s Keyden

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Scotland Clyde & Co

Clyde & Co has chosen latent disease team head David Tait as its new Scotland managing partner, effective from today (1 June), replacing current managing partner and former Simpson & Marwick head Gordon Keyden.

Clyde & Co has chosen latent disease team head David Tait as its new Scotland managing partner, replacing current managing partner and former legacy Simpson & Marwick head Gordon Keyden.

Tait takes up his new managing partner role, which does not have a fixed term, today (1 June). He also sits on Clydes’ UK management board.

Tait is currently undertaking an ongoing review of the region’s post-merger executive committee, following the integration of 45-partner Simpson & Marwick and Clydes after the firms’ merger in 2015.

A legacy Simpson & Marwick partner who joined the firm in 1992, Tate was appointed unanimously by the Clydes’ six partner Scottish management board as Keyden’s replacement after the former head decided to step down from the role.

Tait told Legal Business that he will now lead Clydes’ Scottish offering onto the next stage, growing the newly consolidated business across the whole of the UK: ‘One of the reason behind the merger was that Simpson & Marwick was extremely relevant to clients in Scotland, Clydes was extremely relevant to clients in England.’

‘We formed the impression that clients were going to move on and would look to have single providers to cover the whole of the UK. Whilst at the time we didn’t need to merge at the time, it made sense for both firms.’

As part of Scottish business growth, a review of the Scottish executive committee was underway. ‘We need to have some sort of body in Scotland but we don’t necessarily need the full body we had prior to merger,’ Tait said.

‘We have Simon Konsta who is senior partner, the UK board which looks after the UK business, and below that it’s organised through business lines. Those key practice areas will drive the business forward under the guidance of the UK board.’

Clydes and Simpson Marwick have just completed their first combined financial year, with employment revenues increasing by 60% in the region, while revenues generated by the latent disease practice, headed by Tait, rose by 14%.

madeleine.farman@legalease.co.uk

Legal Business

Clydes and Fieldfisher take spots on NHS litigation panel as BLM misses out

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Adviser reviews Clyde & CoFieldfisher

The NHS Litigation Authority (NHSLA) has unveiled a roster of firms for its £544m legal advice panel, with Fieldfisher, Clyde & Co, DAC Beachcroft and Bevan Brittan among those making the cut. Meanwhile, Berrymans Lace Mawer has missed out.

Legal Business revealed in February that the NHSLA was reviewing its panel, with firms being invited to pitch for three sub-panels: clinical liability, non-clinical liability and regulatory, health and disciplinary. The process was overseen by the NHSLA’s director of claims Alan Hunter.

A group of firms have been appointed to offer advice for all three panels, these are Browne Jacobson, DAC Beachcroft, Kennedys and Weightmans.

Firms also on the clinical panel are Bevan Brittan, Capsticks, Hempsons, Hill Dickinson and Ward Hadaway. The non-clinical panel is made up of the four firms who are on all the panels and Clyde & Co, while Blake Morgan, Fieldfisher and Mills & Reeve have also been appointed to the regulatory panel.

The clinical liabilities panel is worth an estimated £480m over four years while the non-clinical liability panel and the RHD panels are worth £32m over the four years. Places available on the clinical and non-clinical panels have decreased since 2013, where there were 11 and six slots available respectively.

This latest panel follows the tender process launched by NHS Shared Business Services (NHS SBS) earlier this month. The panel, which is worth £20m, is due to be finalised in August this year.

In January 2017, the Department of Health began a separate tendering process to form a £6m panel of law firms to pursue litigation against companies in the pharmaceutical industry. The decision followed the £84.2m fine handed down by the Competition and Markets Authority to US-based pharmaceutical company Pfizer after it drastically elevated the prices of anti-epilepsy drugs.

tom.baker@legalease.co.uk

Read more: ‘A buyers’ market – The trends and traumas in adviser reviews’

 

Legal Business

Latin America: Clydes to open in Mexico via merger as Dentons secures Brazilian alliance

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Latin America Clyde & CoDentons

Clyde & Co has kept up the rapid pace of its international expansion by announcing its first office in Mexico, merging with four-partner local law firm Garza Tello & Asociados. Meanwhile, Dentons has signed a strategic alliance in Brazil with local firm Vella Pugliese Buosi Guidoni.

Clydes will gain insurance, marine and energy firm Garza Tello’s 23 lawyers based in Mexico City and its satellite presence in the Gulf of Mexico port city of Ciudad del Carmen. The firm will be fully integrated into Clydes after the merger receives regulatory approval.

The four local partners include founder of Garza Tello and oil and gas partner Enrique Garza, insurance and reinsurance partner Arturo Arista, litigation partner Arturo Bello and shipping partner Fernando Escamilla.

Senior partner Simon Konsta said: ‘Garza Tello is a firm we’ve worked with for many years. Its sector focus complements our own and having a presence on the ground in Mexico is important as the market continues to liberalise and provides new opportunities for both our local and international clients.’

Earlier this year, Clydes opened new offices in Chicago and Washington DC after taking on a team of ten lawyers from Global 100 firm Troutman Sanders at the end of January. The growth follows Clydes’ expansion into Miami in May last year with the acquisition of five-partner strong litigation firm Thornton Davis & Fein.

Meanwhile, yesterday (9 May) it emerged Dentons plans to form a strategic alliance with Brazilian firm Vella Pugliese Buosi Guidoni (VPBG). If approved by the partnership, the alliance will give Dentons access to VPBG’s 13 partners and 116 fee-earners based in offices in São Paulo and Brasília.

The proposed alliance follows the launch last year of Dentons López Velarde in Mexico and Dentons Cardenas & Cardenas in Colombia, as well as earlier this year the launch of Dentons Muñoz in Central America.

Following the approval by partners of both firms, who are expected to vote on it in the next few weeks, the proposed strategic alliance will launch later in 2017.

madeleine.farman@legalease.co.uk

Legal Business

‘Glaring defaults’: SDT hits Clyde & Co with record fine under anti-money laundering rules

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Legal regulation Clyde & Co

In the joint-largest fine ever handed down to a law firm, in March Clyde & Co was hit with a £50,000 penalty for breaching accounting and money laundering rules. In a Solicitors Disciplinary Tribunal (SDT) decision, Clydes corporate partners Christopher Duffy and Simon Gamblin, alongside projects partner Nick Purnell, all received individual fines of £10,000.

The charges related to the use of a client bank account as a banking facility, in direct breach of the Solicitors Regulation Authority (SRA)’s money laundering regulations. Duffy and Purnell admitted they failed to take on guidance of the Law Society’s rules on fraudulent financial arrangements in acting as an escrow agent on behalf of the client.

Legal Business

Inadequate systems: SDT lays out Clydes failings in money laundering case

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Legal regulation Clyde & Co

Details behind one of the largest penalties awarded against a law firm by the Solicitors Disciplinary Tribunal (SDT) have been released after Clyde & Co received a fine of £50,000, while three partners also were also fined £10,000 for breaching accounting and money laundering rules.

In a case brought by the Solicitors Regulation Authority (SRA), corporate partners Christopher Duffy, Simon Gamblin and projects partner Nick Purnell admitted they allowed a client bank account to be used as a banking facility, acting against SRA accounting rules and in breach of obligations under money laundering regulations.

Duffy and Purnell admitted they had failed to take on guidance of the Law Society’s fraudulent financial arrangements in acting as an escrow agent on behalf of the client – a company incorporated in the Republic of Ireland.

Duffy and Gamblin were also asked by another client in the financial repayment industry to hold money for it in the firm bank account after Barclays had closed its accounts. Payments were then made from the account on the client’s behalf. The judgment says the action involved a breach of a number of money laundering requirements. It added: ‘there are a number of good reasons why firms should not allow their client account to be used as a banking facility.’

Clydes was also judged to have failed to follow rules on dealing with dormant client balances.

In the judgment Clydes admitted: ‘the firm previously did not have adequate procedures to deal with the residual client account balances and the residual balances should have been identified and dealt with more quickly, although the firm believed that since 2013 the firm had acted reasonably in its attempts to clear the balances.’

The Tribunal found: ‘it was a matter of concern that such a large firm had failed to deal with this issue for a significant period, up to July 2013. It has also taken a long time to rectify the problem. Also it was clear that the firm’s systems for dealing with queries and concerns about money laundering had been inadequate, which has also led individual partners to be vulnerable to errors.’

It went on to say: ‘the defaults in question were particularly glaring as the firm was a large and, previously, reputable firm; it would be expected to set an example to other firms in its compliance systems.’

In a statement Clydes said: ‘We hold ourselves to the highest professional and ethical standards and take responsibility for ensuring we meet them.

‘We acknowledge the SDT’s judgment that in three matters that occurred in 2013 and prior, we did not meet those high standards and the firm and three of its partners did act in breach of the SRA accounts rules and the Money Laundering Regulations, which also led to breaches of certain SRA principles and code.

‘We believe it to be clear and the SDT’s judgment does not dispute, that any mistakes made were honest and inadvertent. It is not alleged that the firm or the three partners lacked integrity, probity or trustworthiness, or laundered or misappropriated money.

‘We have worked constructively with our regulator, the SRA and we are confident that the circumstances which led to these breaches could not happen again. We have since reviewed and strengthened a number of aspects of our approach to risk management.’

madeleine.farman@legalease.co.uk

Read the full decision here.

Legal Business

Clydes trims partner round to nine as Asia sees bulk of promotions

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Partnership promotions Clyde & Co

Clyde & Co has trimmed back on its partner promotions, making up just nine compared to 16 last year and just one in the City.

This year’s lighter round follows several years of increasing numbers for the firm, which made up 16 in 2016 and 13 the previous year.

Reflecting the firm’s recent global push, the London office saw just saw one partner promotion compared to five new partners last year, with corporate partner Richard Elks elected. Elsewhere the UK, Kate Duffy was made up in Manchester and Katie Carmichael was promoted to Edinburgh, both in insurance.

Asia gained the most new partners, with four promotions. Two partners were made up in the firm’s Hong Kong and China branch, while there was one partner apiece for the firm’s Singapore and Perth offices.

Clydes also elected one partner in Dubai and one in Atlanta. The round leaves the firm with more than 375 partners worldwide. Just two of the eight new partners were women, compared to last year when 50% of its promotions were female.

While Clydes has pursued its international strategy, opening offices in Chicago and Washington DC recently, it has also seen cutbacks in its London office with associate redundancies and a four-partner team exit for DAC Beachcroft.

Clydes senior partner Simon Konsta said: ‘As an international firm, we’re proud that our new partners reflect the diverse range of people, talent and countries in which we do business. It also demonstrates the opportunities we give people to grow and develop with us across the world.’

The promotions are effective from 1 May 2017.

Clyde & Co promotions in full:

Leon Alexander, trade & commodities/marine, Singapore

Katie Carmichael, insurance, Edinburgh

Kate Duffy, insurance, Manchester

Richard Elks, corporate, London

David Jordan, insurance, Atlanta

Kevin Martin, corporate/insurance, Hong Kong and China

Tim Searle, insurance, Perth

Ben Smith, corporate/foreign direct investment, Dubai

Dennis Wong, projects & construction, Hong Kong and China

matthew.field@legalease.co.uk

Legal Business

Solicitors’ tribunal hands Clyde & Co record fine under money laundering rules

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Legal regulation Clyde & Co

In one of the largest penalties awarded against a law firm by the Solicitors Disciplinary Tribunal, Clyde & Co has been fined £50,000, while three partners also received £10,000 each in fines for breaching accounting and money laundering rules.

In a case brought by the Solicitors Regulation Authority (SRA), the partners admitted they allowed a client bank account to be used as a banking facility, acting against SRA accounting rules and in breach of obligations under money laundering regulations.

Clydes was fined £50,000 and corporate partners Christopher Duffy (pictured), Simon Gamblin and projects partner Nick Purnell all received fines of £10,000.

The fine was handed down following a hearing on 21 March. Clydes was represented by corporate insurance partner David Langley, while the SRA was represented by Bevan Brittan solicitor Annelise Allen-Norris. A judgment from the tribunal is expected in the coming weeks.

Duffy and Purnell admitted they had failed to take on guidance of the Law Society’s fraudulent financial arrangements in acting as an escrow agent on behalf of the client.

Clydes was also judged to have failed to follow rules on dealing with dormant client balances. The client involved in the case was not named in the settlement.

The firm said in a statement: ‘We hold ourselves to the highest professional and ethical standards and take responsibility for ensuring we meet them.

‘We acknowledge that in three matters that occurred in 2013 and prior, we did not meet those high standards and the firm and three of its partners did act in breach of the SRA accounts rules and The money laundering regulations, which also led to breaches of certain SRA principles and code.

‘We believe it to be clear and the SRA does not dispute, that any mistakes made were honest and inadvertent. It is not alleged that the firm or the three partners lacked integrity, probity or trustworthiness, or laundered or misappropriated money.

‘We have worked constructively with our regulator, the SRA and we are confident that the circumstances which led to these breaches could not happen again. We have since reviewed and strengthened a number of aspects of our approach to risk management.’

The fine handed down to Clydes is the joint largest fine for a law firm, matching a fine to Fulgers in 2014. West End firm Fulgers was fined £50,000 for using the client account of Portsmouth FC to channel £10m, using it as a banking facility to favour certain creditors. The SDT also fined two partners a total of £25,000.

The fine is also one of the largest ever handed down by the SDT and the largest to a City law firm. Earlier this year, human rights lawyer professor Phil Shiner was ordered to pay £250,000 in costs and was struck off over the pursuit of false allegations against British soldiers in Iraq.

matthew.field@legalease.co.uk

Read more: ‘All fall down? – The 2017 Risk Survey‘