CASES AGAINST LAW FIRMS DOWN
Figures collated by RPC suggest the post-financial crisis wave of professional negligence claims against law firms has passed. High Court cases against firms were down 47% last year. While the number of cases spiked by 192% to 418 for the year 2013-14, the number of actions against solicitors for the 12 months to 30 June 2015 is lower at 221.
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National law firm DAC Beachcroft took a £4.39m hit on a failed IT project as it tried to change its case management system internally, accounts reveal.
The firm’s LLP accounts for 2014/15 show it wrote off £1.5m as an exceptional expense after giving up on the IT project. The year before it had written off £2.89m associated with the project, for a total of £4.39m.
The accounts say after a board review the project was considered ‘no longer viable.’
DAC finance director David Gillard said the firm had hired external consultants which worked with staff to develop a case management system, but in October 2014 it was decided it was no longer of value.
Gillard said since then the firm had not yet implemented a new system but it was ‘back to the drawing board.’
He added: ‘We will look to all sorts of alternatives – it may be more sensible for a large software firm to take over the project for us.’
Despite the expense, the firm posted a 20% jump in profits for the financial year 2014/15. Its profit for division among members rose to £30.5m from £25.5m.
The firm, which posted flat turnover at £198.5m from £197.2m said in the report it considered the results a ‘solid financial performance in challenging circumstances.’
‘This growth was principally due to a reduction in expenses, in large part associated with lower staff costs, including those occasioned by restructuring in DAC Beachcroft Claims Operations,’ the accounts stated.
DAC’s average number of employees fell to 2,129 from 2,027 and staff costs were reduced from £109.2m to £104.8m. The firm’s highest paid member took home 6.7% more, as the payout rose to £438,506 from £468,063.
The firm reduced its lock up days from 164 to 149, and said total net debt at the year-end reduced from £29.7m in 2014 to £24.6 in 2015, a reduction of 17.2%.
In July last year, the firm elected real estate partner Virginia Clegg as senior partner, while insurance head David Pollitt became managing partner, bringing both the insurance and non-insurance parts of the business together.
victoria.young@legalease.co.uk
National firm DAC Beachcroft has unveiled a 2% rise in 2015/16 half year revenues to £100.8m, while overall net debt fell by £4.7m (17%) year-on-year.
Announced today (14 December) for the six months to 31 October, the firm said revenue ‘stood above budget’ and the results were ‘characterised by ongoing margin improvement and continued progress in the management of working capital, resulting in a strong cash outcome.’
In June the firm announced its full year 2014/15 financials which showed a 3% rise in total billings to £200m up from £194.4m the year before, while the average amount received by equity partners was £307,000 for 2014/15 – up 10% on last year’s £278,000.
Following a period of integration since the merger of Davies Arnold Cooper and Beachcroft in 2011, the firm undertook a defining post-merger management election over the summer, in which real estate partner Virginia Clegg was elected as the firm’s new senior partner while insurance head David Pollitt took the role of managing partner.
The firm also broadened its international reach, opening an office in Miami as it seeks to strengthen its Latin American offering by connecting local insurance clients to the rest of its network. It also entered the alternative business structure market, gaining a licence for its claims solutions business in England and Wales, a move which will allow the firm to bring in outside investment or make non-lawyers partners in the business.
Pollitt said: ‘Our drive for improved profitability is also showing results as is our focus on good business discipline, with lock-up improving significantly.’
‘However, there is plenty more to be done to continue delivering the necessary marginal gains for the remaining six months of the year to help us transform our year-end figures from good to great.’
Other firms to announce half year results this quarter include Nabarro, Allen & Overy, Osborne Clarke, Field Fisher, TLT and Clyde & Co.
sarah.downey@legalease.co.uk
A number of firms including Osborne Clarke, Baker & McKenzie, CMS and Simmons & Simmons made key hires last week.
Osborne Clarke has hired Jeremy Summers as a partner in its litigation team, joining from Slater and Gordon where he headed the business crime and regulation team. The firm’s UK managing partner Ray Berg said the hire would allow the firm to offer further white collar crime expertise, and Summers’ experience in Hong Kong would add to the formal association Osborne Clarke has with Koh Vass & Co.
Going the other way, James Mullock is leaving Osborne Clarke after almost 20 years to join Bird & Bird as partner in its international privacy and protection group. The firm’s of its co-head international data protection group Ruth Boardman said Mullock’s sector-specific expertise, particularly in advising on complex technology, media and telecoms transactions, will help the firm proactively develop data protection opportunities clients as the practice grows internationally.
Baker & McKenzie is also upping its data protection practice by hiring GE Capital’s global senior privacy counsel Dyann Heward-Mills as partner, in a move which brings the number of IT and commercial lawyers it has in London to more than 30. The firm’s London head of IT law Harry Small said Heward-Mills brings to the team a wealth of privacy and data protection insights together with a deep understanding of the regulatory pressures currently faced by clients in a number of sectors.
Meanwhile, CMS Belgium has picked up former Allen & Overy counsel Tom De Cordier to join as a TMC/data protection/life sciences partner. CMS Belgium managing partner Tom Heremans said ‘CMS has a strong focus on technology and life sciences both internationally and here in Belgium. And this strategy is paying off: more and more clients turn to us for assistance in this rapidly developing area.’
Still in Europe, Simmons & Simmons’ German office is expanding its life sciences sector group with the hire of Boris Handorn who joins as partner. In Düsseldorf Orrick, Herrington & Sutcliffe has hired Andre Zimmerman from the Frankfurt office of King & Wood Mallesons to head up Orrick’s German employment law practice. Orrick has also hired Annalisa Dentoni-Litta as partner in its structured finance team in Rome.
Back in Britain, Gide has expanded its London real estate practice by shifting Hugues Moreau, who had headed Gide Warsaw’s real estate practice, back to London.
Meanwhile, DAC Beachcroft has expanded in Manchester, adding Paul Ellaby as a corporate partner. Ellaby joins from Ward Hadaway where he was a partner in the Manchester corporate practice. Also in Manchester, Browne Jacobson has boosted its Manchester health team by appointing Rebecca Fitzpatrick from Hill Dicksinson, and appointing former Berrymans Lace Mawer lawyer and deputy district judge Claire Batchelor as a consultant.
Simmons & Simmons has hired James Coleman as corporate partner in its Dubai office, from Allen & Overy in Doha where he was counsel. In Asia, Ashurst has strengthened its debt capital markets team with the appointment of Jini Lee as a partner in its Hong Kong based securities and derivatives group. Lee joins from Linklaters where she had worked in the Hong Kong and London offices.
victoria.young@legalease.co.uk
DAC Beachcroft has opened an office in Miami, led by a former AIG lawyer, as it looks to strengthen its Latin American offering by connecting local insurance clients to the rest of its network.
In common with the firm’s New York office, the Miami outpost will not undertake legal work locally in Florida. Led by former AIG associate general counsel Sascha Stullenberg, DAC Beachcroft said the new office will instead acting as a liaison between the firm’s international network in Chile, Mexico and Colombia, to insurance and reinsurance clients operating in Miami.
The firm’s head of insurance, David Pollitt, said ‘The firm maintains its own offices in Mexico, Chile and Colombia as well as a strong and deepening relationship in Brazil but the final piece of the jigsaw has been Miami, a rapidly growing market through which an increasing amount of Latin American insurance and reinsurance business flows’.
The move means the firm has a presence in two leading insurance and reinsurance centres in Latin America, São Paulo and Miami, DAC Beachcroft’s Latin American regional head Anthony Menzies said. It also builds on the merger of its Brazilian associate office, JBO Advocacia with full service firm Demarest Advogados earlier this month. JBO Advocacia partner Marcia Cicarelli Barbosa de Oliveira became head of insurance of the newly merged entity.
DAC Beachcroft has been building its presence in Latin America for some years and became the first UK firm to open in Chile in 2013 with the acquisition of two local outfits.
victoria.young@legalease.co.uk
DAC Beachcroft is the latest firm to enter the alternative business structure (ABS) market gaining a licence for its Claims Ltd as it seeks to future-proof its offering in the sector.
Effective today (2 September), the licence will only apply to the firm’s claims solutions business in England and Wales, and both DAC Beachcroft LLP and DAC Beachcroft International Ltd will continue to be regulated as law firms.
Commenting on the move, Craig Dickson, chief executive of DAC Beachcroft Claims Solutions Group said: ‘Securing an ABS licence for our claims business in England and Wales gives us greater flexibility and capability, in the future, to adapt to changes and opportunities in this complex and challenging market.’.
The move will allow the firm to bring in outside investment or make non-lawyers partners in the business. Mishcon de Reya and Kennedys have both obtained ABS licences over the last 12 months while US firm Cahill Gordon & Reindel used the structure to open up a litigation practice in the City.
It has been tough recently for firms with large insurance practices and margins continue to be squeezed. DAC was no exception, cutting 62 roles following a redundancy consultation and being hit by rising staff costs and IT failure, however the firm posted positive results for this financial year, with a 3% rise in its total billings to £200m, up from £194.4m last year.
The firm also stated that operating profit before exceptional items rose by 10% from £30m to £33m – the use of that metric comes after the firm was hit by an expensive IT failure last year which was booked as an exceptional item and knocked £2.9m off profits, the firm said that whether there are any exceptional items for this year will be determined during the audit process.
In July, DAC unveiled a new leadership team, electing real estate partner Virginia Clegg as senior partner, while insurance head David Pollitt was named managing partner. Clegg succeeds Simon Hodson while Pollitt will replace current incumbent Paul Murray. Both new appointments will take effect from 1 November.
kathryn.mccann@legalease.co.uk
DAC Beachcroft has elected real estate partner Virginia Clegg as the firm’s new senior partner, while insurance head David Pollitt has been named managing partner, bringing both the insurance and non-insurance parts of the business together in leadership.
Clegg succeeds Simon Hodson while Pollitt will replace current incumbent Paul Murray. Both new appointments will take effect from 1 November.
The duo won their seats against two other candidates – Richard Beaty, a partner in the firm’s professional and financial risk group and Bristol-based real estate head Michael Bothamley from the non-insurance side of the firm.
Based in Leeds, Clegg is currently the regional senior partner for Leeds and a board member, and has advised property owners and developers on development, asset management, investment and funding issues.
Pollitt, who will be based in London, chairs the Claims Solutions Group, is an executive board member, as well as heading the insurance department. During his tenure, the firm has opened new offices in Colombia, Chile and a representative office in New York, as well as signing association agreements in Canada, Malaysia and Brazil.
Both Clegg and Pollitt will stand down from their current position when the new leadership roles take effect with successors to their respective roles announced in due course.
Outgoing DAC Beachcroft managing partner Paul Murray said: ‘Simon and I would like to place on record our heartfelt congratulations to David and Virginia. Virginia’s contribution to the growth of our commercial business and David’s tenure of the insurance sector during a period of significant growth bear testament to the pair’s leadership, resilience and business focus.’
The new management is the firm’s first new executive team since the merger of Davies Arnold Cooper and Beachcroft in October 2011. Hodson and Murray were elected to their roles at legacy Beachcroft in 2005 and then re-elected for a second term in 2010.
jaishree.kalia@legalease.co.uk
As the firm ramps up for a defining election, DAC Beachcroft has announced its financial figures for 2014/15 saying it had seen a 3% rise in its total billings to £200m up from £194.4m last year.
The firm also stated that operating profit before exceptional items rose by 10% from £30m to £33m – the use of that metric comes after the firm was hit by an expensive IT failure last year which was booked as an exceptional item and knocked £2.9m off profits, the firm said that whether there are any exceptional items for this year will be determined during the audit process. The firm’s £200m billings figure is 1.5% higher than the firm’s £197m fee income figure which was reported in its 2013/14 LLP accounts.
Based on the operating profit before exceptional items figure, the average amount received by equity partners was £307,000 for 2014/15– up 10% on last year’s £278,000. The firm also said that net debt had fallen from £30m to £25m as of 30 April 2015 while lock-up days had also decreased from 164 to 149 reducing the firm’s need for working capital.
DAC Beachcroft managing partner Paul Murray (pictured), who is set to step down from his role later this year, said: ‘This is a solid performance across key areas of our business and I am very pleased with the outcomes reflected in the provisional numbers. Billings exceeded our plans for the year and the Operating Profit figures reflect improvement in underlying profitability and margins.’
‘In addition, the lock-up days values highlight our efforts to improve working capital management and the reduction in net debt is the practical consequence of these focused endeavours. This performance represents improvements that we were determined to make and that will be continued.’
The firm is currently getting set for an election this summer as it sees senior partner Simon Hodson also stepping down. Potential candidates for the two executive roles being cited currently are: head of the firm’s insurance sector, David Pollitt and Richard Beaty, a partner in the firm’s professional and financial risk group, as well as real estate head Michael Bothamley and Leeds-based partner Virginia Clegg.
michael.west@legalease.co.uk
DAC Beachcroft is gearing up for a management election this summer between both insurance and non-insurance partners as the firm looks to select its first new executive team since the merger of Davies Arnold Cooper and Beachcroft in October 2011.
Current senior partner Simon Hodson and managing partner Paul Murray have been in place since 2005 when they were elected to the roles at legacy Beachcroft and then re-elected for a second term in 2010. Neither will stand again this time around.
There are four partners being talked of as in contention for the firm’s leadership, with the heads of real estate and insurance both potential candidates.
As Legal Business went to press four potential candidates had been cited, including head of the firm’s insurance sector, David Pollitt, who is based in Bristol, and Richard Beaty, a partner in the firm’s professional and financial risk group. London-based Beaty was appointed to DAC Beachcroft’s board in May 2011 and is a disputes lawyer.
From the non-insurance side of the firm comes Bristol-based real estate head Michael Bothamley, who sat on the firm’s board from 2006 to 2011, while real estate partner Virginia Clegg is also being touted. Leeds-based Clegg was elected to the firm’s board in 2013 and is also the firm’s regional senior partner in the city.
A statement from the firm said: ‘This is an ongoing process so it would be inappropriate for us to comment any further until its completion later this summer, at which stage we will make a formal announcement.’
The new management will have work to do as the latest LLP filings at Companies House revealed an 18% drop in profits from £31.2m in the 2012/13 financial year to £25.5m in the year ending 30 April 2014 as staff costs rose and the firm booked the cost of an expensive IT project. However, the firm did see a 6% increase in revenue from £186.8m to £197.2m.
The LLP filings also revealed that the firm had extended its banking facilities by £15m to help it focus on ‘its strategic growth plans’. This saw the amount of bank loans the firm had outstanding rise from £9.2m in 2012/13 to £24.1m in the year ending 30 April 2014.
kathryn.mccann@legalease.co.uk
DAC Beachcroft is gearing up for a management election this summer between both insurance and non-insurance partners as the firm looks to select its first new executive team since the merger of Davies Arnold Cooper and Beachcroft in October 2011.
Current senior partner Simon Hodson and managing partner Paul Murray have been in place since 2005 when they were elected to the roles at legacy Beachcroft and then re-elected for a second term in 2010. Neither will stand again this time around.
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