Legal Business

Quality not quantity – stalled growth at DLA Piper but a leaner global giant boosts the bottom line

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After years of breakneck expansion, DLA Piper is increasingly into a phase of managing and refining its 80-office global practice, at least according to the firm’s recently-announced results for 2014.

DLA Piper today (5 March) confirmed that its revenue for 2014 was flat on 2013 at $2.48bn, while its profit pool increased by over 10% from $602m in 2013 to $667m. Profits per equity partner (PEP) were up 13% from $1.33m in 2013 to $1.49m last year.

The results reflect a period of cost-cutting and a firm-wide drive to tilt its practice upmarket after years of global growth and mergers. DLA Piper reduced its ranks by 260 lawyers in 2014 to 3,702 lawyers and also launched a new low-cost services centre in Tampa, Florida.

This follows an effort to manage out underperforming partners and restructure what was deemed an over-lawyered offering in Asia-Pacific.

The 1,250-partner firm attributed the rise in profitability to a buoyant year in finance and M&A work, having been instructed to advise Vodafone on its €7.2bn purchase of Spanish telecoms company Ono at the start of last year and Synergy Health on its $5.2bn merger with Steris later in 2014. DLA Piper also picked up a number of high-profile IPOs in London, including last year’s largest AIM listing, the £750m float of the owner of Camden Market – Market Tech.

Having made increasing its revenue per lawyer (RPL) one of its main targets last year, the firm managed to move RPL from $625,000 to $670,000, an increase of 7%. Efficiency savings helped to push its profit margin from 24% to 27%.

IP litigator Simon Levine replaced Sir Nigel Knowles as co-chief executive at the start of this year and has made greater integration between the firm’s US and international arms as a major goal.

DLA Piper this week announced its first merger since Levine’s appointment when it confirmed a tie-up with 260-lawyer Canadian practice Davis. The deal will see DLA take over nine Davis offices and fulfil its long-held desire to enter the Canadian legal market.

The notable cooling of DLA Piper’s growth in recent years means it has ceded its position as the world’s largest law firm by income to Latham & Watkins, which last month confirmed a 14% hike in revenue in 2014 to take its turnover to $2.61bn. The results come as a number of major US law firms have already announced robust growth in 2014.

tom.moore@legalease.co.uk

Legal Business

DLA joins Canadian club at last as it announces Davis deal

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Having long sought a presence in Canada, DLA Piper has finally struck a merger deal with Vancouver-headquartered firm Davis. The partnership at Davis approved the merger in a vote held last week and the firm will be rebranded as DLA Piper Canada when the deal closes in April.

The merger will add around 250 Canadian lawyers, including 112 partners, to DLA Piper’s 4,000-strong operation. Davis is well-known for its work on major energy and infrastructure projects and is run out of nine offices. It has eight Canadian offices in Toronto, Montreal, Vancouver, Edmonton, Calgary, Penticton, Whitehorse and Yellowknife. Its biggest office is in Vancouver, where it has around 60 lawyers, followed by Toronto, where it has around 40 lawyers. The firm also has an outpost in Tokyo through an associate office called Davis & Takahashi.

It is a mid-tier firm in its domestic market, considered a step below the country’s Seven Sisters, a term used to group together top-tier firms Blake, Cassels & Graydon; Davies Ward Phillips & Vineberg; Goodmans; McCarthy Tétrault; Osler, Hoskin & Harcourt; Stikeman Elliott; and Torys.

It is ranked by The Legal 500 as a top-tier firm in infrastructure and projects, alongside Blake, Cassels & Graydon, Davies Ward Phillips & Vineberg and McCarthy Tétrault, and is ranked in the fourth-tier for work in the power sector. The firm is also ranked in the fourth-tier of The Legal 500 for banking and finance work. The firm’s biggest clients include Rio Alto Mining and Japanese corporates Sumitomo and Mitsubishi.

The merger seals DLA Piper’s entrance into the Canadian legal market just over a year after having held talks with lawyers from the Toronto office of now defunct national firm Heenan Blaikie. It is the firm’s first office launch since Simon Levine replaced Sir Nigel Knowles as co-CEO on 1 January and the first office opening for the firm since launching in Seoul at the start of 2013.

‘As a G20 nation and the principal trading partner of the US, Canada has been, for some time, an integral part of our global strategy,’ said Roger Meltzer, DLA Piper’s global co-chair. ‘Davis is a firm with a long and successful history and the right combination of talent and experience centered on core areas of DLA Piper’s focus. Our combined enterprise will not only enhance our service offering in the Americas and around the world, but it will allow Davis’s practices and capabilities to expand more deeply as part of the DLA Piper global brand.’

Robert Seidel QC, managing partner of Davis, added: ‘This is a one-of-a kind opportunity to join a leading-edge global firm with high-profile legal professionals committed to helping clients succeed through practical and innovative legal solutions. We recognize that many of our clients’ interests are now international as the markets for their products and services become increasingly global.’

DLA Piper’s last substantive merger came in 2011 when the firm executed a financial merger with DLA Phillips Fox in Australia to add offices in Brisbane, Canberra, Melbourne, Perth and Sydney.

The firm has also today (2 March) announced that DLA Phillips Fox in New Zealand, which has 25 partners and nearly 70 lawyers, will be rebranded as DLA Piper.

tom.moore@legalease.co.uk

Legal Business

Targeting 50 clients by year end: DLA Piper develops e-learning tool in quality drive and to sell

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Not wanting to be outdone by their US colleagues, who recently launched DLA Piper’s first non-legal entity selling cybersecurity software subscriptions for $25,000 a year, the firm’s London office is preparing to rollout an e-learning product for both associates and clients.

With corporates looking to build in-house legal functions, or just keep more work in-house, DLA Piper is in the late stages of developing an e-learning tool to reduce the drain on partners having to fly around the world to deliver training in between client work.

Devised by Kit Burden, global co-head of the firm’s technology group, the product will also be used to assess the firm’s army of associates as it looks to improve the quality of its client delivery.

The firm is set to select a build partner this week, with three bidders still in the frame for the contract, and Burden expects the product to go live by the end of September.

The product will cover all practice areas and is configured to allow automatic marking, through use of key words and phrases. Burden says he didn’t want the software to be ‘some survey monkey multiple choice stuff’ as it would give lawyers ‘too much of an opportunity to guess at the right answer even if they didn’t understand the training’. There will also be a live drafting module.

He adds: ‘The moment you have to do it manually, with each one being dealt with on its own merits, you cease to have any advantages in terms of time and it’s no longer a product, but a very expensive operation for a law firm.’

While the e-learning will compliment and not replace all training workshops the firm runs for clients, Burden says that the marking element will help corporates to improve their in-house teams and spot areas they may be failing in. The tests can be timed to replicate exam conditions.

A cost plan for clients is due to be made up soon, but Burden says ‘it will be significantly less than a lawyer’s time going through individual papers from a clients’ team’. He adds: ‘We’re developing this on a one-to-many basis, which means we can defray that cost over a whole load of separate clients.’

Within DLA Piper, the e-learning will first be rolled out among Burden’s technology group, before uptake from other sector and practice teams. ‘We are trying to impose a common level of sophistication across all of our staff globally. Most law firms do a lot of law firm training but it’s all pretty basic and very time consuming. We’ve got to make sure we’re giving our smaller offices all the tools, knowledge, and knowhow the global group has.’

Unlike in the US, where Burden’s colleagues set up Blue Edge Lab to launch its cybersecurity guidebook, the e-learning product will be sold within the law firm.

‘If we haven’t got at least 50 clients utilising it globally within a year; I will be very disappointed,’ says Burden.

tom.moore@legalease.co.uk

Legal Business

Revolving Doors: DLA Piper continues Asia rebuild as Eversheds bulks up its Swiss offering

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Matthew Elliott’s long-mooted arrival at Kirkland & Ellis from Linklaters stole headlines last week, but LB 100 firms including DLA Piper, Eversheds and DWF also all made hires.

DLA Piper continued to rebuild its depleted Asia offering with the capture of Morrison & Foerster capital markets partner Melody He-Chen.

He-Chen’s practice is largely made up of Chinese corporates, specialising in securities offerings. Her arrival follows the hire of a group of former Jones Day colleagues in Singapore, with corporate partners John Viverito and Myles Hankin joining from Gibson Dunn & Crutcher and Joseph Bauerschmidt from Jones Day.

Terry O’Malley, chairman emeritus of DLA Piper, said ‘Melody’s experience of working in the United States will help further align the Asia business with the strategic objectives of the firm and reflects the growing business flows we are seeing between the two regions.’

Eversheds, intent on improving its offering in continental Europe, added three partners in Switzerland last week. The firm hired BNP Paribas lawyer Patrick Eberhardt to boost its banking group and made moves to improve its transport group with the addition of two partners.

Barbara Klett, who recently established the national claim centre for the Swiss Federal Railways, joins as a partner from local firm Kaufmann Rüedi Rechtsanwälte. She advises on liability issues in the transport and medical sectors and is a lecturer at the University of Lucerne. The firm also added procurement projects lawyer Bruno Schoch as its head of rail, leaving his position as head of legal at Swiss rail company BLS to take up the post.

Klett said ‘investment in transport continues to be high on the agenda’ for governments and said her new firm has ‘one of the largest teams of specialist lawyers acting for some of the world’s major transport providers’.

Back in the UK, rapidly expanding DWF has hired Tods Murray’s head of renewables Ben Powell in Edinburgh. The project finance lawyer has had stints at Dundas & Wilson, McGrigors and Hammonds in the past and brings extensive knowledge of the Scottish and UK energy markets.

His hire follows the capture of former Royal Bank of Scotland in-house lawyer Gary MacDonald from Pinsent Masons, where he was a legal director.

tom.moore@legalease.co.uk

Legal Business

Grand designs: DLA Piper to move City operation to Cameron McKenna’s old office

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Seeking to expand its office space in the City, DLA Piper has signed a lease to move into CMS Cameron McKenna’s old London base at Mitre House.

DLA Piper is planning to move out of its offices in 3 Noble Street (pictured) and 1 London Wall and reassemble at Mitre House once refurbishments are completed. Plans are to  expand the building by two floors providing 201,000 sq ft of office space.

The proposed move will give DLA Piper 50,000 additional sq ft in the City with it currently holding 110,000 sq ft at 3 Noble Street and 40,000 sq ft at 1 London Wall. With leases expiring on its two current properties in 2019, the firm is hopeful that the developer, Mercer Real Estate, gains planning permission so that it can move in.

Mercer Real Estate submitted new plans to refurbish Mitre House, 160 Aldersgate Street last week, after more than 100 objections from current residents. The majority of complaints centred on the increased height of the building, with Barbican residents concerned about a loss of daylight. Some also mentioned the building’s proposed roof terraces, fearing that there would be additional noise nuisance from partying.

The latest planning application states: ‘The evolution of the design has been informed by a rigorous process of public consultations with local stakeholders and meetings with the City of London Planners.’

A spokesperson for DLA Piper told Legal Business: ‘We have signed a lease and we do intend to move there but it’s subject to planning permission. It’s going to be a bigger office.’

In a recent survey into law firms in London, property advisor CBRE found that 83% of City firms are seeking to cut their rental costs. The research also discovered that the area occupied per fee earner across the 100 biggest firms in London has shrunk by 5% to 490 sq ft in the past year while it found that office space for partners across these firms cost, on average, £22,400 in 2014.

tom.moore@legalease.co.uk

Legal Business

‘An extremely tragic situation’: Police name DLA Piper associate as victim stabbed in Washington DC hotel

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Police have identified a man killed in a stabbing at a Washington DC hotel on Tuesday 10 February as 30-year old DLA Piper associate David Messerschmitt.

Messerschmitt suffered multiple wounds in an attack at the Donovan Hotel, in Washington DC, and was pronounced dead in the fourth-floor room. Police have ruled the death a homicide and released a surveillance video from inside the hotel showing a person of interest walking through the lobby wearing a hooded jacket. The video was taken the day before, at around 7:45pm, and police are offering a $25,000 reward for information leading to an arrest and conviction.

DLA Piper said in a statement: ‘This is an extremely tragic situation and we send our sincere condolences to David’s family. We are cooperating with the police as they continue their investigation.’

Washington DC-based Messerschmitt joined DLA Piper in April last year as an associate working in the intellectual property and technology team. He had previously spent four years working at Mayer Brown and had worked for Dow Chemical.

Messerschmitt graduated from Boston University School of Law in 2009 and became a member of the Illinois state bar that same year. He then became a member of the Washington DC state bar in late 2012.

The family of Messerschmitt released the following statement: ‘We are deeply saddened and shocked by the loss of David, our beloved husband, son, and brother. We ask that everyone respect our privacy. We will have no further comments at this time.’

‘We ask anyone who has information about this crime to please contact the Washington, D.C. Police Department at 202-727-9099.’

tom.moore@legalease.co.uk

Legal Business

Growing the team: Mayer Brown hires DLA Piper’s head of structured trade finance

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Mayer Brown, as it eyes an increase in cross-border asset-based lending (ABL) throughout Europe, has boosted its City banking and finance team with the hire of Alex Dell, DLA Piper’s structured trade and receivables finance head.

The senior ABL partner Dell will join Mayer Brown’s 50-lawyer banking group as it boosts its City loan offering. Dell particularly focuses on large, highly structured receivables financing and ABL transactions with a cross-border element. His client base covers banks, financial institutions, sponsors and corporates, and includes HSBC, Barclays and GE Capital.

Some of Dell’s key work includes acting for Barclays on the $1.5bn commodity and receivables financing arrangements provided to Essar Oil Limited; and representing an international borrowing group on the $1.5bn syndicated ABL facilities led by JP Morgan Chase in favour of Office Depot group.

Dominic Griffiths, who was appointed co-global head of Mayer Brown’s banking and finance team last September, said that Dell was the perfect fit having acted for sponsors and private equity funds, as the firm increasingly works with clients outside of the traditional ABL space like Grovepoint Capital. ‘The advent of alternative credit providers and funds moving into asset based lending has increased the opportunities for advisers like Mayer Brown,’ he added.

Both DLA Piper and Mayer Brown are ranked tier one in The Legal 500 for ABL, while Dell was previously named a leading individual for his work within trade finance. ‘We already have a substantial structured finance team, and built up the capital markets team last year, so building our loans practice was the next thing to build a stronger offering for our clients,’ said Griffiths.

Dell leaves DLA Piper after eight years, during which he also headed the ABL team London, and is expected to join Mayer Brown within the next three months. His addition will take the number of ABL partners to six, within the wider 20-partner banking team.

Griffiths said: ‘We work a lot on large loan facilities with our Paris and Frankfurt offices, but also across the region and in Asia. US lenders are showing a particular interest in expanding their reach across Europe and Asia and the established European banks are looking at consolidation of trade finance, receivables and asset based lending to provide an expanded offering to their corporate customers.

‘I have known Alex for a number of years. He has a strong and impressive practice, which mirrors our own focus on providing the best legal advice to financial institutions and companies in their European and global strategies.’

jaishree.kalia@legalease.co.uk

Legal Business

News in brief – February 2015

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Strategic recruitment DLA PiperKennedysKirkland & EllisLatham & WatkinsOsborne ClarkeShakespeare Martineau
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KENNEDYS OPENS IN SCOTLAND

Last month, Kennedys finally entered the Scottish market with the opening of offices in Glasgow and Edinburgh after talks with Simpson & Marwick fell through at the end of 2013. The firm hired Francis Gill & Co’s founder and director Frank Gill, and Rory Jackson, insurance liability and regulatory partner at McClure Naismith, to co-lead the practice.


LATHAM OPENS NEARSHORING OFFICE IN MANCHESTER

Latham & Watkins announced it is set to open a business services office in Manchester during 2015. In the firm’s second centre (after its first in LA), 25 staff will focus on IT and technology support in Europe and there will also be a financial analysis team to provide practice and regional heads with greater budgetary insight.

Legal Business

Targeting New York: Clifford Chance bolsters NY office with DLA Piper finance partner

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With US leadership previously announcing intentions to boost the firm’s New York bench, Clifford Chance has today (3 February) confirmed the hire of DLA Piper’s Gianluca Bacchiocchi as a partner in its banking and finance practice in the Americas.

Having joined from the Chicago office of DLA Piper, Bacchiocchi will be based in New York but will continue to spend a significant amount of time on the ground in Latin America. Bacchiocchi focuses on sponsors, issuers and underwriters undertaking cross-border capital markets transactions across Latin America, including project bond financings, public and private issuances of asset-backed securities, future-flow backed securities and high-yield. Recent mandates include the development and financing of the $5.4bn Metro Linea 2 in Peru.

Also a former lawyer at Mayer Brown and Greenberg Traurig, Bacchiocchi’s arrival to the firm’s Manhattan office brings the number of CC partners in the Americas to 73, and constitutes the third lateral hire made by the firm in the region in recent months.

In December CC recruited a five-strong team from beleaguered US firm Bingham McCutchen to its Washington DC office, led by partners Robert Gross and William Cejudo, in a bid to enhance its US structured finance and real estate finance offering. The firm’s US leadership recently told Legal Business of its intention to upscale its offering in the Americas, and is actively looking to recruit fresh talent across all levels, from associate to partner level.

The firm’s Americas regional managing partner Evan Cohen said: ‘The continued development of our presence across the Americas – both in the US and Latin America – remains an important point of emphasis for Clifford Chance. Gianluca’s recruitment fits perfectly with what we’re trying to accomplish. The experience and creativity he brings will be invaluable to our clients as we continue to expand our regional footprint.’

‘Access to capital markets, whether for greenfield or take-out financings, is now in every client’s playbook,’ added Fabricio Longhin, co-head of the firm’s Spanish Latin America group. ‘Gianluca is widely acknowledged as a leader in that field and we are delighted to welcome him into our Latin American team.’

sarah.downey@legalease.co.uk

Legal Business

Accounts revealed: DLA Piper revenues slip as partner numbers shrink

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DLA Piper‘s European, Asian and Middle Eastern operations suffered a fall in revenue from £800m to £787.5m for the 12 months to 30 April 2014.

While UK revenues rose sharply, Australia was the biggest contributor to the firm’s dip in revenues. A senior figure at the firm told Legal Business: ‘Firstly, the economy in Australia took quite a dive and secondly, we’ve been reshaping our Australia practice to exit from some of the high volume, low value insurance work and focusing on the areas more aligned with our global strategy and operating to the big global organisations.’

According to filings made at Companies House, DLA Piper International LLP, which comprises all of the firm’s offices outside of the US, made wide ranging cuts across its international network to headcount. The total number of people employed fell 6% from 5,208 to 4,911 with staff costs decreasing from £531.9m to £509.7m.

The total number of fee earners across the firm’s European, Asian and Middle East operations decreased 7% from 2,226 to 2,081. There were also 30 fewer equity partners on 30 April 2014 than the year previous, with the size of the partnership shrinking from 733 to 703. The highest paid partner at the firm received £1.8m.

The headcount changes were in part due to DLA Piper’s rework of its Asian practice to improve the quality of its services, which resulted in a number of underperforming partners being asked to leave the firm. Cuts were also made among support staff, with 130 fewer employees, and the trainee intakes were slashed, with 343 trainees on the firm’s books on 30 April 2014 compared to 365 the previous year.

Group operating profit slipped marginally from £799.4m to £786.7m, but the firm did manage to reduce its debt pile by 44% from £32.4m to £18.2m. A source at the firm revealed that Australian revenues slumped 24% from £131m to £101m.

Operating profit within this unit, which accounts for 47% of fee earners, rose 8% from £115m to £125m. Cash at bank and in hand was also up, rising from £2.7m to £5.9m as of 30 April 2014. T

But the accounts also reveal that the UK LLP suffered the bulk of the staffing cuts, with the size of its equity partnership falling 10% from 382 to 344 members. The highest paid partner within these countries took home £1.4m, up markedly on the £1.1m in 2013.

tom.moore@legalease.co.uk