Legal Business

Asia Round-up: Field Fisher launches in Shanghai while Global 100 leaders position themselves in Hong Kong and Dubai

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Field Fisher Waterhouse has joined forces with Ryser & Associates in Shanghai while a show of strength among the Global 100 leaders in Hong Kong over the past week has seen Jones Day, Dentons and DLA Piper bolster their finance and capital markets capability.

Field Fisher announced yesterday (8 July) that it has launched in Shanghai under the brand Field Fisher Ryser. Ryser & Associates was formed in 2004 with a focus on intellectual property and corporate.It services clients from China, Japan, the US and Russia across industries such as food, electronics, automobiles and finance led by managing partner Zoe Zhan.

Commenting on the move Field Fisher’s managing partner Michael Chissick said: ‘A key aspect of the two firms coming together was the opportunity to have a credible base in China built on the IP/IT and corporate focus of both firms. We hope Field Fisher Ryser will continue to grow over the next few years and help our clients realise their ambitions and strategic plans in China whilst also enabling us to better service our growing Chinese client base.’

In Hong Kong meanwhile, Jones Day – in 10th position by revenue in this year’s Global 100 – secured a high profile local hire in the form of Michelle Taylor, former Asia managing partner and China office leader at US rival Orrick Herrington & Sutcliffe. She has joined the firm’s banking and finance practice.

Taylor has 20 years’ experience of structured finance, real estate finance, debt capital markets and securitisation. Jones Day Hong Kong head Robert Thomson said: ‘Michelle’s in-depth knowledge and market leading experience in structured finance make her a great asset to our clients and significantly enhances our ability to work on the some of the most innovative financial transactions in the region.’

The hire builds on the arrival last year of banking and finance specialist Maria Tan Pedersen, who came from K&L Gates in August.

Jones Day’s Asian presence was given a significant boost in February this year when it was one of four firms to be awarded a qualifying foreign law practice (QFLP) license in Singapore.

Also in Hong Kong, Dentons has bolstered its local capital markets practice with the hire of corporate partner Gordon Ng from O’Melveny & Myers, in what may be interpreted as a vote of confidence in the local IPO market, in which Ng specialises and for which the forecast has so far been cloudy.

This month saw the $284m IPO of leading Hong Kong casino and gaming facilities owner Macau Legend Development, in which Hogan Lovells’ Hong Kong office advised the underwriters.

Meanwhile, DLA Piper brought in Mayer Brown Hong Kong banking and finance partner Benjamin Sandstad. His practice focuses on structured finance, securitisation and debt capital markets transactions. Recent clients include China International Marine Containers (Hong Kong), which he advised on the establishment of a $600 million US commercial paper program.

Charles Morrison, partner and international head of finance & projects at DLA Piper said: ‘We are pleased to welcome such a highly regarded partner to the finance & projects group in Asia, Ben’s appointment is testament to our growing F&P practice and our commitment to the region. The Asia-Pacific market offers a wealth of opportunity for our firm, and it is a real coup for us to have such an energetic and dynamic individual join us.’

Bob Charlton, partner and managing director, Asia Pacific, of DLA Piper added: ‘The Asia region is a key focus for DLA Piper and the hire of Ben is seen as an important step in the plan to strengthen the F&P team there, this will ensure that the firm takes advantage of the available opportunities in the region now and in the future.’

Elsewhere, Morgan Lewis & Bockius announced this week that it plans to open an office in Dubai, bringing in Ayman Khaleq, a structured finance and debt capital markets lawyer in the Middle East region who has a particular knowledge of Islamic finance and Jim Knight, a corporate and transactional lawyer with more than 20 years of experience in energy and other industries.

They are joined by London-based energy transactions partner Lewis Jones, who concentrates his practice on the development and financing of energy and infrastructure projects with a particular focus on emerging markets.

Other recent entrants to the Dubai market include White & Case, which announced it has been granted a licence to practice in the emirate, Baker & McKenzie which merged with leading Dubai outfit Habib al Mulla this month and Addleshaw Goddard and Cleary, Gottlieb, Steen & Hamilton, which opened in the emirate last September.

david.stevenson@legalease.co.uk

Legal Business

Global 100: DLA Piper

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Financial results 2012/13 DLA Piper
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A highly symbolic year for DLA Piper, with the rapidly-assembled business services juggernaut becoming the world’s largest law firm in revenue terms with income up 9% to $2.44bn, while profit per equity partner (PEP) was up by 6% to $1.3m.

The 1,300-partner firm – which now has nearly 80 offices worldwide – also made ground in pushing up the value chain, a key aim behind the 2011 appointment of former Linklaters head Tony Angel as global co-chair. Profit per lawyer (PPL) was up 10% annually to around $150,000 as the number of lawyers decreased by 3% to 4,036 firm-wide.

Legal Business

Asia-Pac continues to challenge new entrants as DLA Piper freezes Australia salaries

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The impact of the Australian downturn has once again been thrown into sharp relief after DLA Piper’s staff in the region were told not to expect pay rises and some partners to expect a drop in pay as the office failed to meet its targets.

As first revealed by RollOnFriday, an email from chief operating officer and stand in local managing partner Andrew Darwin told staff ‘for many…there will be no increase in base salary this year and for others there will only be a modest increase.’

Local partners, meanwhile, were told: ‘many partners will have no increases or, in some cases, a reduction in their remuneration.’ Further savings are also expected to be made on expenses.

Darwin in March began a stint as Australian managing partner while the firm looks to re-energise the local practice and ‘groom’ home-grown talent.

The move comes as a number of firms show signs of struggling at the hands of the depressed conditions in Australia and low revenues across the wider Asia-Pacific region, with UK managing partners reporting that it must be viewed as a long term game.

In March, Herbert Smith Freehills blamed market conditions for deferring staff pay reviews in Australia. Moreover, Asia-Pacific accounted for only 13% of the firm’s revenues this year, according to LB Global 100 results, despite the firm having 15 offices across the region, five of which are in Australia.

DLA merged with its Australian alliance firm Phillips Fox in May 2011, having had an exclusive referral relationship since 2006. The merger formed part of DLA’s global strategy to strengthen the firm’s presence in G20 economies.

francesca.fanshawe@legalease.co.uk

Legal Business

Insurance: Mills & Reeve takes up last of DLA’s defendant insurance team as CMS snares RPC head

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Strategic recruitment DLA PiperMills & Reeve
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Mills & Reeve and CMS Cameron McKenna boosted their offerings at opposite ends of the insurance spectrum this week, taking staff from the Birmingham office of DLA Piper and the City office of RPC respectively.

Top 50 UK firm Mills & Reeve acquired a nine-strong defendant insurance practice from DLA, marking the conclusion of DLA’s withdrawal from the typically lower margin area of law, as first announced by the top 10 firm last year.

The team, which will start at Mills & Reeve on 1 July and bring its client book, is led by DLA’s former head of the Birmingham insurance group Alan Jacobs, who joins alongside five fee-earners and three support staff.

The sale by DLA comes after its Manchester and Sheffield defendant insurance teams joined Hill Dickinson in late February this year.

Neil Davis (pictured), head of Mills & Reeve insurance sector said: ‘Both we and DLA Piper are convinced this is a positive step for the clients involved, and have worked together to facilitate a smooth transition.

‘Alan’s team have an impressive list of insurance and corporate clients, all of which fit well within our existing strategy for the development of a diversified and corporate focussed insurance offering, across a national footprint. Our strategy is to grow our business in line with our sector commitments, including insurance and corporate services, while maintaining our reputation for outstanding client service. The fact that Alan’s clients have enthusiastically supported this move speaks volumes for the regard in which his team are held.’

The 384-lawyer firm on 1 June also completed its merger with Manchester’s George Davis.

Meanwhile CMS announced yesterday (18 June) that it has recruited RPC’s head of reinsurance and longstanding partner Simon Kilgour to its ranks.

Kilgour advises domestic and overseas insurers and reinsurers on matters including high value and non-standard coverage disputes, and has led numerous high value disputes and arbitrations in London, the US and Bermuda.

CMS managing partner Duncan Weston said Kilgour arrival will add ‘strength and depth to our big-ticket capabilities across CMS.’

Ed Foss, head of the insurance and reinsurance group said: ‘Worldwide, the industry faces a challenging environment characterized by increasingly global competition, regulatory oversight and a rising cost of capital. Now, with CMS’s broad service offering to insurers and reinsurers across disputes and arbitration, transactional, corporate advisory and other key areas, Simon’s experience will be a tremendous asset for this practice and its clients.’

sarah.downey@legalease.co.uk

Legal Business

Comment: Don’t push your luck with partnership

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Leadership DLA PiperHogan LovellsNorton Rose Fulbright
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Do law firms take partnership for granted? They really shouldn’t as the model has served them so well. Just consider the case. Partnership aligns management and ownership. This has helped large law firms to avoid the patchy governance and rewards-for-mediocrity seen at public companies over the last 20 years and drives partners to a pure form of performance pay. It is inherently long-term and as such has a strong record in promoting independence and ethical standards. And given that law isn’t a capital-intensive trade – at least once you cross the Rubicon of international expansion – partnership is workable (if not ideal) from a financing point of view.

But the killer app of partnership is the meritocratic oddity of institutions aiming to turn a group of workers into owners. It promotes a razor focus on career development and does a lot of the heavy lifting in governance terms at law firms. That obsessive focus on standards and talent coming through the door truly marks out the legal profession from other, less successful industries.

Why the love-letter to partnership? Well, looking at the grim statistics on partner promotions, as we do this month, you can’t escape the feeling that leading law firms are pushing their luck. The top ten largest UK firms, including DLA Piper and Hogan Lovells, together have over 5,500 partners. This group collectively promoted 197 new partners in 2013 – equivalent to 3.5% of their current ranks. These levels are well below the replacement rate needed to sustain partnerships at current sizes and the picture is considerably worse if you look at UK partner prospects. Given that less than half of those making partner trained with their firm or joined at intake level, the traditional track to equity is under unprecedented strain. And as to women making partner – well, even a hard-nosed pragmatist would have to say the current numbers at major City firms – with the honourable exception of Norton Rose – are woeful given the public hand-wringing of recent years.

It still works for now but at a certain point, an increasingly remote partnership will surely cease to function as an effective long-term engagement tool. That would likely leave you with strong junior ranks given the appeal of law. But if joining a law firm really becomes mainly about a start of a career largely focused outside of private practice, the crucial mid-tier associate ranks will be under siege. This is not theoretical – a growing body of research confirms the fading allure of partnership, especially among female lawyers.

Law firm leaders acknowledge this existential threat to partnership but, when it comes down to the annual promotion round, the model is chipped away every year with smaller promotions and more barriers to equity.

We’ve moved into a curious half-life of partnership where the pretence is maintained that the old deal hasn’t changed. But it has changed and we could even soon reach a tipping point where the dominant path for a legal career is one without partnership. That would have huge implications for the UK legal profession. The suspicion is managing partners will come to regret pushing to breaking point the institution that once elevated them.

 

alex.novarese@legalease.co.uk

Legal Business

Comment: Say what you like, City practices taking on larger real estate is a good sign

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If upgrading your square footage is any litmus test of how City firms feel about the future then a raft of them including DLA Piper, Bird & Bird and Field Fisher Waterhouse (FFW) can be said to be in confident mood.

As reported by Property Week on Tuesday (11 June), top Global 100 firm DLA is the most recent UK firm looking to expand its City office space, hiring Jones Lang LaSalle (JLL) to carry out a search for up to 200,000 sq ft of space, an increase on the 110,000 sq ft office it currently occupies in Noble Street.

Last week, top 40 UK firm FFW reportedly placed a bid to take on several floors of a Thames-side site, and Bird and Bird, which recently announced a turnover increase of 6%, last month took on 142,500 sq ft of office space at Great Portland Estates’ New Fetter Lane office building. Hill Dickinson, Quinn Emanuel Urquhart & Sullivan and Gateley all increased their City space late last year.

On the one hand, no real trend can be read into the upgrades as many have either been driven by firms’ need to consolidate multiple sites or move out of old, no longer fit for purpose buildings. DLA, which currently operates out of two bases in London, is looking to bring both offices under one roof prior to the expiry of its current leases. Bird & Bird, meanwhile, is consolidating three into one.

Furthermore, amidst only fledgling signs of economic recovery in Europe, nor should the moves be taken as a sign of City law firms being over confident. Many firms are deeply aware of client perception and JLL director Richard Proctor said: ‘I don’t see a trend of people taking extravagant office space. They are saying that they have got to strike the balance between appearing professional without clients asking why their office looks so expensive.’

All this aside, the expansions are nonetheless a positive sign and Perry said: ‘We have seen a lot of growth in the last few years, the firm has a lot of ambitious plans, we are very confident for the future.’

One trend that has arisen out of the moves is more visible creativity in the way City practices are using their space.

Proctor said: ‘All law firms are looking at ways they can use their space more effectively, include subletting space they don’t use to reduce their overheads.’

Perry added: ‘I suspect that there’s been a movement in the nature of the space that firms wish to use for direct client use so I think certainly we are looking to have much more imaginative options for our client facing area.’

While this may be so, only a handful of firms including Addleshaw Goddard, Reynolds Porter Chamberlain and Eversheds are taking the plunge by going open plan. At least one Magic Circle firm has considered and dismissed the idea of dispensing with their closed office space, and US firms’ use of larger offices to reward those higher up the hierarchy means they will be even further behind.

‘It will take a long time for the large firms, particularly US firms, to move to an open plan model,’ Proctor says.

francesca.fanshawe@legalease.co.uk

Legal Business

Comment: A star signing is one thing but who needs a lateral?

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Strategic recruitment DLA PiperKirkland & EllisLatham & Watkins
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The worlds of business, politics and sport have since the 1970s fallen increasingly under the spell of the star individual and law has been anything but an exception. As partnership mitigates the heaviest excesses of the winner-takes-all compensation cultures seen in banking, sports and plc management, in law the star culture has manifested to a considerable extent via the partner recruitment market.

The emergence and massive expansion of this international bazaar for senior legal talent over the last 25 years has had a profound impact on the profession – often unhappily so.

This has happened despite widespread acknowledgement that the returns on partner recruitment are patchy – a finding backed by a significant and growing body of research. Compared to internal candidates, external recruits are more expensive even without counting direct recruitment costs, prone to fail in the first two years and more likely to leave. Added to which is the fundamental difficulty of accurately identifying and then persuading key business influencers to move.

Sound familiar?

Yet if such problems are rife in the legal profession, the impact of the sustained downturn in Western economies has done little to deflate the partner bubble. If anything, the upwardly mobile US law firms that have increasingly defined the partner recruitment market at home and abroad have pushed this merry-go-round towards even more aggressive levels.

And this has happened during a period in which the record of partner recruitment has arguably become worse not better. When partners first began moving in the late 1980s, a path was provided for ambitious and driven individuals to find better platforms or just check out of firms going nowhere. Those hires generally did well because there was a clear economic rationale for the move on both sides. The last decade has seen the emergence of a genuinely sideways market for partners who are just moving, well, laterally.

That’s not to suggest that all of this recruitment is irrational. Some firms have used partner recruitment to effectively super-charge their growth, with Latham & Watkins, Kirkland & Ellis and DLA Piper being among the most striking examples in recent years. The poor overall performance of lateral recruitment has always masked the vast discrepancies in individual performance.

Here is our assessment of the track record of partner recruitment: a small group of firms use it very effectively to deliver great results. A much larger group gets returns barely worth the effort once you account for the time and costs of recruitment. What’s left is another minority that performs so badly that firms in the club actually damage their business. But law – like many fields – remains poor at identifying the formula for success.

We consider the experience of a handful of the transferring partners that have excelled in this month’s edition and there are common factors in what makes a star signing an actual success, but it’s never easy. In essence, firms should be strongly biased towards organic progression unless there is a compelling, clear strategic reason to go to market. Then you must have a senior candidate that actually fits the bill and is energised about the opportunity of your team. The best lawyers don’t do it for the money or a home. They do it for the game. They play to win.

alex.novarese@legalease.co.uk

Legal Business

DLA and Simmons promote fewer partners as firms continue to favour Europe

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Partnership promotions DLA PiperSimmons & Simmons
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DLA Piper and Simmons & Simmons are among the latest UK firms to announce a reduced number of partnership promotions, appointing 34 and seven lawyers respectively, down from 58 and 10 in 2012.

DLA’s appointments came largely across its US offices, where 19 lawyers were made up to the partnership, with a further seven in continental Europe, four in the UK and four in Australia.

Simmons & Simmons, meanwhile, continued the recent trend among the UKs international firms to favour European promotions, with four in London, compared with one each in the financial hubs of Paris, Milan and Brussels and none in the Middle East or Asia.

Simmons & Simmons senior partner Colin Passmore said: ‘The firm’s business plan envisages significant growth for the firm over the next few years and the promotion of our homegrown talent is integral to this.’

Elsewhere, international firm Kennedys made up five associates in the UK (one each in London, Sheffield and Chelmsford and two in Belfast) and one in Hong Kong. The firm’s six promotions represent a 50% increase on last year and half of this year’s promotions round were women.

Kennedys senior partner Nick Thomas added: ‘I’m proud that we continue to have one of the highest proportions of female partners amongst the top 30 law firms.’

Similarly, DAC Beachcroft has made up five new partners, the same number as last year, taking its total partner numbers to 247. The firm’s London, Birmingham and Manchester offices will take up one partner each while the remainder will be based in Madrid, which saw a number of departures to rival Clyde & Co last month.

Two of the firm’s promotions were within its claims solutions arm – representing around one third of the firm’s staff and approximately £64m in revenue.

The European promotions and nurturing of homegrown talent come as international firms are increasingly focusing their expansion efforts further afield, particularly in Asia.

Other firms to have liberally promoted in London include Berwin Leighton Paisner (BLP), which made up a total of nine lawyers – seven in the firm’s London headquarters and one each Frankfurt and Moscow.

Magic Circle firms Clifford Chance and Linklaters also promoted heavily across Europe this year, as did Pinsent Masons.

Jaishree.kalia@legalease.co.uk

Legal Business

Asia round-up: DLA hits Jakarta while Stephenson Harwood expands in Singapore and Beijing

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Asia DLA PiperStephenson Harwood
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Despite concerns over a cooling eastern economy, UK advisers continue to invest in Asia with DLA Piper and Stephenson Harwood this week making major plays in the region.

DLA Piper has entered into a strategic alliance with Indonesian law firm Almaida Baely & Firmansyah (IAB&F), ramping up its already huge global footprint. Like most international advisers, DLA had previously largely serviced Indonesian work from its Singapore arm.

DLA co-chief executive Nigel Knowles explained the rationale for entering the increasingly feted market: ‘At DLA Piper we make it our business to do business where our clients do business. Indonesia is one of the fastest growing emerging economies in the world, with a young population, burgeoning middle class consumers and growing international trade – it makes sense for us to formalise our close ties with our partners there.’

International advisers have been attracted to soaring rates of direct foreign investment in Indonesia – estimated by the International Monetary Fund to have expanded 400% over the last four years – annual growth rates of over 6% and the potential of a country with a population of a quarter of a billion.

In March 2011, Norton Rose tied up with Jakarta’s Susandarini & Partners, while Stephenson Harwood entered into an association with Christian Teo Purwono & Partners in November the same year. Herbert Smith Freehills (HSF) has a longstanding alliance with Hiswara Bunjamin & Tandjung that began over ten years ago.

Magic Circle firms Linklaters and Allen & Overy also have alliances in the country while White & Case is the most recent international firm to enter the market via an association with MD & Partners, which was agreed earlier this year.

IAB&F joins DLA as part of a growing group of ‘relationship firms’, including DLA Phillips Fox in New Zealand, Croatia’s Glinska & Miskovic, Egypt’s Matouk Bassiouny, Sweden’s DLA Nordic and six firms across Africa.

Elsewhere, Stephenson Harwood has ramped up in another much touted market after agreeing a formal association with Singapore’s Virtus Law. This bypasses the need for a qualifying foreign law practice (QFLP) licence to offer Singaporean law. Despite 23 international firms – including Stephenson Harwood – last year applying for the incoming QFLP, only four were granted in the first round.

Stephenson Harwood also this week opened a representative office in Beijing, after receiving approval from the Ministry of Justice late last year. James Zhang, a legal director at the firm, is heading up the branch, which will focus on corporate and maritime law.

The relative difficulty of securing local licences has been seen as a driver for alliances between foreign and local firms. However, Singapore is widely expected to eventually move towards further liberalisation.

Elsewhere, Legal Week today (2 May) reports that Linklaters and Baker & McKenzie are the latest firms to secure approval to launch local offices in South Korea. A large group of foreign law firms last year applied for local licences in response to Bar liberalisation. Eighteen firms have so far received approvals from the Ministry of Justice, including Clifford Chance, DLA Piper, K&L Gates and Herbert Smith Freehills.

david.stevenson@legalease.co.uk

Legal Business

A star signing is one thing but who needs a lateral?

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Strategic recruitment DLA PiperKirkland & EllisLatham & Watkins
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The worlds of business, politics and sport have since the 1970s fallen increasingly under the spell of the star individual and law has been anything but an exception. As partnership mitigates the heaviest excesses of the winner-takes-all compensation cultures seen in banking, sports and plc management, in law the star culture has manifested to a considerable extent via the partner recruitment market.