Anna Cole-Bailey rounds up the latest management reshuffles at home and abroad
The autumn saw significant c-suite changes announced at Global 100 and Legal Business 100 (LB100) players, with Baker McKenzie voting in Milton Cheng as its new chair in a victory for the Asia partnership, while the figureheads of Herbert Smith Freehills (HSF), TLT and Clyde & Co will step down to pave the way for successors.
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Herbert Smith Freehills (HSF) CEO Mark Rigotti is to stand down from his role next year, with the firm now priming itself to select a new leader once his term ends on 30 April.
The firm’s council will be the body appointing the new CEO, and is at the early stages of launching a selection process for Rigotti’s successor. The new incumbent will occupy the sole CEO position after the firm switched from a dual model in 2017.
Rigotti (pictured) first took the leadership mantle at HSF alongside Sonya Leydecker in 2014. The decision to appoint Rigotti as sole leader followed a consultation with the firm’s partnership following the merger between Herbert Smith and Freehills in 2012, with Leydecker apparently surprised by Rigotti’s appointment.
The leadership role at HSF typically does not exceed two terms, while Rigotti told Legal Business his decision was due to a desire to return to his native Australia for ‘personal and professional reasons’ after ‘six years and a solid run.’
In 2018, HSF senior partner James Palmer saw off a challenge from disputes partner Mark Shillito to be re-elected as senior partner and chair of the firm, receiving approval from over 50% of the partnership. Palmer’s victory against former head of disputes Shillito exacerbated a long-running rift between HSF’s transactional and contentious factions, with the upcoming CEO selection process likely to produce similar challenges.
Most recently HSF produced a sluggish financial performance despite a strong year for the corporate practice, with revenue rising a pedestrian 4% to £966m, while profits rose 11% to £307m. PEP, meanwhile, matched overall profit growth, rising to £949,000.
thomas.alan@legalbusiness.co.uk
For more background on Rigotti’s leadership of HSF, read ‘Taking over – one leader at HSF but is the culture clash over?’ (£)
Sir John Major (pictured) has instructed litigation heavyweight Herbert Smith Freehills (HSF) as the former Prime Minister looks to join investment manager Gina Miller in a legal challenge against the suspension of Parliament.
HSF disputes partner Andrew Lidbetter has been enlisted to instruct The Rt Hon Lord Edward Garnier QC and Tom Cleaver of Blackstone Chambers, with the pair representing Major as he looks to get behind the existing claim brought by Miller, rather than initiating separate proceedings.
Meanwhile, Mishcon de Reya partners James Libson and Rob Murray have been instructed by Miller.
In a statement, Major said: ‘I promised that, if the Prime Minister prorogued Parliament in order to prevent members from opposing his Brexit plans, I would seek judicial review of his action. If granted permission to intervene, I intend to seek to assist the Court from the perspective of having served in government as a minister and Prime Minister, and also in Parliament for many years as a member of the House of Commons.’
Murray acted for Miller when Mishcon successfully pursued a claim in the Supreme Court that an Act of Parliament was required to trigger Brexit. However, a separate legal challenge against the proroguing of Parliament supported by 75 MPs failed today (30 August) after a Scottish judge temporarily refused to make an emergency order preventing the suspension.
While Miller’s 2017 claim proved successful, she is expected to face an uphill battle in convincing the courts a proroguing of Parliament is unconstitutional. Miller’s case also faces greater time constraints than in 2017, with judicial review a slow process which will have to be expedited. The time pressure will be all the greater as the side that loses the first review will likely appeal.
For more on the potential constitutional ramifications of Brexit read Legal Business’ analysis Brexit vs Dicey.
Herbert Smith Freehills (HSF) has made what its senior partner James Palmer described as a ‘game changer’ for its Chinese practice by signing a joint operation agreement with 20-lawyer Shanghai firm Kewei.
The move announced today (7 August) makes HSF the sixth Western firm to acquire PRC law capability in the Shanghai Free Trade Zone (FTZ), as part of the scheme launched by the Chinese government in 2013 in a bid to boost foreign investment.
While HSF’s 35-strong China operation remains barred from practising local law, the deal will allow its Shanghai practice to team up with Kewei’s PRC-qualified lawyers on client matters through a contractual arrangement known as HSF Kewei.
Palmer told Legal Business: ‘This may look just like another decision but it’s strategically key: clients are looking for integrated capability and if you can deliver it, as we now can, that’s a game changer for us in terms of offering advice in China.’
The deal took over a year of negotiations and planning before receiving the approval of Shanghai’s Bureau of Justice. Palmer said HSF picked Kewei because the firm, launched in 1995, had been growing with a view to tying up with an international player in recent years.
He said: ‘It was not a firm we would have worked with five years ago, but it developed a strategy to meet international quality standards with a view to entering an international partnership like this. It wants to be the Shanghai end of global quality work.’
As part of the deal, Kewei has also absorbed HSF’s alternative legal services hub, set up in Shanghai in summer 2016, into its own managed services business.
The initial focus of the joint operation will be on cross-border M&A, finance, disputes, competition, capital markets and financial services regulatory. Palmer noted the firm had not set any targets for headcount growth but its development would be influenced by ‘client response and the quality of people we can find’.
Despite being the only way around the ban on local law for foreign counsel in mainland China, just five firms have preceded HSF in signing similar partnerships in the six years since the launch of the FTZ.
The first was Baker McKenzie, which in April 2015 signed an association with FenXun Partners, followed by HFW’s deal with Wintell & Co in April 2016; Hogan Lovells’ alliance with Fujian Fidelity Law Firm in October 2016; and Ashurst’s tie-up with Guantao in January 2018.
Completing the group is Linklaters which, after holding talks with several firms for years, resolved to spin off some of its team to launch 30-lawyer practice Zhao Sheng and then set up a joint operation with it, which received the green light in May last year.
Palmer mentioned the current challenging economic climate in China amid trade wars with the US and the difficulties in finding a partner firm of the right quality as some of the challenges in the route to such partnerships for Western firms.
He added: ‘We take a long-term view: we are looking at the next 10 to 20 years, and international trade with China is going to increase massively. So we were not worried to enter [this association] in this period.’
The Shanghai launch comes after HSF posted the second consecutive year of sharp uptick in partner profits amid slower revenue growth. The firm’s top line rose 4% to £966m while profit per equity partner surged 11% to £949,000.
Marco.cillario@legalbusiness.co.uk
For more details on the fate of Shanghai joint operation agreements, see ‘Letter from Shanghai: Despite high hopes, it turns out there is no such thing as a free trade lunch’ (£)
In a quiet week for lateral recruitment, Weil, Gotshal & Manges hired from Ashurst in the City as other firms made notable moves further abroad.
In London, Weil expanded its banking and finance practice with the hire of Paul Stewart, currently at Ashurst. Stewart has experience in domestic and international finance transactions as well as leveraged acquisition finance and debt restructuring.
Weil London managing partner Mike Francies (pictured) commented: ‘We are delighted to have recruited someone of Paul’s caliber. His expertise and diverse lender practice are a perfect match for our market leading leveraged finance team.’
Meanwhile in South Africa, Herbert Smith Freehills added two partners and their teams to its Johannesburg office, for a total of 13 hires.
The hires included Nick Altini from Baker McKenzie, where he headed the firm’s competition practice, as well as corporate transactions partner Ross Lomax from Norton Rose Fulbright, who joins next month. HSF’s Johannesburg office now has three corporate partners and two competition partners.
Corporate partner Rudolph Du Plessis told Legal Business: ‘Towards the end of 2018, there was a dip from an M&A point of view but we’re expecting it to pick up in 2019. We have seen, in the first part of 2019, an increase on transactions both inbound and outbound. With an enhanced M&A activity there will be enhanced competition activity and there seems to be quite a lot of movement on the African continent in respects to competition law.’
Elsewhere, Pinsent Masons added to its life sciences and technology practice in Dublin with the hire of Michael Finn, who joins from Matheson. Finn, who led Matheson’s IT disputes group and established its life sciences regulatory and litigation practice, has experience in advising technology companies on life sciences and medical device laws, as well as IP litigation and the defence of product liability litigation.
Clare Tunstall, head of life sciences at Pinsent Masons said: ‘Pinsent Masons has a pan European team of lawyers specialising in life sciences and healthcare who advise across a range of IP, transactional and regulatory matters and Michael’s stellar reputation and experience makes him a fantastic addition to our team.’
Finally, Simmons and Simmons has hired George Vlavianos to its dispute resolutions practice in Doha, Qatar. Vlavianos joins from Bennett Jones and has a particular focus on complex energy and construction disputes with experience in advising owners, contractors and sub-contractors on contractual issues.
Herbert Smith Freehills (HSF) has hired a six-strong energy and infrastructure team from Paul Hastings, with two partners and four associates joining the Anglo-Australian firm in Milan.
Lorenzo Parola will decamp Paul Hastings, where he chaired the firm’s EU energy and infrastructure practice, and is joined by Milan-based partner Francesca Morra. Parola focuses on energy projects development, while Morra has experience on energy regulation and competition law.
The new energy and infrastructure team sees HSF’s Milan office count four partners, with Italy the second largest energy market in Europe.
HSF global head of corporate Scott Cochrane (pictured) told Legal Business: ‘We have consciously been thinking about European expansion from a sectoral point of view for a while. When it became apparent a team was available, it made sense to look at it because Italy is a big energy market with a few big energy clients for whom we act.’
He added: ‘Europe is important for us and we’ve seen growth there. We don’t want to do size for size’s sake, it has to line up strategically from a sector perspective.’
Over the last financial year Europe has been a boon for HSF, with profits from the continent hiking 30% as the firm looks to deepen its European commitments in light of domestic uncertainty. HSF’s firm-wide results, announced earlier this month, showed a pedestrian 4% increase in overall revenue against an 11% increase in profits.
The Milan expansion comes off the back of contraction in Germany, when HSF last month announced it would close its Berlin office by the end of the year to focus on Frankfurt and Düsseldorf.
Revenue growth at Herbert Smith Freehills (HSF) remains sluggish after a strong year for the corporate practice was offset by a relative slowdown in disputes.
Revenue grew a steady 4% to £966m, whereas profits grew 11% to £307m. Profit per equity partner (PEP) matched overall profit growth, rising 11% to £949,000.
Last year the firm posted flat revenue growth, up less than 1% to £927m as profit grew 8%. Last year’s PEP growth at 12% outpaced this year slightly, however. Over the last two years, the disparity between revenue and profit growth has been stark, with revenue up 5% as PEP and overall profit grew 25% and 20% respectively.
‘The two engines of the firm – our people and our clients – are firing at the moment,’ HSF chief executive officer Mark Rigotti (pictured) told Legal Business. ‘Corporate is up 16% globally, it’s been a really good contributor.’
He added that while none of the firm’s practice areas had a bad year, its traditional breadwinner – disputes – saw slower than normal growth: ‘Disputes continued to do well, but not as much an increase as other years.’
Employment grew 11%, while Europe was one of the firm’s stronger regions. Meanwhile, mood among partners at the firm is said to be high due to an increase in remuneration: ‘What we pay partners is by point value and that’s gone up 15%,’ Rigotti said. ‘It makes people feel good and confident.’
The firm announced a 13% increase to its associate pay package last week to £105,000 including salary and bonuses, in a hope to place greater emphasis on performance rather than post-qualified experience.
Herbert Smith Freehills (HSF) has joined the ranks of firms upping their associate pay commitments, boosting its compensation package to £105,000 including salary and bonuses.
The figure is a 13% increase on the £93,000 the Anglo-Australian firm announced last year. Though the firm would not disclose the underlying basic salary, the new structure is meant to place greater emphasis on associates’ performances and less on post-qualified experience (PQE).
‘It is important that we continue to attract and retain the best talent to deliver the service our clients expect and deserve,’ said HSF executive partner Ian Cox. ‘Newly-qualified associates – along with all our junior associates – represent a key pool of talent and the future of the firm.’
Despite the new focus on performance, HSF stressed the changes will not mark a radical departure from the associate salary structure introduced in 2018, when the firm announced that associates with two years PQE can earn up to £114,000.
The announcement comes after Linklaters became the last of the Magic Circle to unveil a significant pay hike yesterday (1 July), boosting the cash payable to NQs to £100,000 after Freshfields Bruckhaus Deringer went first in May with a big increase.
While the battle over associate pay continues to unfold, US players are still significantly ahead on associate remuneration.
A woman who filed a sexual harassment case against her employer was allegedly told by a Herbert Smith Freehills (HSF) lawyer the case would end her career.
City finance associate Nathalie Abildgaard was awarded £270,000 in April after settling a sexual harassment case against her employer IFM Investors. However Abilgaard wrote in a submission to the Women and Equalities Committee a HSF lawyer had engaged in ‘aggressive and intimidating behaviour.’
Although not named in the document, the firm confirmed that employment partner Andrew Taggart has since been reported to the Solicitors Regulation Authority (SRA).
The written evidence details how Taggart had allegedly stressed to Abildgaard’s lawyer that if she stood in the witness box her career in the City’s finance industry would be effectively over. In her submission Abildgaard accuses Taggart of using words to the effect of: ‘If Nathalie goes on the witness stand tomorrow, her and her partner’s credibility will be so shuddered they will never be able to work in the financial industry in London again.’ Taggart was alleged to have concluded that ‘Nathalie is toast.’
Although Abildgaard reported Taggart to the SRA in January over his handling of the defence of her claims, Taggart has not yet been contacted by the SRA.
In a statement, HSF said: ‘We are aware that Ms Abildgaard has made a complaint to the SRA. This process is at its early stages and we will be fully co-operating with the SRA.’
Meanwhile, a spokesman for the SRA said: ‘We are aware of the situation and getting all the relevant evidence in place.’
Abildgaard’s case was settled without the controversial use of non-disclosure agreements (NDAs) which have recently received increased scrutiny. A report by the Women and Equalities Committee on discrimination and harassment in the workplace published yesterday (11 June) condemned the ‘routine cover-up’ of discrimination allegations by employers.
Currently the SRA is investigating 19 cases related to the use of NDAs and 13 cases related to sexual harassment.
Herbert Smith Freehills (HSF) will be closing its Berlin office by the end of the year, reducing the firm’s German footprint to Frankfurt and Düsseldorf.
The 10-lawyer office was first opened in 2013 and is currently led by corporate partners Dirk Hamann and Ralf Thaeter. All associates, trainees and business services staff in Berlin have been given the option to transfer to the firm’s other German offices.
HSF managing partner Nico Abel said in a statement: ‘After careful consideration and consultation, we have decided to close our office in Berlin. So that we are best placed to meet current and future challenges, and make the most of opportunities, we must ensure we have the right capability in the right locations. We want to concentrate our future growth in Frankfurt and Düsseldorf, as these are the markets with the greatest opportunities for the firm and our clients.’
Traditionally international firms have focused on Munich and Frankfurt rather than Berlin, with HSF’s Berlin exit suggesting a refocusing along similar lines. Notable exceptions include Dentons and Greenberg Traurig, who both have a meaningful presence in the German capital.
The German retreat also follows a curtailed London promotion round for the Anglo-Australian firm, with four partners being minted in the City. However the global round was an increase on last year, with 22 lawyers being added to the firm’s partnership overall.
‘Germany continues to be a key strategic market for the firm, and we remain strongly committed to growing our leading practice in the region,’ Abel added. ‘We are confident that we can continue to provide the same quality and breadth of service to our clients in Berlin.’
