Legal Business

It’s now or… later. Hogan Lovells to make decision on dual chief executive structure

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Hogan Lovells’ senior management has begun discussions over whether to retain the firm’s dual US-UK chief executive (CEO) structure or continue with a single head if UK CEO David Harris steps down as expected next year.

Harris and US counterpart Warren Gorrell have opened the discussion on succession plans with the transatlantic firm’s board, which in turn will canvass the appetite of partners to move to a single leader now the merger of UK firm Lovells and Washington DC’s Hogan & Hartson is three years down the line.

The ten-strong board includes longstanding legacy Lovells City partners Nicholas Cheffings, who also acts as global chair, and finance partner Emily Reid. US members include new appointees Cole Finegan (Denver) and Dan González (Miami), who replaced New York-based Marc Gottridge and Hamburg-based Andreas Meyer respectively in May.

Over the past three years the firm has phased out some dual US-UK senior positions, with London real estate litigator Cheffings becoming sole chair for a three-year term in February 2012, replacing co-chairs Claudette Christian and the retiring John Young.

However, while there appears to be little doubt in the firm that the dual CEO role will eventually be subsumed into one, it remains a highly divisive issue, with more conservative London partners fearful of US dominance under Gorrell’s watch. Tensions have also emerged following the implementation of a new partner pay model for the legacy Lovells.

One City partner said: ‘David has been with Lovells for years, [and] people trust him. Warren has been around for three. There’s a fear if no one was to stand, he would take over on his own. To be fair, there’s enough fear on both sides that people would prefer two chairs than one.’

A European partner disagreed: ‘[Dual management] was one of those things we thought was a bit odd. It was down to the particular personalities of Warren and David.

‘As time goes on, we should move towards a single management structure. Whether that time is now, or in two to three years’ time, it definitely will [happen]. It’s a natural progression. The dual management structure can’t go on forever.’

sarah.downey@legalease.co.uk

Legal Business

Hogan Lovells was right to get hitched. It needs to remember that.

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The Issue Hogan Lovells
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I’m not a big fan of comparing law firm mergers to marriages. All those torturous metaphors and incongruous imagery. But in assessing the three-year old union between Lovells and Hogan & Hartson, it’s hard to escape the nuptial motif. The deal was forged amid high expectations and a simple analysis: both firms were better off together as neither looked compellingly positioned for an emerging elite of global law. Putting together a transatlantic merger of equals with two large firms that ranked just below the top tier in their respective markets made sense and was arguably a first for the profession.

But, as we address this month, the problem with raising expectations is that you’ve then got to meet them. And on that yardstick the firm has faltered. Three years in Hogan Lovells is still struggling for growth, the gap between its profitability and other global 20 peers remains too wide and the break-through in transactional work is elusive.

Legal Business

It’s now or… later. Hogan Lovells to make decision on dual chief executive structure

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Leadership Hogan Lovells
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Hogan Lovells’ senior management has begun discussions over whether to retain the firm’s dual US-UK chief executive (CEO) structure or continue with a single head if UK CEO David Harris steps down as expected next year.

Harris (pictured) and US counterpart Warren Gorrell have opened the discussion on succession plans with the transatlantic firm’s board, which in turn will canvass the appetite of partners to move to a single leader now the merger of UK firm Lovells and Washington DC’s Hogan & Hartson is three years down the line.

The ten-strong board includes longstanding legacy Lovells City partners Nicholas Cheffings, who also acts as global chair, and finance partner Emily Reid. US members include new appointees Cole Finegan (Denver) and Dan González (Miami), who replaced New York-based Marc Gottridge and Hamburg-based Andreas Meyer respectively in May.

Legal Business

The daily grind – toil and tension as Hogan Lovells gets past the honeymoon period

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Legal mergers Hogan Lovells
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It’s been three years since the trailblazing transatlantic pairing of Hogan & Hartson and Lovells. Legal Business assesses if the much-touted marriage is living up to expectations

Rarely for a June evening in London, the sun was shining on the rooftop bar as the Legal Business journalist by chance ran into a senior partner at Hogan Lovells. ‘I have to ask, as we’re doing a piece on the firm, three years on, how do you think it’s going?’ The reply was to the point: ‘I saw the e-mail telling us not to talk to your journalists. Well, what do you want to know?’

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

City lawyers say court strike will cause minimal disruption but should be given due attention

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Legal affairs Hogan LovellsWhite & Case
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As court staff go on strike this afternoon (17 June) in protest at the Ministry of Justice’s (MoJ’s) plans to cut £220m off the annual criminal legal aid budget, it is with the support of many City lawyers.

The unusual move comes as the Equality and Human Rights Commission (EHRC) last week claimed the MoJ’s plans could breach human rights laws and as lawyers warn that cuts made to civil legal aid earlier this year are already leading to a significant increase in pro bono requests and in areas outside of their expertise.

The strikes are not expected to cause disruption to existing cases – a HM Courts & Tribunals spokesperson said the courts are ‘aiming for business as usual’, while Hogan Lovells confirmed to Legal Business that one of its trials scheduled for today will continue regardless.

The court has put in place ‘robust contingency plans’ which prioritise delivery of its most essential services including custody cases and urgent family cases.

However, lawyers point out that with no history of striking, any kind of industrial action by court staff should be taken seriously.

John Reynolds, head of litigation at White and Case, said: ‘The people who work in the justice system are not known for being militant. When any part of the public sector not known for that goes on strike, it makes a big impact as it shows that normally mild mannered people have been pushed beyond the limit that they’re used to. It should make an impact.’

The strikes come after several hundred lawyers blocked the road outside the MoJ in central London earlier this month in protest against the cuts.

In a further blow to the MoJ’s plans, the EHRC last week (13 June) warned the Government that the proposed cuts could breach equality and human rights laws by excluding vulnerable people from access to justice, and proposed that it should run pilots for some proposals, a sentiment echoed by Legal Business guest blogger, fiscal realist and former government lawyer Carl Gardner.

Mark Hammond, chief executive of the EHRC, said: ‘The Commission recognises that the need to curb public spending applies to all public services, and agrees with the government that the taxpayer is entitled to the best possible value for money. But any budget cuts that are made to the administration of justice must preserve the basic rights of fair and equal access to the courts including for those who cannot afford to pay for a lawyer.’

Lawyers say they have already seen a significant increase in requests for pro bono work since cuts to civil legal aid came into force this year under the Legal Aid Sentencing and Punishment of Offenders Act 2012.

Hogan Lovells City partner and commercial litigator Crispin Rapinet said: ‘From the pro bono point of view here in London, we’re already seeing the effects quite dramatically and since April have experienced a rise in the number of requests from members of the public for free legal service providers.’

The firm has seen a particular increase in requests for advice on family work in relation to access to children and complex divorce case, as well as immigration, according to the firm’s international pro bono manager Yasmin Waljee, who said: ‘It’s difficult for us because that’s not our area of expertise. All of those [requests] would have normally gone to legal aid firms but now people are getting increasingly desperate and looking elsewhere for help.’

Reynolds added: ‘However unfair it is, one can only take on so many cases.’

Justice Secretary Chris Grayling has accused lawyers of making ‘over the top’ claims about legal aid cuts as he warned that spending on criminal cases must fall to protect NHS budgets.

sarah.downey@legalease.co.uk

Legal Business

Hogan Lovells hires rated HSF tax partner in another post merger exit for the firm

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Strategic recruitment Herbert Smith FreehillsHogan Lovells
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Rated Herbert Smith Freehills (HSF) City tax disputes lawyer Rupert Shiers is set to join Hogan Lovells to head its direct tax disputes practice.

Shiers will start in his new role on Monday (24 June), working alongside indirect tax disputes head Michael Conlon QC. He focuses on disputes with HM Revenue & Customs and has led appeals to the First-tier tribunal, Upper Tribunal, Court of Appeal and Supreme Court, as well as references to the European Court of Justice. His clients have included Cadbury Schweppes and BMW Holding.

HSF is a first-tier tax litigation firm, according to Legal 500, where Shiers is said to be ‘very intelligent with a wide-ranging knowledge of tax law, whilst also being a rigorous litigator’.

Commenting on Rupert’s arrival, Fulvia Astolfi, global co-head of Hogan Lovells tax group said: ‘Hiring Rupert reflects our continuing commitment to grow and strengthen this team. Rupert’s skills and experience in conducting tax disputes speaks for themselves and he is a great fit with our practice, complementing perfectly our indirect tax disputes practice led by Michael Conlon QC.

‘With the high level of scrutiny of tax arrangements in the UK, the demand for tax disputes advice is set to increase. In addition, the ever-growing legal structure to tribunal appeals means the role played by tax disputes lawyers is increasingly significant.’

Shiers added: ‘Hogan Lovells offers both a top performing global litigation practice and first class tax advisory practice which, combined, make the firm a perfect fit for my tax disputes expertise and provide an excellent global platform to really develop a direct tax disputes practice.’

His departure is the latest in a series of high profile exits from HSF, including co-head of global arbitration Charles Kaplan to Orrick, Herrington & Sutcliffe in May, and veteran litigator Ted Greeno to Quinn Emanuel Urquhart & Sullivan in March.

sarah.downey@legalease.co.uk

Legal Business

Consumer protection dragged into 21st century with new Bill that could open floodgates to class actions

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Legal affairs Hogan LovellsRPC
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A Consumer Rights Bill published on Wednesday (12 June) is set to radically overhaul the rights of consumers in the digital age but could open the door to US-style class actions, lawyers warn.

The Bill was one of many announced in the Queen’s speech at the state opening of Parliament in May, and if enacted, will enhance consumer rights by making them easier to understand and streamline complex areas of consumer legislation into a single bill.

However, the Confederation of British Industry, speaking for some 240,000 businesses that together employ around a third of the private sector workforce, has highlighted the dangers behind a provision that allows members of the public, businesses or consumers to bring collective actions on an opt out basis.

Matthew Fell, the CBI director for competitive markets, said: ‘We will resist any efforts to introduce US-style class-actions into consumer redress, which risks fuelling a litigation culture and making the UK a worse place to do business.

‘Consumer law should be fit for the digital age but any changes must be properly scrutinised before they are put into practice.’

Hogan Lovells partner and product liability specialist Rod Freeman says they are right to be cautious. ‘It could lead to more litigation and that’s the greatest concern,’ Freeman said.

Speaking to Legal Business, he added: ‘The great concern is these measures on this side of the Atlantic are expressly intended to avoid the excesses that you see in the US class action regime, but the practical reality is the kind of infrastructure that’s been described is naturally going to attract those excesses. There are real questions on whether the safeguards being put in place will be effective.’

Few question that reform of the out of date consumer protection framework is necessary and consumer minister Jo Swinson said: ‘For too long, the rules that apply when buying goods and services have been murky for both consumers and businesses.’

This situation has worsened in the digital age, and the Bill specifically covers consumers’ ability to claim for faulty digital content, including film and music downloads, online games and e-books replaced.

Oliver Bray, commercial, IT and technology partner at Reynolds Porter Chamberlain said: ”There is lots of overlap and uncertainty with legislation including the sale of goods act which is now 30 years old. The messy backdrop is a complex patchwork of legislation. What was slightly bizarre is you have a consumer buying a CD with more protection than someone who is downloading music online.

‘This is going to be good for everyone. It’s simplifying and clarifying, and hopefully will make us more competitive. We are moving to a more sane world where digital content in particular is covered and there’s clearer lines of redress for services than before.’

Freeman added: ‘The area of consumer law in the UK is a mess. One of the great challenges is for the legalisation to keep up with changes in technology and changes in practices in the market. It’s important that it’s coherent, understandable legislation in dealing with digital content as much as it’s important for tangible goods and for services.’

Elsewhere, trading standards officers will be required to provide reasonable notice to businesses before carrying out routine inspections, as well as speedier and faster remedies for businesses that have been disadvantaged by breaches in competition law.

Consumers currently spend more than 59 million hours every year dealing with goods and services problems, according to a government statement published. The hope is that the new measures will reduce the effort consumers and businesses have to make to resolve problems.

sarah.downey@legalease.co.uk

Legal Business

Italy: Hogan Lovells trio departs to Ernst & Young while Bonelli changes management

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Europe BonelliEredeHogan Lovells
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Hogan Lovells’ Rome office has lost partners Gianroberto de Giovanni, Massimiliano Marinozzi and Paolo Ricci to Ernst & Young.

The trio will join as partners of the Italian legal offering of the global audit firm in its Rome and Milan offices. Ricci will take over the leadership team in Italy, while de Giovanni and Marinozzi will head the corporate and dispute teams respectively.

They join Ernst & Young (E&Y) partner Francesco Marotta, who will supervise the development and supervision of the firm’s Mediterranean offices in Italy, Spain and Portugal.

Ricci joined Hogan Lovells’ Italian start-up in 2000 and was head of the firm’s Italian corporate insurance team. Meanwhile, de Giovanni led the Italian energy practice while Marinozzi has over 20 years’ experience of disputes and led Hogan Lovells’ Rome litigation practice.

E&Y’s Italian boost comes as CEO Jim Turley prepares to retire on 30 June after a 12-year stint. He will be replaced by former Bush administration assistant secretary to the US treasury, Mark Weinberger.

Elsewhere, E&Y’s London office also recently announced it intended to boost its in-house legal team, with general counsel Lisa Cameron confirming to Legal Business that it was currently in the process of hiring.

The auditing firm reported global revenues of revenues of $24.4bn at the end of its financial year in June 2012, a $1.5bn increase from 2011 figures, while the headcount was at an all-time high of 167,000.

A spokesperson for Hogan Lovells said: ‘While we are sorry to see Paolo, Gianroberto and Massimiliano move on, our Italian and broader European corporate and litigation practices are very strong market leaders and will continue to expand.’

In other news, Slaughter and May ally and Italian royalty Bonelli Erede Pappalardo has elected two new managing partners following an overhaul of its governance structure.

Employment partner Marcello Giustiniani and tax head Stefano Simontacchi have taken over as joint managing partners from Alberto Saravalle, who served two three-year terms in charge of the firm. Giustiniani will be in charge of internal management, while Simontacchi will oversee strategy.

sarah.downey@legalease.co.uk

Legal Business

Hogan Lovells gets brand boost Apple-style with $17bn bond role

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Corporate Hogan LovellsSimpson Thacher & Bartlett
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Hogan Lovells’ corporate team has received a welcome profile-raiser after advising Apple on its record-breaking $17bn bond issue.

Stuart Stein, Hogan Lovells’ global co-head of corporate, is advising the technology giant alongside corporate and securities partners Eve Howard and Gregory Parisi, according to a Securities and Exchange Commission (SEC) filing on Tuesday (30 April). Apple’s legal fees and expenses were not disclosed.

Wall Street leader Simpson Thacher & Bartlett is advising underwriters Deutsche Bank and Goldman Sachs, according to a preliminary prospectus filed with the SEC on Monday (29 April).

The high-profile issue has been billed as the largest ever corporate debt sale and will be used by Apple to help finance a $100bn cash return to shareholders by 2015, after concerns over slowing growth.

Given its ambitions to materially upgrade its securities and M&A practice following the merger of Lovells and Hogan & Hartson, the mandate will be seen as a major coup for the global law firm. It is acknowledged that Hogan Lovells has been a solid performer since its merger three years ago but has yet to achieve a decisive breakthrough in its transactional practice in the US or UK. The firm saw its London fee income fall by 9% in 2012 while global revenues were marginally down at $1.633bn.

Hogan Lovells’ appointment is notable after Apple replaced it with Morrison & Foerster as its representative in piracy-related class actions two years ago. In the UK, Apple has turned to Freshfields Bruckhaus Deringer in its global dispute with Samsung over its rival Galaxy tablet, with Morrison representing the company in the US.

Hogan Lovells was unavailable for comment.

david.stevenson@legalease.co.uk