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

‘Nothing is off the cards’: Kennedys launches in Scotland with plans to double headcount

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Insurance firm Kennedys has finally entered the Scottish market with the launch of two new offices in Edinburgh and Glasgow.

The firm officially opened its doors today (12 January), creating two new bases with the hire of partners from commercial litigation firm Francis Gill & Co and McClure Naismith.

The Edinburgh office will be the firm’s primary practice in the region while the site in Glasgow will be used to assist services. The practice will offer existing and new clients – mainly insurers as well as large self-insured businesses – commercial litigation expertise.

Francis Gill & Co’s founder and director Frank Gill, along with two assistant lawyers and Rory Jackson, insurance liability and regulatory partner at McClure Naismith, join the firm to kick-start the openings. Both Gill and Jackson will co-lead the practice and the entire team will be based in the Edinburgh office, while Glasgow serves as a base for flexibly working staff in the near future.

Kennedys’ senior partner Nick Thomas told Legal Business that the firm intends to double headcount across the office in the next year through lateral hires at both partner and lawyer level.

The move into Scotland is a particular win for Kennedys that almost took over Scots practice Simpson & Marwick in 2013, but talks fell through in December, despite 18 months of negotiations and a formal announcement of the union in the summer.

In terms of future merger considerations, Thomas said: ‘Nothing is off the cards. This [office launch and organic growth] is much more Kennedys style, but if the right people came along we would certainly think about it.’

‘We’ve made no secret of our desire to be in Scotland, we already have a number of insurer clients in the country and opening up in Edinburgh and Glasgow, under the expert leadership of Frank and Rory, will further enhance how we serve our existing clients and provide us with a very strong platform for further growth, which I expect to occur rapidly,’ he added.

jaishree.kalia@legalease.co.uk

Legal Business

‘Closer ties’: Kennedys enters formal agreement with Chinese firm

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Kennedys has entered into a co-operation agreement with Chinese law firm AnJie as it further boosts its presence in Asia.

AnJie, which is noted in The Legal 500 as having ‘strong power and infrastructure credentials’, has offices in both Beijing and Shanghai with its main practice areas including antitrust and competition, intellectual property, real estate, litigation and arbitration, and banking and finance.

Both firms share a focus on the insurance sector, with key areas of co-operation planned to be corporate insurance and insurance dispute resolution. The two firms will also assist each other’s clients in acquisitions, investments, anti-trust, dispute resolution and regulatory issues.

Nick Thomas, senior partner at Kennedys said: ‘This co-operation progresses a long term working relationship with AnJie, and marks the beginning of even closer ties for Kennedys with the People’s Republic of China.’

Zhan Hao, managing partner of AnJie added: ‘It will help us to serve a wider range of clients, and is a natural extension to what we already do. There are a lot of similarities between our firms, and we have already worked seamlessly with Kennedys on various projects.’

In December, Kennedys boosted its Asia presence with the hire of a seven-lawyer aviation team in Singapore. This new co-operation agreement with AnJie takes the firm’s total number of offices and cooperation’s to 30 worldwide.

kathryn.mccann@legalease.co.uk

Legal Business

News in brief – December 2014

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KennedysKing & Wood Mallesons
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KING & WOOD MALLESONS HIRES HEAVYWEIGHT EVERSHEDS TRIO

KWM last month hired former Eversheds senior partner Cornelius Medvei alongside former international head of real estate William Naunton and former London head of tax Clive Jones. The trio will lead expansion plans for the firm’s structured real estate team.

Legal Business

‘Taking its time to reflect on the next phase’: Kennedys CEO steps down without a successor in place

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Kennedys chief executive officer Guy Stobart has announced he will stand down at the end of 2014 after five years of leading the firm.

At Kennedys, there is not an official term length for leadership roles, but Stobart told Legal Business that now was the right time to make this decision. He will continue in a consultancy role until April 2015 during which he will continue various projects, including a review of the firm’s current tax structure, after which he will leave the firm.

‘One of the many joys of this job is that you are at the centre of things and acquire a lots of wisdom, and this does not disappear overnight. There are many things that I am happy to continue doing,’ added Stobart.

The firm has no current plans to replace him, Stobart added the firm is ‘rightly taking its time to reflect on the next phase and succession’. In the meantime, senior partner Nick Thomas will assume the chief executive duties.

During Stobart’s tenure, the firm’s turnover has almost doubled from £68m in 2009 to £128.5m this year, while headcount has grown from 796 to over 1250. This is alongside the launch of five new offices, in Europe and Latin America, over the same period. 

Stobart joined Kennedys as chief executive in 2009 and has managed nine UK offices as well as ten outside of the UK. He helped develop Kennedys’ business services team, as well as introducing agile working, upgrading the firm’s IT system, implementing a practice management system and outsourcing information services to Integreon.

Before Kennedys, Stobart completed three terms as managing partner at Burges Salmon, where he worked for over 26 years, and was appointed managing partner in 1995 and then again in 2001. He became a partner at Burges Salmon in 1986 after joining as an assistant in 1983. Prior to this, Stobart was an articled clerk and assistant solicitor at Slaughter and May for five years and a half years.

Kennedys senior partner Nick Thomas said: ‘Guy has made a very valuable impact on Kennedys’ business, having been part of taking a great business and making it ever stronger. I wish him well in whatever he chooses to do next and thank him for the commitment he has made to Kennedys’ growth agenda. One of his legacies is the team of business services directors in place to continue spearheading our growth.’

jaishree.kalia@legalease.co.uk

Legal Business

ABS latest: Kennedys wins licence to maintain non-lawyer partners

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ABS Kennedys
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Insurance specialist Kennedys has received approval from the Solicitors Regulation Authority (SRA) to become an alternative business structure (ABS). The new status will allow the firm to retain four non-lawyers as partners. The new status took effect on 1 November.

Kennedys chief executive officer Guy Stobart told Legal Business that the firm converted to the new structure to ensure regulatory compliance but added that becoming an ABS would also throw up potential new business ventures, in particular, allowing the firm to partner with non-lawyer services.

‘No doubt, the conversion to ABS provides opportunity, and one we are piloting right now is to create satellite operations,’ said Stobart.

In 2009, Kennedys was the first City law firm to become a legal disciplinary practice (LDP), which enabled chartered legal executives to become partners. Under the Legal Services Act, the LDP model is set to phase out – another reason why the firm has opted for the ABS model.

‘We will cease to be a LDP, which leaves us with two options – go back to being the old-model partnership or become an ABS. We didn’t want to lose our four partners so the ABS is a good fit,’ said Stobart.

Kennedys currently has four non-solicitor partners – two legal executives and two partners with no legal qualifications.

Senior partner Nick Thomas (pictured) added: ‘Having an ABS licence will not change the day-to-day running of the business and we are not considering external investment in the law firm. It will help us operate as a modern legal services business, with greater flexibility to take advantage of future growth opportunities.’

In the 2013/14 financial year, Kennedys reported 10% increase in turnover to £128.5m with £98.3m being generated in the UK. Revenue has grown 91% in the last five years, while profit per equity partner was up 3% in the last financial year to £419,000.

jaishree.kalia@legalease.co.uk

Legal Business

Clydes hires Kennedys aviation heavyweight as it builds practice

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Strategic recruitment Clyde & CoKennedys
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Clyde & Co has hired Kennedys’ aviation liability and insurance star David Johnston with further lateral hires expected.

Johnston specialises in Asia-Pacific aviation liability and insurance matters and has handled some of the recent major Asian air disasters. Johnston represents insurers and airlines on regulatory issues, commercial disputes and transactions as well as high profile aviation cases.

Clyde & Co is understood to be expanding its aviation practice with a further two partners expected to join shortly, extending its capabilities.

At Kennedys, Johnston was on standby to advise the Malaysia Airlines’ insurance company, Allianz Insurance, for any potential claims arising against the airline after the Malaysian Airlines flight MH370 crashed into the southern Indian Ocean.

Johnston has also handled other major air disasters including the Korean Air MD-11 accident in Shanghai, Singapore Airlines SQ006 in Taipei, the Air China accident in Busan, the Garuda Solo, China Northern Airlines Dalian and China Eastern Yunnan Baoutou accidents, and the Airblue accident in Pakistan in 2010.

Johnston previously headed the Singapore office at Gates and Partners from 2007, before it merged with Kennedys in June 2013 to form the specialist aviation team, Kennedys Aviation, which comprised 60 people including 20 partners. Before Gates and Partners, Johnston was a partner at Barlow Lyde & Gilbert – which merged with his new firm Clyde & Co in November 2011.

Jaishree.kalia@legalease.co.uk

Legal Business

Financial Results 2013/14: Kennedys unveils a double digit hike in turnover to £128.5m

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Financial results 2013/14 Kennedys
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Kennedys is the latest UK firm to announce its 2013/14 turnover, unveiling double digit growth with revenue up by 10% to £128.5m.

The lion’s share of revenue at the top 30 firm came from its UK activity, which generated £98.3m.The firm has attributed it’s growth to its merger over a year ago with aviation practice Gates and Partners, which in May 2013 took total headcount at the firm to 176 partners, while the specialist aviation team, Kennedys Aviation, now comprises 20 partners.

The combination also gave a boost to turnover in the firm’s UK, Singapore and Dubai offices, and facilitated expansion in its insurance and aviation practices. Kennedys in September last year also announced an association with Bogota-based insurance law boutique Botero Salazar Tobón & Abogados.

Senior partner Nick Thomas said: ‘We’ve made some strong lateral hires throughout the past year, which along with our merger with Gates and Partners, has contributed to another positive year.

‘Looking ahead, our growth will continue to be predicated on client need and organic growth. We continue to explore opportunities for international expansion and we remain very focused on driving operational effectiveness throughout our network of offices.’

Kennedy’s made five lateral partner hires during the year, including former CMS Cameron McKenna Hong Kong insurance head Michael Skrbic, who joined the City office in March from Commerzbank.

In May, the firm called on its fixed-share partners to make a 30% capital contribution in light of HM Revenue & Customs’ (HMRC’s) decision to overhaul the way salaried partners are taxed.

jaishree.kalia@legalease.co.uk

Legal Business

Flight MH370: Kennedys’ aviation partner David Johnston on standby for claims

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Asia Kennedys
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As the Malaysian government this week releases the raw data used to show Malaysian Airlines flight MH370 crashed into the southern Indian Ocean, Kennedys aviation liability and insurance partner David Johnston is on standby to deal with any potential claims arising against the airline.

The Singapore-based partner has been retained for Malaysia Airlines’ insurance company, Allianz Insurance, with the family members of some of the crash victims having already filed a multi-million dollar law suit against Boeing and Malaysia Airlines in the US, reported by the Asian press and Yahoo news to be for a value of RM4.95bn (£914.25).

Chicago-based firm Ribbeck Law, led by of counsel Monica Kelly, is advising claimants from China and Indonesia on the proceedings, which follow a petition filed in Cook County Circuit Court in Illinois for discovery against the aircraft manufacturer and the airline.

According to an article re-published on Ribbeck’s website, the focus of the case will be on Boeing and a so far unproven accusation that the crash was caused by mechanical failure.

Of the 239 people on board MH370, 154 are understood to have been Chinese nationals. There were 49 Malaysian and seven Indonesian passengers.

Kennedys said that Johnston was unable to speak to press in relation to the case and instead said in a statement: ‘Kennedys’ aviation team have a long standing relationship with the airline and its insurers and were the designated lawyers on MAS’ insurance policy.’

Johnston has previously advised on the Korean Air MD-11 accident in Shanghai, the crash of Singapore Airlines SQ006 in Taipei, the Air China crash in Busan and Pakistan’s deadliest air accident of Airblue Flight 202 in 2010, which crashed on the outskirts of the capital with 152 passengers on board, leaving no survivors.

jaishree.kalia@legalease.co.uk

Legal Business

HMRC LLP rule change – Kennedys calls on fixed-share partners for 30% capital injection

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Kennedys has become the latest UK firm to call on its fixed-share partners (FSPs) to make a 30% capital contribution in light of HM Revenue & Customs’ (HMRC’s) decision to overhaul the way salaried partners are taxed, giving the firm some ‘headroom.’

The top 30 UK firm was in consultation with its partnership in January, which went to a vote, after which the firm decided its FSPs should contribute 30% of their earnings, 5% above the amount required under the new HMRC rules.

The rule change dictates that partners in limited liability partnerships (LLPs) with less than 25% of their salary attached to the equity will be viewed as having a ‘disguised salary’ and taxed as an employee, including National Insurance, meaning higher salary costs for LLPs.

Kennedys chief executive officer Guy Stobart told Legal Business: ‘We tried to keep it [the contribution] as tight as possible, but we would like some headroom.’ Stobart added that the contribution will be used as part of the firm’s ‘working capital’, and declined to be drawn on whether it would use the money for strategic development. The new rules prohibit firms paying the capital injection off against existing debt.

Legal Business understands that the request for cash will affect around 100 of the firm’s non-equity partners from legacy Kennedys. The firm merged with aviation practice Gates & Partners on 1 June last year creating a 176-partner firm.

In April this year Hogan Lovells called its 65 non-equity members to contribute capital of around £60,000 to £100,000 each. Capital investment by salaried partners – which will total between £3.9m and £6.5m – will save the firm having to pay more in tax in respect of national insurance, and the firm said today (3 April) that loans will be available to salaried partners from the firm’s banks on the same terms as those available to equity members.

Also in April, CMS Cameron McKenna call upon its fixed-share partners to contribute around £35,000 to £50,000 each, bringing in a total capital investment of up to £4.5m.

A partner at the firm told Legal Business: ‘The firm doesn’t necessarily need the money – it’s not a call for borrowings or to meet debt requirements. It’s a call to even out the capital positions across the various levels of the partnership. People were not necessarily happy taking on more borrowings but it hasn’t caused any ructions across the junior partnership.’

Jaishree.kalia@legalease.co.uk