Legal Business

‘Natural choice’: long relationships see Freshfields and Linklaters bag roles on Poundland bid

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Both Linklaters and Freshfields Bruckhaus Deringer scored lead roles on an attempt by South Africa’s Steinhoff International Holdings to take over British retailer Poundland. Steinhoff, a $22bn homeware and clothing conglomerate, made a bid to take over Poundland, which it already had a 23.26% stake in. At press time, Poundland had rejected Steinhoff’s initial bid, but Steinhoff upped its holding in the UK discount retailer to 23.52%.

Steinhoff already owns PEP, which sells discount clothing, footwear and homeware across 1,800 stores in Africa, as well as UK chain Harveys Furniture.

Legal Business

Record year for Linklaters as strong M&A run pushes firm over £1.3bn revenue boundary

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Financial results 2015/16 Linklaters
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Revenue at Linklaters has crossed £1.3bn for the first time, up 3% in 2015/16 to £1.31bn, as profits per equity partner hit a new high of £1.403m.

It may have taken eight years, but Linklaters has surpassed the £1.29bn it achieved in 2007/08, following strong performances across its M&A, project finance, dispute resolution and TMT practices. The firm added an extra £43.5m worth of revenue to the £1.266bn it achieved in 2014/15.

It’s a strong showing, in keeping with the improved results released by other Magic Circle firms for 2015/16, following a five-year spell of flat performances broken only by a 5% jump in turnover during 2013/14. The growth is largely organic too, with headcount rising only by 18 lawyers last year.

The rise in partner numbers were smaller still, up by just two to 452, which meant most the rise in revenue ended up in the pockets of partners. Profits per equity partner (PEP) were up 3% to £1.403m, an increase of £35,000. This, perhaps crucially at a time of high-stakes lateral recruitment by US rivals in London and Hong Kong, takes the top of equity at Linklaters to back over £1.8m.

Gideon Moore (pictured), who succeeded Simon Davies as the firm’s managing partner in January said: ‘We had a decent pickup in the second half and we ended up with record profit, record revenue and record PEP. That doesn’t mean there isn’t room for further improvement but if you are hitting record levels in each of these three categories then you would want your partners to feel pretty comfortable with what they have achieved.’

While law firms were impacted by a slowdown in M&A volume towards the end of 2015, partially due to political and economic instability, Linklaters’ corporate group landed a string of big-ticket mandates to outperform the market. ‘M&A had a good year,’ said Moore. ‘Really solid and people thought that would wane because of Brexit but that wasn’t the case.’ Standout mandates include advising SABMiller on its $108bn takeover by brewing rival Anheuser-Busch InBev – last year’s second biggest deal, acting for Belgian supermarket chain Delhaize on its €26bn merger with Dutch grocery giant Ahold and advising Visa Europe on its $23.4bn takeover by Visa.

While Moore is quick to add that he’s ‘quite happy with our current size and shape’ given the ‘low growth legal services environment’, he noted ‘there is a growth agenda’ and a shift away from the cost cutting that symbolised his predecessor’s time at the helm. During the handover period, Linklaters made a double hire in the US after a long period of stasis with the arrival of Baker & McKenzie New York litigation head Douglas Tween and Willkie Farr & Gallagher restructuring partner Margot Schonholtz. Those hires were followed up with the recruitment of Adam Lurie from Cadwalader, Wickersham & Taft in February to head the firm’s Washington, DC litigation and government investigations practice. ‘Our US offering is good for what we’re doing at the moment but there are opportunities that we can bolster our profile and presence,’ said Moore. ‘Investigations and disputes are two key growth areas.’

With popular M&A heavyweight Charlie Jacobs set to take up the senior partner role from Robert Elliott in October, the mood at Silk Street is largely upbeat, bar unease about a devastating raid by Kirkland & Ellis on the firm’s private equity group. ‘The mood within the firm is good,’ said Moore. ‘The best way to deal with the challenges out there is to rally the troops, remain collegiate and believe in our culture and work closely together.’

tom.moore@legalease.co.uk

Read our wrap of big four 2015/16 financial results here.

Legal Business

Linklaters leadership shuffle: Senior partner candidate Comiskey made corporate head

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Less than two months after missing out on the coveted senior partner role at Linklaters, Aedamar Comiskey has been made global head of the Magic Circle firm’s corporate division.

Comiskey (pictured) attracted broad support for the senior partner role but eventually missed out to frontrunner Charlie Jacobs in a partnership vote in May. The race was between three corporate partners, with Antwerp-based Jean-Pierre Blumberg also standing.

She succeeds Matthew Middleditch as global corporate head, a role the veteran deal maker assumed in 2014 ahead of Jeremy Parr’s retirement to take up the role of general counsel at Jardine Matheson in Hong Kong. The change in roles sees the global head of corporate role return to London, with Middleditch based in Hong Kong.

Comiskey had sat on the firm’s partnership election committee for four years and had a three-year stint as co-head of Linklaters’ retail sector group. She is a non-executive director at FTSE oil and gas company James Fisher and Sons.

Middleditch, who has been a partner at Linklaters for over 25 years, has been handed the newly created role of global corporate chairman, a position that will allow him to take a more ambassadorial role.

Linklaters managing partner Gideon Moore said: ‘With their extensive cross-border expertise, deep sector-based knowledge and commitment to supporting our clients with their most complex and critical matters, Matthew and Aedamar bring tremendous experience to these roles. Matthew’s newly created role recognises his standing in the market and the firm, as well as his deal record and the key client relationships that he will maintain. Aedamar’s significant leadership skills and experience make her ideally placed to help build on the progress the team has made under Matthew.’

tom.moore@legalease.co.uk

Legal Business

‘We’re not immune from how these changes will impact on our clients’: Linklaters leader Moore on Brexit vote

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Linklaters managing partner Gideon Moore has warned that it’s not just the UK’s relationship with Europe that will change as a result of the Brexit vote, but Britain’s relationship with the rest of the world, as London’s leading position as a financial, legal and accountancy hub comes under threat from a vote to leave the EU.

Head of one of the biggest law firms in London, Moore (pictured) told Legal Business: ‘The important thing we need to remember is that this vote doesn’t only change our the UK’s relationship with the EU, it changes its relationship with the rest of the world as a lot of our trade deals are through the EU.’

Staff at Linklaters, as is the same across the City, were worried by the outcome but Moore moved to reassure the workforce of their positions. ‘On a human level, we have a number of lawyers and business services people in the UK who will want to know what their position will be,’ he said. ‘I said that as far as we’re concerned you’re an important part of Linklaters so don’t worry about it. Linklaters has always been good at reacting positively to changes and we will continue to be so. The important thing is that we remain close to our clients.’

He also noted that ‘we, as other professional organisations do, have the ability to move people around and have the ability to work in other parts of Europe.’ Moore confirmed a few  Linklaters lawyers, mainly in its competition practice, had applied for admission in Ireland, but he did not expect huge numbers to become admitted there.

While admitting that Linklaters is ‘not immune from how these changes will impact on our clients’, Moore said ‘English law is and will continue to be important’.

With UK law firms having spearheaded the globalisation of the legal industry, carrying English law with them across the world, Moore said the impact of a devalued sterling ‘ought not to make any difference’ for firms that pay partners in local currency. However, ‘if you allocate your profits on a sterling basis then you will perversely find that UK partners’ profit will go up if sterling weakens relative to the euro and the dollar.’

For Moore, who headed Linklaters banking group before being appointed global managing partner, ‘the big question now is whether there is recognition that the City is not just good for the UK but for Europe’.

Financial organisations currently take advantage that if you operate in the UK, you can operate in the rest of the EU, which has fueled London’s rise as a financial and legal hub. Moore argues that ‘leaders may come to the conclusion that changing financial services passporting won’t help Europe, as it could result in work being sent to other parts of the globe, so decide it’s best for Europe to allow the City of London to keep operating the same way.’

He concluded: ‘The jury is out. The UK government needs to decide what its priorities are in its negotiations with the EU.’

tom.moore@legalease.co.uk

For more analysis see: ‘The profession reels as shock Brexit vote sends UK crashing out of EU… and into years of uncertainty’ or ‘LB’s Brexit take: City law’s globalisation playbook has just been shredded’

Read Slaughter and May corporate heavyweight Nigel Boardman’s view here.

You can click here and here to see our two-part Insight special on Brexit.


Legal Business

Linklaters the latest to match Cravath’s $180,000 associate pay in New York salary war

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Linklaters has become the latest, and the last, of the Magic Circle firms in the US to match Cravath, Swaine & Moore’s $180,000 pay for first year associates in New York.

The firm said in a statement: ‘We confirm that Linklaters will be increasing US associate base salaries, in line with the new scale first announced by Cravath.’

White-shoe firm Cravath set the new $180,000 rate, up $20,000 on 2015, last month in a move that prompted rivals to follow suit. Linklaters’ closest UK rivals – Freshfields Bruckhaus Deringer, Allen & Overy and Clifford Chance – have already confirmed they will match Cravath’s new pay for their New York lawyers.

The move means New York lawyers at Linklaters could be earning up to £33,000 more than their peers in London. The firm raised pay in London in March, with average pay for newly-qualified lawyers rising to £81,000 including bonus. High performers will on average earn £91,000 including bonus. This is up on the basic £68,500 salary newly-qualified lawyers at Linklaters earned in 2015.

The changes also saw Linklaters increase holiday days and entitled staff to work one day a week from home.

Some of the other US firms to boost pay include Milbank, Tweed, Hadley & McCloy, Paul, Weiss, Rifkind, Wharton & Garrison, Weil Gotshal & Manges and Cahill Gordon & Reindel.

tom.moore@legalease.co.uk

Read more on salary wars in: ‘Guest post: US associate pay – welcome to the New Mediocre’

Legal Business

The usual suspects: Linklaters and Freshfields take roles as Steinhoff gears up for Poundland takeover

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Magic Circle duo Linklaters and Freshfields Bruckhaus Deringer have scored lead roles on an attempt by South Africa’s Steinhoff to takeover British retailer Poundland.

Steinhoff, a $22 billion furniture, homeware and clothing conglomerate, has acquired a 23% stake in Poundland and confirmed that it is considering making an offer for the UK discount retailer.

Steinhoff already owns Pep, which sells discount clothing, footwear and homeware across 1,800 stores in Africa, and UK furniture chain Harvey’s.

Linklaters M&A heavyweight Charlie Jacobs, who is set to succeed Robert Elliott as the Magic Circle firm’s senior partner in October, has been instructed by Steinhoff. Steinhoff is part of South African Christo Wiese’s retail empire. He is chairman of Steinhoff and its biggest shareholder. Wiese, through his various investment vehicles and companies, is a longstanding client of Linklaters and Jacobs.

Linklaters has benefitted from Wiese-backed companies splurging on UK retailers in the last two years. The firm’s private equity partner Alex Woodward led last year as Wiese’s private equity vehicle Brait purchased Virgin Active for £1.3bn and took a 90% stake in clothing retailer New Look in a £780m deal.

The Wiese work follows a string of high-profile instructions for Jacobs, who has been advising commodities giant Glencore on its ongoing plans to slash $10.2bn from its $30bn debt pile and landed a lead role last year on the world’s biggest brewing deal, advising SABMiller on its mammoth $107bn takeover by AB InBev.

Freshfields corporate partner Oliver Lazenby is advising Poundland. A rising star in the Magic Circle firm’s corporate department, Lazenby advised Poundland on its £55m acquisition of rival 99p Stores last year.

Poundland also turned to Freshfields for its IPO back in 2014. The team for that mandate was led by corporate partners Mark Austin and Adrian Maguire.

tom.moore@legalease.co.uk

Legal Business

Olswang silent as inquiry reveals Linklaters billed £1.2m to Arcadia in BHS sale

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After MPs in the BHS inquiry called on the law firms involved to disclose further details of their dealings, Olswang has failed to provide details of its fees, while Linklaters and Nabarro have released what they billed.

The Work & Pensions Committee, along with the Business, Innovation and Skills, is jointly taking evidence on BHS as part of their inquiries into the Pension Protection Fund and the sale and acquisition of BHS.

MPs led by Labour MP Frank Field called on Olswang, which advised Retail Acquisitions in its takeover of BHS, to reveal its fees relating to the sale. The firm said it could not reveal details of payments due to client privilege.

In a letter to Field dated 3 June, Olswang said: ‘We are bound by professional obligations regarding legal professional privilege and client confidentiality, which have not been waived by our clients.’

The firm did, however, respond to other questions from the committee. Olswang said it was required to conduct customer due diligence checks under its legal obligations imposed by the Solicitors Regulation Authority. ‘As a result, if we identify monies from a source other than a client of their agent…we determine why the funds have come from an alternative source.’

However it said: ‘If we receive payment of our fees from a client, we are unable to trace where a client has obtained that money.’

Olswang was previously questioned on its due diligence over the sale of BHS to Retail Acquisitions. Retail Acquisitions director Dominic Chappell had previously been declared bankrupt twice prior to the purchase of BHS for £1 last year.

Other firms also responded with evidence that was released by the Work and Pensions Committee today (8 June).

Linklaters partner Owen Clay responded, detailing fees charged to Arcadia in relation to the sale of BHS and after, with Clay stating the firm had billed Arcadia £1.2m as of February 2016. The letter, which noted the firm has continued since that date, added the firm did not charge ‘success fees’.

Clay added: ‘We do not have in place any other forms of incentive arrangements.’

Nabarro partner Ian Greenstreet also responded to the committee’s call for evidence. Nabarro advised Sir Philip Green’s firm Taveta Group, charging £217,000 in relation to a rescue plan for the BHS pension scheme – dubbed ‘Project Thor’. The firm also billed a smaller amount for advice on the sale itself.

Eversheds partner Emma King, who advised the trustees of the BHS pension scheme, also provided evidence of when the firm first learned of the planned purchase of BHS.

Chappell has appeared before the committee of MPs today (8 June) to give evidence on his part in the sale. Chappell told the inquiry he was considering legal action against Sir Philip Green. He added: ‘I think Philip genuinely thought that we would fail. He sold it to us nevertheless.’

matthew.field@legalease.co.uk

Legal Business

‘Inappropriate and untrue’: Linklaters defends itself in letter to MPs over BHS inquiry

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Linklaters has complained to MPs over questioning during the BHS inquiry hearings and comments made by Labour’s Frank Field over the law firm’s role in the sale of BHS by Arcadia Group.

In a letter to the Business, Innovation and Skills Committee seen by Legal Business, dated 26 May, Linklaters partner Andrew Hughes details concerns about remarks made by MP Field during the committee stages and in an interview with legal press regarding the inquiry.

Hughes stated: ‘The statements attributed to Mr Field are, to say the least, inappropriate. In fact we are confident that they are actionable in that they are highly defamatory, untrue and not protected by parliamentary privilege.

‘That said, we have no intention of taking the matter further, other than respectfully requesting the committees to disregard the published statements.’

The letter from Hughes also commented on Linklaters corporate partner Owen Clay’s decision not to respond a question about the advice given to his client, during the initial hearing on 23 May.

Clay advised Arcadia Group, the then owners of BHS, on the sale. He cited client professional privilege when he declined to respond to questions from MPs.

The letter repeated Clay’s response during the committee session and stated: ‘You can see I have been helpful with what I have given. I have been as open as I can. In terms of discussions with my client and the advice I have given to my client that is something I am not able to disclose for reasons of privilege.’

Hughes’ letter said Clay had no option but to comply with client instructions relating to client privilege ‘without intending any disrespect whatsoever to the committees’. Linklaters refused to comment on the letter.

Yesterday (6 June) the minister for small business Anna Soubry delivered a statement to the House of Commons regarding the collapse of BHS, which was owned by retail tycoon Sir Philip Green before its sale to Retail Acquisitions for £1 last year.

‘A number of questions have quite properly been raised about how BHS found itself in this situation,’ said Soubry. ‘If any of the directors’ conduct fell below what is expected of them, then action will be taken.’

Yesterday was also the deadline for Olswang to release details of the fees it had charged Retail Acquisitions for the takeover, as requested by Field and the committee. A spokesperson for the committee told Legal Business Olswang had submitted a response but it had not yet been made public.

matthew.field@legalease.co.uk

 

 

Legal Business

Client-facing pitch sees corporate star Jacobs take Linklaters senior partner role

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Pitching himself as an outward-facing leader has paid off for Linklaters M&A heavyweight Charlie Jacobs (pictured), who won the firm’s senior partner election last month.

Jacobs defeated competition from corporate colleagues Jean-Pierre Blumberg and Aedamar Comiskey to be elected the new senior partner at the Magic Circle firm.

Jacobs will replace Robert Elliott when he finishes a five-year term at the end of September.

Legal Business

Magic Circle chase Chinese law as Linklaters launches Shanghai spin-off

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The decision by Linklaters to spin off part of its Shanghai office in a bid to then merge with it at a later date, comes as part of a significant push by Magic Circle firms to practise local law in China.

Having already scoped out the local market for a suitable target to form a joint venture with under new Shanghai Free-Trade Zone (FTZ) rules, which permit domestic law firms to tie-up with international giants and practise local law, Linklaters has decided to go it alone.