Legal Business

Macfarlanes LLPs show profit dip to £82.5m as management pay rises

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Financial results 2015/16 Macfarlanes
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After record profitability last year Macfarlanes has reported a 9% fall in profits to £82.5m, while management pay was up, according to its latest LLP accounts.

In 2014/15 Macfarlanes recorded operating profits of £91m with top member income up to £2m. However, this year the top earning member took home £1.76m. Key management figures at the firm collectively saw an increase in take home pay from £4.3m, up from £3.9m the year before.

Turnover increased just over 1% to £161m for the financial year ending April 2016, up from £159.6m the previous year. The increase is Macfarlanes sixth year of consecutive growth.

In its financial results reported over the summer, the London firm recorded profit per equity partner (PEP) of £1.29m. The fall in PEP came after a record £1.55m in 2014/15 that was better than four of the five Magic Circle firms, with the exception of Slaughter and May.

Staff costs increased to £48m in 2015/16 from £44m the year before. The total number of support staff increased from 206 to 299, while fee earners increased to 333 from 312.

Macfarlanes has landed roles on a number of key deals this year, securing a role advising on Verizon’s $2.4bn purchase of Fleetmatics and acting for Argus Media’s chairman in its £1bn takeover by General Atlantic.

On the drop in profitability, the firm said in a statement: ‘As far as the fall in profits is concerned, we have been consistently clear that 2014/2015 was a standout year for profitability. Accounting practice requires partner remuneration to be reported according to the year in which it is allocated. Therefore the remuneration for partners within the group reflects the balance of the higher profits in 2014/15 which were not allocated in the accounts for that year but were required to be allocated in 2015/16.’

matthew.field@legalease.co.uk

For more on Macfarlanes recent growth, see: ‘This is a gritty place’: Macfarlanes’ leaders on the hustle it takes to look effortless’

 

Legal Business

Another defection from Macfarlanes as competition head moves to White & Case

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Strategic recruitment MacfarlanesWhite & Case
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In a rare move, White & Case has hired Macfarlanes competition and EU head Marc Israel after 15 years at the firm.

Formerly the leader of Macfarlanes cross-departmental competition litigation practice, Israel will join White & Case bringing his focus on M&A and private equity related non-contentious matters along with cartel, investigations and antitrust litigation.

While partner defections are rare from Macfarlanes, the loss is the second in recent months as the firm lost a partner in September to a US firm when financial services head David Berman agreed to join Quinn Emanuel Urquhart & Sullivan.

Described by The Legal 500 as the ‘experienced’ and ‘practical’ head of a ‘remarkable’ team, Israel’s list of deals includes advising BATS Global Markets on its acquisition of Chi-X to create the largest pan-European equities trading platform, Virgin Group in connection with BSkyB’s acquisition of 18% of ITV and DC Thomson on its acquisition of Friends Reunited from ITV.

White & Case EMEA head of competition Mark Powell expects Israel’s appointment will provide ‘synergies between our competition, disputes and our M&A/private equity teams in London and across EMEA.’ He added: ‘Marc’s practice is an excellent fit for the firm and our clients, and his addition will strengthen our London capability.’

White & Case has been aggressively bulking up its City practice with plans to have more than 500 lawyers in London in four years as part of its 2020 strategy.

In October the firm brought in Clifford Chance corporate partner Patrick Sarch in what will be a significant loss for the Magic Circle firm. In the same month it was announced BNY Mellon’s EMEA regulatory head James Greig was joining White & Case’s financial services team. The US firm also added to its global tax practice in September with the addition of London-based Michael Wistow as co-head of the firm’s tax practice in EMEA from Berwin Leighton Paisner.

The firm has been aggressive outside the City as well, as it was revealed in September the US firm had taken a ten-partner project finance team from Herbert Smith Freehills in Australia, launching two offices in Melbourne and Sydney.

madeleine.farman@legalease.co.uk

For more on competition practices in the City see: ‘Less bark, more bite – competition to the fore as tougher enforcement arrives’

Legal Business

‘A great enhancement to our practice’: Quinn lures Macfarlanes’ Berman in latest City hire

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Strategic recruitment MacfarlanesQuinn Emanuel Urquhart & Sullivan
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In a rare defection from Macfarlanes, financial services head David Berman is set to join Quinn Emanuel Urquhart & Sullivan.

Cited by The Legal 500 as ‘calm, pragmatic and highly knowledgeable’, Berman joined Macfarlanes investment funds and financial services group in 2009 as a partner from Dresdner Kleinwort bank where he served as managing director and other senior level roles in legal, compliance and front office functions.

He advises a variety of financial institutions on both buy-side and sell-side on regulatory and compliance issues, and frequently advises boards and senior management teams on regulatory issues of strategic significance. Berman’s hire follows Quinn’s launch of its long-anticipated corporate crime practice in London through the hire of Covington & Burling partner and former Serious Fraud Office (SFO) prosecutor Robert Amaee.

Managing partner John Quinn (pictured) said: ‘David’s unique background in finance, regulatory matters and internal investigations make him the perfect fit for our white collar and investigations practice. It is the fastest growing practice area in the firm and much of it is cross-border and much of it with a UK and EU component. Having a white collar lawyer in the UK with deep regulatory experience is a great enhancement to our practice.’

Macfarlanes senior partner Charles Martin said he was sorry to see Berman go, adding: ‘He is leaving for a very different platform and new challenges. We wish him well.’

Last week Quinn lost Moscow-based arbitration partners Ivan Marisin and Vasily Kuznetsov to US rival Baker Botts, leaving Quinn’s ten-lawyer Russia outpost with one full-time partner.

To soften the blow, Quinn has brought over Russian counsel Kirill Parinov, as managing partner of its Moscow office from mining firm Norilsk Nickel where he served as group general counsel. The office is also served by partner Nick Marsh who splits his time between London and Moscow.

Quinn continues its lateral hiring spree however, as last week it emerged the firm is in talks to hire a team from Shearman & Sterling’s Brussels arm, including office head Stephen Mavroghenis and competition partner Trevor Soames.

sarah.downey@legalease.co.uk; madeleine.farman@legalease.co.uk

Legal Business

Deal watch: Corporate activity in July and August 2016

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Corporate AshurstMacfarlanesSkadden, Arps, Slate, Meagher & FlomSlaughter and May
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US ELITE LEAD AS VERIZON TAKES YAHOO! FOR $4.8BN

Skadden, Arps, Slate, Meagher & Flom and Wachtell, Lipton, Rosen & Katz are among a host of US firms advising on Verizon Wireless’ much-anticipated acquisition of Yahoo!. Wachtell, Gibson, Dunn & Crutcher, Covington & Burling and Winston & Strawn are acting for Verizon. Skadden, Wilson Sonsini Goodrich & Rosati and Weil, Gotshal & Manges are advising Yahoo!, while Cravath, Swaine & Moore is acting for the strategic review committee of Yahoo! as its independent legal adviser.

 

Legal Business

Macfarlanes gets the gig as firms line up on Verizon’s $2.4bn purchase of Fleetmatics

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Dealwatch A&L GoodbodyAshurstGoodwin ProcterMacfarlanesMaples and Calder
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Just days after the headline grabbing acquisition of Yahoo!, Goodwin Procter, Cleary Gottlieb Steen & Hamilton, A&L Goodbody and Macfarlanes are among those who have landed roles advising on Verizon’s purchase of Fleetmatics Group.

US internet giant Verizon has agreed to buy the Dublin-based and New York Stock Exchange-listed vehicle communications company for $60 a share in cash, valuing the offer at around $2.4bn.

The deal will see Verizon pick up Fleetmatics’ web-based solutions and tracking software for vehicle fleet operators, which provide insights into the mobile workforce. The company, which has offices in the US, UK and Ireland, has 1,200 employees and around 37,000 customers with 737,000 subscribers to its services.

Verizon was advised by US firm Cleary Gottlieb, Macfarlanes in London and A&L Goodbody on the Irish side of the deal. The Macfarlanes team advising Verizon was led by a trio of partners in Graham Gibb, Nicholas Barclay and Ashley Greenbank.

For Macfarlanes, the mandate follows the firm’s advice to Verizon in 2013 when Vodafone sold off its 45% interest in the company.

Fleetmatics was advised by Goodwin Procter technology partners Kenneth Gordon, James Matarese and Joseph Theis. Maples and Calder also advised on the Fleetmatics side.

Ashurst advised Wells Fargo and PJT Partners, the joint financial advisers to Verizon on the deal. The Ashurst team was led by corporate partners Adrian Clark and Karen Davies.

The announcement of the deal follows Verizon’s purchase of Yahoo! for $4.8bn. The acquisition was confirmed last week, with elite US firms taking on the major roles. Wachtell, Lipton, Rosen & Katz, Gibson Dunn & Crutcher, Covington & Burling and Winston & Strawn all acted for Verizon. Skadden, Arps, Slate, Meagher & Flom, Wilson Sonsini Goodrich & Rosati and Weil, Gotshal & Manges served as legal advisers to the internet company.

The acquisition of Yahoo! and the offer for Fleetmatics come after Verizon’s purchase of AOL last year for $4.4bn.

matthew.field@legalease.co.uk

Legal Business

After five years of growth Macfarlanes revenue stalls and PEP falls 17%

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Financial results 2015/16 Macfarlanes
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Following one of its most successful years, Macfarlanes has seen revenue remain static at £161m for 2015/16, up less than 1% from £159.6m.

The firm’s profit per equity partner is down, slipping to £1.29m, down 17% on 2014/15 when the firm reported PEP of £1.55m. Overall profits were also down to £74.5m, dropping 8.8% on 2014/15.

The falling figures follow five years of top line growth and the firm’s PEP rising above that of four of the Magic Circle firms.

The results follow a highly lucrative period for Macfarlanes, with PEP jumping 30% in 2014/15 and 21% the year before. The firm’s PEP remained 7.6% up on 2013/14.

Macfarlanes senior partner Charles Martin told Legal Business: ‘It was a good year. Profit per partner is down significantly but we expected that. We said in our results last year there would be a spike. It will be up on the year before last.’

The London law firm has acted on some major deals in the past 12 months, including advising Altria Group on its shares in drinks manufacturer SABMiller, during its £71bn takeover by AB InBev.

Martin (pictured) added the referendum was not a significant factor in affecting the firm’s results, and that he had ‘no complaints on activity levels’.

He said business could be ‘softer’ following the referendum. He added: ‘We’re spending a lot of time listening to clients and it’s a mixed picture. Some deals are spiked, others are postponed till the autumn and others are pressing on with renewed speed.’

Both senior partner Martin and managing partner Julian Howard were reappointed to their respective roles in January this year, each for another three year term to take them through to 2020.

The firm recently confirmed it was elevating newly-qualified pay levels to £71,000, raising to a potential £98,000 three years post qualification. It also modified its bonus system, increasing the maximum from 15% to 25%.

matthew.field@legalease.co.uk

Read more on the firm in the Focus Feature: ‘This is a gritty place’: Macfarlanes’ leaders on the hustle it takes to look effortless’

Legal Business

Travers Smith matches Slaughters associate base pay as indies beat Brexit woes to lift salaries

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Salaries MacfarlanesTravers Smith
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Despite post-Brexit referendum market turbulence, independent firms Travers Smith and Macfarlanes have both elevated their newly-qualified (NQ) pay levels, with the former matching Slaughter and May’s newly-qualified pay level of £71,500.

Travers NQs will receive £71,500, while 1PQE solicitors receive £79,000, 2PQE get £91,000 and 3PQEs receive £100,000 3PQE.

Macfarlanes also pushed up its pay brackets, raising NQ pay to £71,000 and 1PQE to £77,000-£79,000, 2PQE to £80,000-£88,000 and 3PQE to £85,000-£98,000, with the firm not using a fixed lockstep.

Solicitors’ salary bonuses were lifted from a maximum of 15% to 25% paid in July, as well as the addition of a potential uncapped firm wide bonus in October dependent on the Macfarlanes’ performance.

Herbert Smith Freehills (HSF) also recently ploughed into the City salary war with a boost to associate pay, raising NQ base salaries to between £82,000 and £90,000.

While in May, Freshfields Bruckhaus Deringer announced it had folded its discretionary bonus system into NQ salaries, leaving young lawyers with an extra £17,500 in their pockets with pay rising 26% to £85,000.

The salary rises come amidst fears from some UK firms of pay freezes after a challenging first half of 2016 and market volatility post-EU referendum.

Staff at BLP were notified of their pay freeze on Tuesday (5 July). The move will affect all UK-based staff apart from partners who take a share of the profits. Pay reviews were postponed as of 1 July until 1 November 2016.

On Tuesday (5 July), Berwin Leighton Paisner (BLP) became the first firm to freeze pay for UK staff following the referendum to leave the EU. The firm’s income has fallen 2% to £254m in 2015/16. BLP said the salary freeze for associates, paralegals, business development and other back-office staff was the ‘prudent thing to do’.

matthew.field@legalease.co.uk

Legal Business

Macfarlanes makes up six partners in male-only round

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Partnership promotions MacfarlanesMishcon de Reya
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Macfarlanes has made up six new internal partner promotions across its tax, real estate, corporate and disputes practices, with senior partner Charles Martin (pictured) expressing concern that the group is ‘disappointingly lacking in women.’

Set to take effect from 1 May 2016, the new partners include tax lawyer Peter Abbott, commercial real estate lawyer Nick Barnes, corporate M&A duo Alexander Green and Justin Hope, and litigation specialists James Popperwell and Gideon Sanitt.

Senior partner Charles Martin said the promotions constituted a ‘large group by historic standards but one that is uncharacteristically and disappointingly lacking in women.’

The London-only firm has previously told Legal Business it wishes to improve diversity internally. At June last year it had just 16% female partners, half the Solicitors Regulation Authority’s estimated female partner average of 31% at UK firms.

Martin added in a statement: ‘On a more positive note, the majority of these lawyers trained at the firm, a further vindication of our policy of nurturing home grown talent. We are amongst a small group of firms that has increased trainee intake over recent years. We supplement that carefully with outstanding lawyers from other firms who are attracted by our distinctive offering at a slightly later stage in their careers.’

Although an increase on five promotions last year, the stats still lag on the firm’s 2014 round where nine lawyers were made up – though the 2014 figure had been its highest round since 2005.

It follows Mishcon de Reya making up six to its own partnership across its disputes, real estate, employment, immigration, and tax practices, with a further six taking the role of legal director. The promotions are the first since the firm converted to a limited liability partnership in October last year.

sarah.downey@legalease.co.uk

Macfarlanes partner promotions 2016:

Peter Abbott, tax

Nick Barnes, commercial real estate

Alexander Green, M&A

Justin Hope, M&A

James Popperwell, litigation

Gideon Sanitt, litigation

Mishcon partner promotions in full:

Steven Bostock, immigration

Stephen Diosi, tax

Sarah Houghton, disputes

Kirpal Kaur, commercial real estate

Jennifer Millins, employment

Maria Patsalos, immigration

Legal Business

‘This is a gritty place’: Macfarlanes’ leaders on the hustle it takes to look effortless

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Leadership Macfarlanes
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Victoria Young talks to the singular City player about success and bucking the market

‘Strong culture’, ‘high quality’ and ‘entrepreneurial’ are phrases repeatedly associated with Macfarlanes among peers and former staff. And its recently re-elected executive has no desire to debunk the image of a hard-nosed, competitive shop.

Legal Business

A&O, Macfarlanes and Travers Smith to contest top prize at the Legal Business Awards

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Allen & OveryMacfarlanesTravers Smith
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Allen & Overy, Macfarlanes and Travers Smith are among the firms competing to be named Law Firm of the Year at this year’s Legal Business Awards.

Also shortlisted in the flagship category for the awards, which take place at Grosvenor House Hotel next Thursday (7 April), are Mishcon de Reya, Pinsent Masons, Stephenson Harwood and Stewarts Law.

The full shortlists, revealed below, will see high-calibre law firms, in-house teams and individuals competing across 23 categories, including 11 practice area awards.

The finalists for the coveted In-House Team of the Year award are BT, Funding Circle, InterContinental Hotels Group, Roche Products, SABMiller and Skyscanner.

Meanwhile, Ashurst, Freshfields Bruckhaus Deringer and Shearman & Sterling are among the firms fighting it out to be named Corporate Team of the Year. In the Dispute Resolution category, Cleary Gottlieb Steen & Hamilton, Slaughter and May and a joint nomination for Herbert Smith Freehills and Jones Day are among the contenders.

The winners, which will be unveiled at the gala ceremony hosted by journalist and broadcaster Nick Robinson, will be decided by an independent judging panel for the second year running.

This year’s panel comprises: Nilema Bhakta-Jones, group legal director of Ascential Group; Claire Chapman, general counsel (GC) and company secretary of Daily Mail and General Trust; Kirsty Cooper, group GC and company secretary at Aviva; former vice-president and GC of group legal affairs & compliance at RB Claire Debney; Chris Fowler, GC UK Commercial for BT; FT GC Dan Guildford; Michael Herlihy, GC at Smiths Group; Marks and Spencer’s head of legal Robert Ivens; Alison Kay, group GC & company secretary at National Grid; Zoopla Property Group GC Ned Staple; Nyeem Syed, assistant GC, financial & risk at Thomson Reuters; Tony Williams of Jomati; and Suzanne Wise, group GC and company secretary of Network Rail.

Major winners last year included Osborne Clarke, which was named Law Firm of the Year and Macfarlanes, which won the Corporate Team of the Year award, while Royal Mail walked away with the In-House prize.

mark.mcateer@legalease.co.uk

Click here for further information about the awards.

Practice area awards shortlists

TMT Team of the Year

Dentons

DLA Piper

King & Wood Mallesons

Linklaters

Olswang

Powell Gilbert

Finance Team of the Year

Akin Gump Strauss Hauer & Feld

Herbert Smith Freehills

Macfarlanes

Pinsent Masons

Simmons & Simmons

Weil, Gotshal & Manges

Restructuring Team of the Year

Allen & Overy

Hogan Lovells

Sidley Austin

Simmons & Simmons

Weil, Gotshal & Manges

White & Case

Competition Team of the Year

Freshfields Bruckhaus Deringer

Linklaters

Macfarlanes

Nabarro

Norton Rose Fulbright

Slaughter and May

Energy and Infrastructure Team of the Year

Ashurst

DLA Piper

Milbank, Tweed, Hadley & McCloy

Norton Rose Fulbright

Pinsent Masons

Stephenson Harwood

Dispute Resolution Team of the Year

Cleary Gottlieb Steen & Hamilton

Herbert Smith Freehills/Jones Day

Hogan Lovells

Humphries Kerstetter

Mishcon de Reya

Slaughter and May

Private Client Team of the Year

Boodle Hatfield

Charles Russell Speechlys

Irwin Mitchell

McDermott Will & Emery

Penningtons Manches

Taylor Wessing

Insurance Team of the Year

BLM

DWF

Eversheds

Herbert Smith Freehills

Norton Rose Fulbright

RPC

Corporate Team of the Year

Ashurst

Clifford Chance/Norton Rose Fulbright

Freshfields Bruckhaus Deringer

Gowling WLG

Jones Day

Shearman & Sterling

Squire Patton Boggs

Private Equity Team of the Year

Addleshaw Goddard

Clifford Chance

Freshfields Bruckhaus Deringer

Latham & Watkins

Simpson Thacher & Bartlett

Travers Smith

White & Case

Real Estate Team of the Year

Burges Salmon

Eversheds

Hogan Lovells

King & Wood Mallesons

Mayer Brown

Nabarro

Winckworth Sherwood


Merit awards shortlists

Boutique Law Firm of the Year

Campbell Johnston Clark

Kemp Little

MJ Hudson

Radiant Law

Signature Litigation

Tapestry Compliance

Three Crowns

Lawyer of the Year

Susan Crichton, TSB

Ian Forrester QC, White & Case

David Morley, Allen & Overy

Chris Saul, Slaughter and May

Penelope Warne, CMS

CSR Programme of the Year

CMS

Freshfields Bruckhaus Deringer

ITV

Linklaters

Reed Smith

Simmons & Simmons

International Firm of the Year

Al Tamimi & Company

Arthur Cox

Garrigues

Goltsblat BLP

Harneys

Magnusson

Noerr

Rising Star In-House Counsel of the Year

Carole Deadman, Abbey Life Assurance

Henry Gardener, Markel International

Annaliese Hemsley, BATLaw

Daniel Whitehead, Citibank

Matthew Wilson, Uber

Caroline Withers, Virgin Media

In-House Team of the Year

BT

Funding Circle

InterContinental Hotels

Group

Roche Products

SABMiller

Skyscanner

Management Partner of the Year

Ray Berg , Osborne Clarke

Nick Buckworth, Shearman & Sterling

James Burns, Clyde & Co

Michael Chissick, Fieldfisher

Tim Eyles, Taylor Wessing

Chris Lowe/Lothar Wegener, Watson Farley & Williams

Margaret Robertson, Withers

US Law Firm of the Year

Akin Gump Strauss Hauer & Feld

Boies, Schiller & Flexner

Gibson, Dunn & Crutcher

Latham & Watkins

Paul Hastings

Quinn Emanuel Urquhart & Sullivan

Ropes & Gray

Legal Innovator of the Year

DAC Beachcroft

DLA Piper

Eversheds

Gowling WLG

Lawyers On Demand

Skadden, Arps, Slate, Meagher & Flom

Legal Technology Team of the Year

Axiom

Berwin Leighton Paisner

Cooley

DWF

Kennedys

Osborne Clarke

RPC

National/Regional Firm of the Year

Ashfords

Bond Dickinson

Brodies

Browne Jacobson

Foot Anstey

Shoosmiths

Stevens & Bolton

Law Firm of the Year

Allen & Overy

Macfarlanes

Mishcon de Reya

Pinsent Masons

Stephenson Harwood

Stewarts Law

Travers Smith