Nick Skerrett considers the tax disputes and areas of controversy we are likely to see in the aftermath of Brexit
Given the tensions and uncertainty of Brexit, tax will inevitably be a key area of disputes for UK businesses trading internationally and for foreign firms trading with the UK.
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Coronavirus is increasingly having its impact felt in the business of law, with Simmons & Simmons the latest firm to postpone its partner conference as the virus spreads across Europe.
In a statement, the firm said: ‘In response to the ongoing outbreak of coronavirus across parts of Europe and Asia, Simmons & Simmons has regretfully decided to postpone its partner conference until a later date. The firm believes that this decision will safeguard the health of employees across its international network.’
The conference was due to take place today (5 March) in Monaco over two days, however the increasing number of cases of coronavirus, also known as COVID-19, across Europe forced the firm’s decision. In the UK, there are currently 90 people confirmed to be infected with the disease.
Meanwhile, Linklaters too has had to suspend its partner conference set to take place in Berlin on 24 April. The firm is currently encouraging staff to work from home, and is replicating the measures taken in its Asia offices across its wider business. The gathering of its partners is now set to take place virtually.
Baker McKenzie was the first major firm in the City to be forced into a decision on coronavirus, closing its 1,000-employee office last week after a member of staff was taken ill following a return from Northern Italy, which has been heavily impacted by the virus. The office was reopened this week.
Latham & Watkins also had to take action, suspending its annual partner conference in New York citing safety concerns. Shearman & Sterling is another US firm that has taken measures, imposing a travel ban for China and Hong Kong, limiting non-essential travel to contaminated jurisdictions and putting in place remote working measures. Meanwhile, Dentons has temporarily closed its office within Wuhan, the epicentre of the disease.
Fears around the impact of coronavirus on businesses have proved justified in recent weeks. In February the US Stock markets suffered their worst week since the 2008 financial crisis, with the three main indexes falling by 10% or more.
In another muted patch for City laterals, Simmons & Simmons and CMS were the only firms to hire in London last week as Gibson Dunn & Crutcher recruited to its employment bench and HFW hired in Hong Kong.
Simmons has added to its international banking practice with the hire of Kirsty Barnes, Gowling WLG’s head of banking and finance in the UK.
With 20 years’ experience in the financial markets sectors Barnes has experience in leveraged and acquisition finance, real estate finance and corporate lending transactions.
Head of Simmons’ banking group Peter Manning told Legal Business: ‘Kirsty has done work for Barclays, Lloyds and RBS. She does work for a couple of private equity style funds and has done some leveraged finance work. All of those were really important for us. We thought she would be a good personality and cultural fit for us.
‘She’s very keen to move the practice forward and shares our vision on what that means. We remain committed to doing work for the traditional clearing banks as well as credit funds and the alternative lenders. We’re very much committed to changing the way we deliver our services,’ Manning added.
Meanwhile, CMS has hired pensions partner Tim Green from DWF where he was the national head of its pensions teams.
Green advises trustees, sponsors, government bodies and providers in all aspects of pensions law with particular expertise in retail, energy, nuclear, transport, public and charitable sectors.
Head of pensions at CMS Mark Grant told Legal Business: ‘Tim’s got a great track record of building a practice. We’re in growth mode and this is part of our national growth story. We’ve grown by 30% in pensions in the last two years and this is a continuation of that.’
Elsewhere, Gibson Dunn has hired Ashurst’s Paris former employment head Nataline Fleury to back its European strategy.
Fleury has a particular focus on employment law issues affecting restructuring transactions, acquisitions and disposals. Fleury will be joined by associates Claire-Marie Hincelin and Charline Cosmao, also from Ashurst.
Chairman and managing partner Ken Doran commented: ‘Nataline has strong credentials and is very well regarded in the legal and business communities. We know her well as we have partnered with her on several client matters over the past year. She is the perfect person to lead our effort to add a labour and employment capability to our thriving Paris office.’
Finally, HFW has hired senior corporate finance partner Wing Cheung in Hong Kong. He has defected from Locke Lord where he was the Hong Kong managing partner.
Cheung specialises in capital markets, M&A, private equity and other transactional work. He advises clients on corporate and commercial matters, including initial public offerings and M&A and has experience in regulatory enforcement and compliance.
Cheung’s hire is part of HFW’s expansion of its global corporate and finance practices. Earlier this year the firm launched a transactional practice in China and made hires including lateral hires in Hong Kong and Singapore.
Hong Kong office head Patrick Yeung said: ‘This is a major boost to our transactional offering in Greater China and the wider region. Wing brings a wealth of experience of high-end corporate finance, and has an outstanding reputation for his technical expertise and exceptional client service.’
While some law firms claim to be all things to all clients, for almost a decade Simmons & Simmons has focused its efforts with increasing rigour on a select number of sectors. Given its unhappy period of drift as a generalist corporate finance player, recent years have delivered far better results. And nowhere is that more in evidence than in its particular take on financial services.
Its importance is reflected in the numbers. Currently the firm has 117 partners across its financial markets practice, 63 of which are in the UK, while 40% (around £150m) of firm-wide revenue comes from finance. Even here the firm has often avoided too much business-as-usual work for banking clients – a certain route to poor margins – to zero in on funds, asset managers and more esoteric areas of regulation.
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Simmons & Simmons has made a rare acquisition in the form of legal engineering start-up Wavelength for an undisclosed sum.
Wavelength – which claims to be the first Solicitors’ Regulatory Authority-regulated legal engineering business in the world – uses data science, technology and design to assist on projects in the legal industry. The acquisition will see Simmons look to expose the London and Cambridge-based team to its client base.
‘From our perspective, there’s a pressure from clients for law firms to change, and sometimes that can be difficult,’ Simmons managing partner Jeremy Hoyland (pictured) told Legal Business. ‘When thinking about our larger mandates and the work we do for institutional clients, these matters are increasingly challenging from a data and technology perspective.’
Wavelength is led by co-founders Peter Lee and Drew Winlaw, who had been lawyers at Bird & Bird and Taylor Vinters respectively before founding the company in 2016. A 27-strong team is now expected to move into Simmons’ offices in London, while the company’s Cambridge office will become a Simmons outpost for a Wavelength team.
One of the major projects Simmons hopes to deploy the Wavelength team on is the firm’s response to the replacement of The London Interbank Offered Rate (LIBOR), which acts as a benchmark for financial contracts worldwide worth over $350m.
‘For something like the replacement of LIBOR, if you don’t have a Wavelength-style skillset it would be difficult to have a credible offering,’ Hoyland added. ‘But to be honest, we are finding more opportunities all the time, just earlier I was with our regulatory partners and out of that there was an opportunity to look at deploying Wavelength.’
Lee, meanwhile, believes Simmons is the ideal fit for the company: ‘We always recognised we would have to scale up somehow. We’ve been working with Simmons for a bit over a year now and they have a great international spread and it’s a perfect fit culturally.’
In another significant acquisition, Thomson Reuters snapped up legal software provider HighQ last week as the company looks to make good on plans to bolster its cloud-based software products after selling its managed services arm to EY.
Simmons & Simmons saw growth slow last year following a ‘much tougher’ second half in the UK, as uncertainty begins to weigh following a strong few years for the firm.
Revenue for the 2018/19 financial year rose 6% to £374m, while profit per equity partner (PEP) increased 4% to £710,000. Net profit growth also slowed, up 9% over the last financial year to £119m, compared to a 19% increase last year.
Though steady, the figures are less impressive than last year when the firm had double-digit revenue growth, up 12% to £354m as PEP rose 8% to £686,000.
‘There’s a good mood, we’ve had good levels of income and profit growth,’ Simmons managing partner Jeremy Hoyland (pictured) told Legal Business. ‘But there’s also caution, the second half of the year was much tougher than the first half, particularly in the UK.’
Despite the relative slowdown, on a three-year basis Simmons has performed strongly, growing revenues by 27% and profit 34%, with the finance and disputes practices the two largest contributors respectively. The firm also minted 15 lawyers to partnership this year, its largest promotion round since 2008, as well as making 16 lateral partner hires, including five in the City. Last week the firm also announced a new office in Shenzhen, China.
Looking ahead, Hoyland warned against complacency, with the firm looking to safeguard against Brexit through expansion on the continent. He commented: ‘Europe had a very good year for us, we’ve been Brexit-proofing on the continent. I’m one of those people that’s always worried about something. I think the uncertainty is now having an impact, particularly on transactional practices, and we’ve had three years on Brexit of not knowing where we stand.’
In other recent financial results, Clifford Chance was the first of the Magic Circle to report, posting a muted 1% rise in PEP and a 4% growth in turnover.
Political pressure to crack down on evasion and Bribery Act-style powers are pushing tax disputes onto boardroom agendas, writes Dominic Carman
Tax investigations and disputes historically rarely made the headlines, except for the occasional world-class footballer or rows over globe-trotting firms slashing their tax bills.
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Nick Skerrett examines the trend of tax dispute management falling to GCs and tax litigators, as HMRC takes a tougher enforcement stance
Tax used to be an area where lawyers feared to tread. That has changed dramatically as the environment for resolution of tax disputes has evolved over recent years. We are seeing a growing trend of the management of tax disputes shifting out of the tax department and onto the desks of general or litigation counsel. In parallel, board-level scrutiny and engagement, and responsibility, have increased. This change to managing tax disputes as an area of legal risk, set against a backdrop of increasing complexity and scrutiny, raises new challenges.
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Engaging Simmons & Simmons tax is different. We have deep strategic expertise and the experience to create a bespoke solution that works for all stages of tax disputes, from the first call from the tax authority through to litigation in the most senior courts.
Simmons & Simmons has one of the strongest contentious tax practices in the market, specialising in complex, high-value tax disputes. We are one of very few law firms to have a truly dedicated contentious tax practice, with partners and associates entirely focused on tax litigation and disputes and the only large law firm genuinely able to blend accountancy, economics and legal expertise on tax disputes. We are proud of our reputation for excellence and are committed to getting results for our clients in their most complex matters.
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Top-25 UK firms Simmons & Simmons and Gowling WLG have followed suit on a series of strong partnership promotion rounds, making up 15 and 10 respectively.
Simmons promoted 15 lawyers to partner, eight of which were minted in London. The round is a significant increase on last year, when nine lawyers were promoted across the firm – a decrease from 12 the previous year – with only four promoted in the City.
Of the 15 promoted this year, six are women, seeing the firm make good on its commitment to have at least 30% of all promotion rounds comprised by women.
In London Adam Brown, Chris Owen, Elizabeth Williams and Priya Nagpal were all given the nod to become partners of the firm’s disputes practice, which received the lion’s share of the firm’s promotions with six new partners. Cathryn Bean, meanwhile, was promoted in the firm’s employment practice, while Kathryn James and Alex Ainley were promoted in the London financial markets practice. Jonathan Spencer was made up in the firm’s Bristol disputes practice.
Fourteen of the promotions were across Europe and the Middle East. The sole Asia-Pacific promotion was corporate lawyer Claudia Yiu in Hong Kong.
Gowling, meanwhile, has doubled its UK LLP’s 2018 promotions round to make up 10 partners this year.
In the UK, the firm promoted two partners to the real estate practice, three to its dispute resolution group, two in pensions, and one each in EU, trade and competition and commercial, IT and outsourcing. In France, employment lawyer Gaëlle Le Breton was made partner.
The promotions are up on last year, when five were promoted, and follow four lateral hires across different practice groups over the last year.
Gowling chief executive David Fennell (pictured) commented: ‘Our new partners are all outstanding lawyers and business advisers, with a wealth of expertise in their respective areas, consistently delivering a first class service to our clients. Their diverse skills and experience will enhance Gowling WLG’s support to clients around the world and the continued growth of the firm.’
thomas.alan@legalbusiness.co.uk
Adam Brown – dispute resolution, London
Alex Ainley – financial markets, London
Cathryn Bean – employment, London
Chris Owen – dispute resolution, London
Elizabeth Williams – dispute resolution, London
Kathryn James – financial markets, London
Ed Smith – employment, London
Priya Nagpal – dispute resolution, London
Jonathan Spencer – dispute resolution, Bristol
Christopher Goetz – corporate, Munich
Gijs ter Braak – corporate, Amsterdam
Paul Tjiam – dispute resolution, Amsterdam
Maria Tomillo – financial markets, Madrid
Simone Lucatello – financial markets, Milan
Claudia Yiu – corporate, Hong Kong
Daniel Leather – Housing, Development and Regeneration
Toni Weston – Planning
Catherine Naylor – Commercial Litigation
Helen Davenport – Commercial Litigation
Sam Beighton – EU, Trade and Competition
Kieran Laird – Projects
Jocelyn Paulley – Commercial, IT and Outsourcing
Christopher Stiles – Pensions
Joanne Tibbott – Pensions
Gaëlle Le Breton – Employment
