Legal Business

Dealwatch: Magic Circle firms lead on major City broking merger

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Clifford Chance and Allen & Overy (A&O) are orchestrating a tie-up between two of the City’s most storied brokers, Icap and Tullett Prebon, as the market consolidates in response to low trading volumes and tougher regulations.

Icap, which was founded by Michael Spencer in 1986, is in talks to sell its traditional voice-broking business to rival Tullett Prebon. If the deal completes, it would be the second major shakeup in the industry this year, with Howard Lutnick’s New York firm BGC Partners winning a bidding war to pay £519m for GFI Group earlier this year.

Icap, which remained the largest interdealer broker in the world after BGC’s takeover of GFI, is in talks to transfer its global broking business to Tullett Prebon in a deal which would see Tullett Prebon issue shares to Icap’s investors to pay for it. The deal, which would make Icap a minority shareholder in the new company, is understood to be worth over £1bn and would see around 1,500 brokers move to Tullett Prebon.

The brokers have instructed Magic Circle law firms, with Clifford Chance advising Icap and A&O advising Tullett Prebon. A&O corporate partner Richard Hough is leading the advice to Tullett Prebon, acting opposite Clifford Chance’s Steven Fox, who was instructed by Icap.

Simmons & Simmons corporate partner Colin Bole is acting for Icap’s team of advisers JP Morgan and Evercore, while Ashurst duo Jonathan Parry and Dominic Ross were instructed by Tullett Prebon’s adviser Rothschild.

Interdealer brokers, which match buyers and sellers in currency, bond, share and other trades, have struggled with stricter regulation forcing banks to cut back on trading. Tullett Prebon cut 200 jobs in March in response to difficult market conditions and falling profits.

If Icap’s deal to offload its traditional broker business to Tullett goes through, the FTSE 250 company will be left as a technology-focused business made up of electronic broking and risk management services. Tullett Prebon, meanwhile, would replace Icap as the world’s largest interdealer broker.

tom.moore@legalease.co.uk

Legal Business

Legal privilege: the ripples flow on still from Three Rivers

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Colin Passmore assesses a key ruling in the increasingly contentious area of legal privilege.

In June this year, the Hong Kong Court of Appeal held that the English Court of Appeal decision in Three Rivers (No.5) [2003] does not represent Hong Kong law. This is, of course, the 2003 English Court of Appeal decision well-known for the challenges it presents companies who wish consultations with their legal advisers to benefit from the protection of legal advice privilege.

Legal Business

Hard graft – The pan-Europe bribery crackdown

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As European agencies turn up the heat on bribery and corruption, we team up with Simmons & Simmons to assess how clients are responding.

Until 1999 German laws allowed for some bribes to be tax deductible. Bribes or grease payments enabled German companies to get ahead overseas, or so many claimed. These payments were viewed as good for business and good for the German economy. At worst, they were a necessary evil.

Legal Business

Case Study: Simmons & Simmons

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Life for a financial services-heavy law firm competing with larger rivals was always going to be challenging after the banking crisis, but Simmons & Simmons suffered more than most as it wrestled with abortive merger talks, plunging turnover and strategic discord.

This makes its revival in the last two years all the more welcome. Following a torrid 2012/13, with memories still fresh from its divisive merger bid with Mayer Brown, the firm was left with revenues £40m below its boom-time peak in 2008 but its previous high has finally been passed with an 8% rise in revenues this year and profits per equity partner (PEP) up 17% to £649,000, making its performance one of the strongest in the UK top 25 this year and by far the best by a ‘chasing pack’ firm.

Legal Business

Barclays exits continue as M&A legal chief departs for Simmons & Simmons

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Barclays’ M&A chief, Khasruz Zaman, is set to exit the banking giant after a decade in its Canary Wharf HQ for City firm Simmons & Simmons.

Zaman will join Simmons’ London office as a corporate and commercial partner on 1 September. With Simmons fortunes having returned after a buoyant year in the City, Zaman will bring weight to the firm’s M&A function.

During his time at Barclays, Zaman has guided the British bank through a £226m deal in 2009 to purchase the banking arm of insurer Standard Life and credit card companies Egg from US rival Citigroup in 2011. He also advised Barclays on its proposed takeover of ABN Amro, which was infamously acquired by The Royal Bank of Scotland (RBS) shortly before the financial crisis.

Zaman began his legal career at Slaughter and May before joining what was then Lovells after seven years at the Magic Circle firm.

He becomes the latest in a long line of exits from Barclays, with the bank’s EMEA general counsel for its investment banking arm Erica Handling switching to funds manager BlackRock earlier this year, US general counsel Carlos Pelayo moving to Merrill Lynch in January while financial crime chief Jonathan Peddie will join Baker & McKenzie this September. Deputy group general counsel Michael Shaw also resigned after six years in the role in June, while global general counsel of corporate and investment banking Judith Shepherd stepped down earlier this year.

Simmons recently posted record revenues for the 12 months to 30 April 2015, with its gross income rising 8% to £290m as profits per equity partner soared by nearly £100,000 to hit a new high of £649,000. Barclays is one of the firm’s biggest clients, with financial services giants Santander and RBS among the firm’s core client base.

Mark Curtis, head of Simmons & Simmons’ international corporate and commercial group, said: ‘We are pleased to welcome Khasruz to our corporate practice. His arrival marks the continued development and investment in our current M&A capability and expertise, while bringing real insight and industry strength to financial institutions as one of our five key sector priorities.’

tom.moore@legalease.co.uk

Legal Business

Simmons & Simmons to shut Rome office as firm focuses on ‘doing it all out of Milan’

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Simmons & Simmons is set to shut its nine-partner office in Rome following a ‘detailed review’ and focus on clients in Italy’s industrial heartland in the north of the country.

In a statement this morning (4 August) the firm said it has ‘decided to consolidate its offering’ in Italy with partners relocating to its Milan outpost where most of the firm’s clients are located. The statement added: ‘Ultimately, the location of our offices is determined by the key markets for clients in our sectors.’

Commenting on the decision, Simmons’ senior partner Colin Passmore said: ‘We’ve looked at our business in Italy and we’ve decided that we can just as well consolidate by doing it all out of Milan. Most but not all of our clients are based out of Milan and it’s just a business decision to consolidate what we’re doing.’

While retrenching in Europe, the firm enjoyed a solid financial performance for the 2014/15 year with revenues up 8% to £290m, while profits per equity partner soared by nearly £100,000 to hit a new high of £649,000, following a bout of static years. The closure also follows the firm’s recent vote on a new three-year business plan with a focus on strengthening referral relationships in the US, transforming its partner-client relationships and committing to a set of firm-wide values.

Other looming office closures in Europe includes Winston & Strawn’s Geneva office in September as the firm looks to service arbitration work from London and Paris, while Berwin Leighton Paisner scaled back its offering in Paris last autumn, leaving only a liason outpost following the departure of French head Antoine-Audoin Maggiar.

sarah.downey@legalease.co.uk

Legal Business

City moves: Simmons builds construction team with Trowers’ disputes partner

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Partner exits continue to mount in Trowers & Hamlins’ construction practice as City-based construction disputes partner Rob Horne moves on to join Simmons & Simmons.

Horne leaves Trowers after spending more than a decade at the firm having joined in January 2005 after working as an assistant at Addleshaw Goddard from 2000 to 2005. He also worked at the Chartered Institute of Arbitrators for eight years.

He has experience in construction, engineering and infrastructure disputes, as well as international and domestic arbitration, litigation, adjudication and mediation. Horne comes recommended in The Legal 500 both for rail and international arbitration.

In his new role, he will work closely with construction partners James Pollock and Navneet Juty in London to expand the practice’s construction dispute resolution and avoidance offerings.

Simmons international construction group head Richard Dyton said: ‘Rob’s expertise will greatly enhance opportunities for our clients and our current offering in construction and, as part of our energy and infrastructure sector focus, complement experience across our international team.’

The hire comes after the firm’s former M&A partner Matt Rees left Simmons to join Proskauer Rose in April, and after Squire Patton Boggs hired its acquisition finance partner John Hayward at the beginning of the year.

However, Trowers has seen its share of partner exits too including former head of Bahrain construction Paula Boast who returned to Charles Russell Speechlys as its Middle East head of construction in May, after spending almost nine years at Trowers’ Bahrain office. This came after head of UAE Abdullah Mutawi, and fellow partner and international disputes resolution chief Lucas Pitts, exited the firm in March to join Baker Botts’ corporate and disputes practice in Dubai.

Last week, Trowers revealed its 2014/15 financials which saw improving UK revenue help the firm to a 3% turnover growth rate after international offices’ income fell 7.5% from £15.9m to £14.7m. Profitability performed better with net profit up 8% to £19.5m.

jaishree.kalia@legalease.co.uk

Legal Business

Taking the firm to the client – Simmons’ head argues that traditional rainmakers are gone

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When I qualified (was it really 30 years ago?) I had this impression about how law firms worked. The partnership was made up of different people. There were the technical geniuses – the lawyers who were the equivalent of the rocket scientists at the investment banks. There were the managers who made things work, like meeting the deadlines. Then there were the rainmakers.

These people were special – very special. They were the ones the rest of us watched in awe. They were the ones who went out and impressed the client with their extraordinary interpersonal skills; they dominated their generation and the profession. They had their own profiles in the legal press. More relevantly, they provided the client base the rest of us needed to prosper in a profession growing ever more competitive. We applauded and imagined: could that one day be me?

There may still be people who think this is how the legal profession works. There may even be a tiny handful of these superheroes left. But the better reality is that those days are long gone. The new world of law requires an entirely different approach towards client management and work generation – an approach that’s even more challenging than it was for those old-style rainmakers.

When I became senior partner, the challenge that really kept me awake was: how do you bring the firm to the client? This wasn’t about the financial crisis; it wasn’t about the shift in buying power; it was definitely not about what we all do individually. It was – and still is – about making the whole firm relevant to your client, by creating multiple touch points that make use of what the firm can offer as a whole, across department, across sector and across office.

Within that broad challenge is the much tougher one that all large firms face, particularly those with multiple offices – namely how to foster a genuine culture of collaboration that makes use of the multiple talents available and that together makes the firm increasingly relevant to the clients’ many needs.

Reward is clearly part of the solution, but, as ever, it isn’t the universal panacea for driving the deep changes in behaviour that true cross-firm collaboration requires. The way we behave is far more a part of how we feel about our firms and our role within them – fostering shared values that make it second nature to look for opportunities for colleagues, that provide the glue that cements the world’s best firms.

The new generation of rainmakers are therefore the collaborators. They work together, and in doing so make things happen for others and bring their firm to client relationships. Clients recognise them and value what they do, because it allows the conversation to be more about supporting a broad business need and less about an individual’s personality and practice. It’s perhaps a good thing that these new rainmakers aren’t as visible as their old-school counterparts, since they are far less frightening, but they make a far greater impact on their firm, their colleagues and their clients. And it benefits them too, because such behaviour is easy to recognise and reward.

The challenge for senior and managing partners, and their business development directors, is how to foster and create that essential collaboration. Shared values that really mean something and to which we pay much more than lip service, which truly reflect a firm’s collegiate culture, are an important part of the answer, as, of course, is the sheer dedication and persistence needed to embed such a culture, to ensure it becomes second nature. As we prepare ourselves for (the much predicted) further consolidation in the legal market, this new form of collegiate rainmaking will become more and more essential. Those that get this will survive and thrive.

Colin Passmore is senior partner at Simmons & Simmons

Click here for a report on Simmons & Simmons’ financial performance in 2014/15

Legal Business

Financials 2014/15: Simmons returns to form with strongest-ever results

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With its fortunes tied to its large financial services client base, Simmons & Simmons has brought to an end a period slow growth to post a record-breaking year, with revenues up by 8% to £290.1m, while profits per equity partner soared by nearly £100,000 to hit a new high of £649,000.

Following a number of static years, Simmons & Simmons experienced a resurgent year in 2014 with a steep rise in funds work and a barrage of financial regulatory mandates. Revenue rose by £22m from £268m as the City firm capitalised on a raft of work generated by the implementation of the Alternative Investment Fund Managers Directive in the UK in late 2013 to limit the leverage of funds and a boom in transactional work.

The figure sees the firm pass its previous peak in 2008, when revenue stood at £289.2m. Profits per equity partner (PEP) rose by 17% from £553,000 to £649,000, also breaking the water mark set in 2008.

The sharpest growth came at Simmons’ City office, with strong growth also recorded in Bristol, where the firm opened an office in 2012 to reduce costs. Managing partner Jeremy Hoyland told Legal Business: ‘It was slightly unanticipated that most of the growth came in the UK. We have a bigger proportion of our business in finance than most other firms, and while it’s been tough in the financial crisis, we’ve now seen a good return to form. The standout performance has been in the funds practice. Bristol has made a positive contribution to our UK figures and we continue to grow there.’

Hoyland added: ‘Real estate finance has been busier, we’re seeing more on the asset finance side and also the equity capital markets, which is as volatile as ever but we had a really good year in that area, and the straight debt as well. We had a good year across the transaction finance work.’

Simmons also had some big client wins last year, making it onto the legal panel of energy giant BP for the first time last year, and was instructed on big regulatory mandates for banking clients Morgan Stanley, Barclays and Société Générale.

On the back of this growth, Simmons & Simmons made 19 lateral hires last year and carried its biggest promotions round since 2011 in May, with 13 lawyers joining the partnership. There was also a launch in Luxembourg, with the firm opening an office there in January targeting funds work.

While this year’s growth helped the firm to close the gap in PEP held by its nearest rivals in the City, Ashurst, Hoyland said ‘there is no reason we should be less profitable’ and aims to ‘catch up’ with the figures its closest rivals pay over the coming years.

With the UK generating the bulk of the growth, Simmons is now targeting growth of its £80m book of business in continental Europe. Hoyland said: ‘We’ve made investments in the last year and the year before where we need to see a better return on those investments. We need to sell the likes of Luxembourg and Singapore to our clients. We would like to increase the proportion of our revenue coming from Europe. While the eurozone is having a rough time we have a relatively small proportion of our business in Germany and that’s a key market. We have our Munich office, which is two years old, and we’re still actively looking for growth in the German market.’

tom.moore@legalease.co.uk

Legal Business

Taking the firm to the client – traditional rainmakers are gone

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Simmons senior partner Colin Passmore argues a new breed of collaborators are the rainmakers of tomorrow

When I qualified (was it really 30 years ago?) I had this impression about how law firms worked. The partnership was made up of different people. There were the technical geniuses – the lawyers who were the equivalent of the rocket scientists at the investment banks. There were the managers who made things work, like meeting the deadlines. Then there were the rainmakers.