Legal Business

Disputes round-up: Vannin Capital hires Fountain Court’s Martenstyn as managing director as Stewarts makes litigation tech play

In a further indication of the growing prominence of litigation funders, Vannin Capital has turned to Bar stalwart Paul Martenstyn for its new managing director as Burford Capital announces a robust 17% increase in income.

Elsewhere, Stewarts has struck a partnership with tech start-up Solomonic, while the Supreme Court has ‘with reluctance’ dismissed the appeal of a wife who wants to divorce her husband in the Owens v Owens case.

Martenstyn’s move to Vannin comes after a decade at Fountain Court Chambers. He became a clerk at the set in 2008, and had served as deputy senior clerk since 2011. Among his major accolades, he was the first barristers’ clerk to receive a professional qualification from the Chartered Institute of Marketing.

Martenstyn will start his managing director role at Vannin on 1 October, and will be charged with promoting the funder’s brand at home and abroad.

Alex Taylor, Fountain Court Chambers’ senior clerk commented: ‘Paul has been a stalwart of our clerking team for almost ten years and a clerk of absolutely the highest order. Although we will certainly miss him, I can see that the opportunity to tackle a new professional challenge and to contribute to Vannin’s progress through what Paul does best was extremely attractive.’

He will be joining at a time of heavy investment for the litigation funder. In 2016 Vannin announced it had increased its capital to $500m after a financial injection from asset management firm Fortress Investment Group.

Likewise, it is a boom period at funding rival Burford. The financier announced H1 results today (25 July) including a 17% increase in income to $205.2m. Profit after tax also rose 17% to $166.3m while operating profit was up 18% to $183.5m.

According to Burford, such is the demand for litigation funding in the market that it has reached $540m in legal finance commitments in the first six months of 2018 alone.

While impressive by anyone’s standards, the double-digit increases across the board do not quite compare with the 130% income hike Burford recorded in H1 2017.

Meanwhile, litigation specialist Stewarts has revealed a new tie-up with litigation tech start-up Solomonic.

Solomonic works via an initial human process of analysing a set of previous judgements, which is then reviewed by a barrister. At present this is done by Solomonic co-founder and former One Essex Court barrister Gideon Cohen. After this in-depth analysis, the information is fed into an engine which converts it into a series of algorithms.

Rather than giving traditional percentage estimates of an outcome, the process is designed to inform tactical decisions during litigation, such as whether or not to settle or pursue a particular argument.

Edward Bird, Solomonic’s chief revenue officer, told Legal Business that Solomonic is trying to ‘achieve actual intelligence’ as opposed to typical machine learning: ‘We don’t say “we do predictions.” We give you rigorously analysed data that actually helps you make evidence-based decisions.’

Julian Chamberlayne, Stewarts’ head of knowledge management and compliance, added: ‘We think there are some serious marginal gains to be made here. It’s like the Team Sky cycling approach, we’re looking for incremental gains rather than the magic answer!’

Finally, the Supreme Court has unanimously dismissed the appeal of 68-year-old Tini Owens, who has been told she must remain married to her husband for the time being.

Tini Owens had made consecutive appeals to the Court of Appeal and the Supreme Court after a lower court refused to grant her a decree nisi, despite acknowledging that her marriage to Hugh Owens had broken down.

The Supreme Court admitted that her appeal generated ‘uneasy feelings’ but asserted ‘uneasy feelings are of no consequence in this court, nor indeed in any other appellate court.’

Charles Russell Speechlys family law partner Sarah Jane Boon said the Supreme Court’s decision represented a ‘woeful failure’ to resolve ‘a perverse situation.’

She added: ‘Mrs Owens has failed to satisfy the court that she is entitled to a divorce by a narrow margin on an objective test, raising serious questions about whether the current law remains fit for purpose when it produces results such as this.’

tom.baker@legalease.co.uk

Legal Business

Disputes round-up: Retailers beat Visa/Mastercard on fees as Stewarts launches financial crime unit

The UK’s largest disputes specialist, Stewarts, has helped secure a win in the high-profile Visa/Mastercard interchange fees case less than a week after launching a financial crime department.

On Wednesday (4 July), a host of British retailers represented by Stewarts, Mishcon de Reya and Morgan Lewis & Bockius  won a Court of Appeal ruling against the financial services giants.

The MasterCard/Visa case concerned interchange fees, which are charges made by the card-issuers on payments by debit or credit cards in store or online. Sainsbury’s, Asda, Argos and Morrisons sued the card companies alleging the fees were an unlawful restriction of competition based on EU law.

The retailers’ case was dismissed by Justice Popplewell last year, when he ruled the charges were necessary to MasterCard and Visa’s business operations and were below an objectionable level.

But the retailers appealed, with two of the appeals brought from the Commercial Court and one from the Competition Appeal Tribunal (CAT). Sainsbury’s was represented by Mishcon and Morgan Lewis, while Asda, Argos and Morrisons were advised by Stewarts. Jones Day acted for MasterCard and Linklaters represented Visa.

This week’s judgment overturned last year’s decision, with Master of the Rolls Sir Terence Etherton ruling that the fees restricted competition and were therefore unlawful. He ruled that all three cases should be sent back to the CAT due to its specialism in competition matters.

Elaine Whiteford, competition partner at Covington & Burling, commented on the combination of the three cases: ‘Given that competition litigation is characterised by multiple claims being brought by different parties in parallel and that this risk of different approaches by different courts arises in many cases, it may well be that the Court of Appeal’s approach provides a strong signal of how such claims will be handled in future.’

The win capped off a successful period for Stewarts, which announced last Friday (29 June) it had hired Richard Kovalevsky QC as a partner to head up a new financial crime department.

Kovalevsky joins as the firm’s 62nd partner after 13 years at 2 Bedford Row. He is recognised as a leading individual in the Legal 500 for fraud work, and took silk in 2003.

Managing partner John Cahill said Stewarts plans ‘to establish a leading financial crime team’ with the hire, citing overlaps with pre-existing practices such as civil fraud, asset recovery and tax litigation.

Elsewhere, HFW made a disputes hire in the form of Emmanuel Roger France, a dispute resolution specialist and founding partner of Fieldfisher’s Brussels office.

France joins HFW’s own Brussels base, bringing with him more than 19 years’ experience in fraud, asset recovery and white-collar crime matters. It was the firm’s second lateral disputes hire this week, after the firm brought in Trowers & Hamlins international disputes head James Harbridge to its Dubai office on Monday (2 July).

tom.baker@legalease.co.uk

Legal Business

Boutiques: Highly evolved

With the disputes market evolving and clients becoming more discerning, it has been a phenomenal ten years for boutique law firms focused on litigation. The pressure on generalist, mid-market dispute teams has played towards this dynamic, leaving true contentious specialists increasingly going head-to-head with the traditional London elite.

A glance at the financial results of some of the main litigation specialists – Stewarts, Signature Litigation and Quinn Emanuel Urquhart & Sullivan – shows dramatic increases in revenue amid a string of major cases.

Legal Business

Perspectives: Clive Zietman, Stewarts

I got into law almost by default. I didn’t even like it when I started with Herbert Smith where I was doing non-contentious stuff, but when I did my final seat in litigation I decided this was for me. I’m a games person: I like sport, I like Scrabble, I like fighting. It was only at that point when I decided I wanted to be a lawyer.

It was always going to be litigation. If you look at my profile on our website it says: ‘Clive’s hobby is litigation.’ It’s absolutely true. If I go on holiday and have a bad holiday, I sue the holiday company. Which is, in fact, almost inevitable. We were building a house down in Cornwall and we were entering into a building contract that my wife was helping to draft. I said: ‘Why are you calling in the builders? They’re the defendants!’

Legal Business

Global Outlook sponsored briefing: The International Chamber of the Paris Court of Appeal – France has risen to the challenge

The Paris courts aim to strengthen France’s appeal as a centre for litigation post-Brexit

Paris has long been positioned as one of the leading centres for international commercial arbitration disputes, so the French government’s latest legal initiative should come as no surprise to its European counterparts. Indeed, Paris is no stranger to international dispute resolution as there has existed for more than ten years within its Tribunal of Commerce an International Chamber, formed of ten English-speaking judges, hearing commercial disputes with an international dimension.

Legal Business

Legal Business 100: Case study – Stewarts Law

Stewarts Law, the UK’s largest litigation-only firm, had an eventful 2016/17 financial year, which resulted in its third consecutive period of double-digit growth. As a standout performer across the Legal Business 100 (LB100) as a whole, the firm had a record year with turnover rising 25% to £77.9m and profit per equity partner (PEP) climbing 19% to £1.9m, seeing it move up into the top half of the LB100 for the first time. It has become recognised as one of the fastest-growing players organically in the UK legal market, with revenue growing 123% over the last five years. PEP rose 110% over the same time period.

Year-on-year performance in 2016/17 was boosted by the resolution of some significant mandates last year, most notably the £4bn shareholder group action against The Royal Bank of Scotland (RBS) in which Stewarts’ claimant clients took a settlement offer in December 2016 in a case against RBS’ former chief executive Fred Goodwin and three other directors.

Stewarts is also currently in battle with Tesco on behalf of over 125 institutional funds, who claim they lost money as a result of Tesco overstating its profits by £263m in October 2014.

‘We keep an open mind, but we want to remain a litigation-only business, so it’s a small market for us in terms of mergers.’
John Cahill, Stewarts Law

Coming as a surprise to many after years of startling organic financial performance, Stewarts looked at a potential merger with boutique Enyo Law in early 2017 to create an £80m disputes specialist. The acquisition of Enyo was in the preliminary stages before it was called off, with Stewarts managing partner John Cahill saying at the time that the firm wanted to ‘continue down the path of organic growth and selected lateral hires’.

True to Cahill’s word, Stewarts has made a couple of select lateral hires of substantial seniority over the past year. Firstly, veteran litigator Ian Gatt QC arrived from Herbert Smith Freehills’ advocacy unit in October 2016, bringing with him over 30 years’ experience in both litigation and arbitration disputes.

In June this year, Stewarts brought in Dechert commercial litigation veteran David Hughes. Hughes, who also served as Berwin Leighton Paisner’s head of banking and finance litigation for nine years, slotted into Stewarts’ core commercial litigation practice. However, the firm did lose partner Daniel Loblowitz in July, who left to join property firm Jury O’Shea and build his own practice.

LB: Did any areas thrive or perform poorly over the last year?

John Cahill: Our commercial disputes department had a very strong year. But our newest departments that we’ve set up over the last few years, such as arbitration, tax and trust litigation, need growth and critical mass added to them. Our challenge for the next year will be to focus on building them up.

Has Brexit had any tangible impact over the last financial year?

Cahill: For us, no. In terms of the future, it’s difficult to make predictions. It’s likely that litigation will be less affected by the uncertainty of Brexit than other practices. Market uncertainty may reduce transactional volumes for a period of time, which will be a problem for firms doing that kind of work. If it’s going to bring a harder financial climate, the counter-cyclical nature of litigation may mean we find more work with our clients. It has to be a priority for the government that London remains an international centre for resolving disputes. It’s a major export, so it’s important this is not threatened.

Following the scrapped proposed merger with Enyo, is the firm looking forward to any other mergers?

Cahill: You’ve only got to turn on your computer or read the legal press to see that potential mergers are always being talked about. We keep an open mind, but we want to remain a litigation-only business, so it’s a small market for us in terms of mergers. We’re in no rush to go down that road.

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Legal Business

Financials 2016/17: Stewarts Law reaches £1.9m PEP in another year of standout growth

Litigation specialist Stewarts Law has posted its third consecutive year of double-digit growth, with a record profit per equity partner (PEP) rising 30% to reach £1.9m.

In its best year in revenue terms to date, the firm marks the conclusion of a number of high-value long-running matters, with its 2016/17 figures revealing a 25% revenue rise to £78.1m.

However, the firm said the breakdown of revenue is drawn purely from litigation and includes £1.2m in respect of ‘value recognised on certain contingent work where the income recognition policy applied in our management accounts differs to the statutory financial statements’.

The UK’s largest litigation-only firm, which specialises in complex high-value disputes, has posted a 124% increase in revenue over the last five years.

Meanwhile, Stewart’s average PEP increased 125% over the same period. Net profit stood at £36.4m, also a 25% increase from last year, while compensation for all partners totalled £44.5m, a 24% increase rate.

Managing partner John Cahill (pictured) said Stewarts was pleased to post ‘another strong set of financial results’ as the firm concluded a number of long-running cases which ‘contributed to our strong revenue and profit figures’.

UK fee income continues to account for the majority of the firm’s revenue, as the top of the firm’s equity now stands at nearly £2.5m, 40% more than the £1.8m it recorded in 2015/16.

The lower end of the equity scale stands at nearly £1m, a significant increase from £642,000 in the last financial year.

The firm’s largest piece of concluded litigation this year was the settlement in June of the 2008 £4bn shareholder rights issue group action against the Royal Bank of Scotland (RBS), in which the last shareholders accepted a lsat-minute offer of 82p per share.

Over the year, Stewarts also represented over 125 institutional funds which have filed a damages £100m claim against retailer Tesco, accusing it of breaching the Financial Services & Markets Act in relation to its alleged over-statement of earnings in 2014.

Last year, the litigation firm also recorded double-digit revenue growth of nearly 19% to £62m, alongside a 26% increase in net profits to £29m. That year, PEP also grew 25% to £1.6m.

On this year’s results, Cahill said: ‘In over 50 per cent of those disputes we are sharing risk with our clients through contingent fee arrangements including both damages based agreements and conditional fee agreements.’

‘Increasingly, this will result in “non-linear” patterns of income which will in turn lead to fluctuations in profit,’ he added.

Georgiana.tudor@legalease.co.uk

Legal Business

Stewarts Law brings in Dechert veteran to bolster fraud practice

Disputes leader Stewarts Law has made a rare partner hire in its core commercial litigation practice after recruiting Dechert litigation veteran David Hughes.

Hughes joins after three years at Dechert and had previously served as Berwin Leighton Paisner’s (BLP) head of banking and finance litigation for nine years. His practice focuses on fraud and regulatory issues for banking groups, two boom areas of contentious work.

Despite its expansive form as one of the fastest growing practices in the LB100 Stewarts has been relatively restrained at lateral recruitment in recent years. Its last major hire came in October 2016 when it recruited Herbert Smith Freehills’ advocacy head Ian Gatt QC.

Stewarts’ head of commercial litigation Clive Zietman (pictured) told Legal Business that Hughes will help widen the 52-partner firm’s fraud team: ‘He wanted an absolutely top-quality team and he felt our team could really support him. We’re very picky with our laterals, but we felt that his arrival went in line with what the firm is doing.’

Hughes’ arrival bolsters a commercial litigation team that is currently fighting a headline-grabbing shareholder claim against Tesco. Partner Sean Upson is leading for Stewarts in the case, which relates to a 2014 profit misstatement which saw Tesco over-state its profits by £263m.

The disputes specialist was one of the fastest growing LB100 firms in 2015/16, with revenues increasing by 17% to £61.3m. However, the firm abandoned a preliminary attempt to merge with fellow litigation boutique Enyo Law in March this year.

tom.baker@legalease.co.uk

Legal Business

Called off: Stewarts Law deal to acquire Enyo scrapped

A deal for Stewarts Law to merge with boutique Enyo Law to create an £80m disputes specialist has been called off, Legal Business can reveal.

The unexpected acquisition was due to be finalised before the end of the financial year. Details surrounding the transfer of lawyers and staff to Stewarts were not disclosed.

In a statement, Stewarts said. ‘Following very preliminary and exploratory discussions both firms have decided not to pursue matters further.’

Stewarts managing partner John Cahill (pictured): ‘Our preference is to continue down the path of organic growth and selected lateral hires. Our record growth over the last five years has been impressive and has not been driven by merger or acquisition.’

He added:’The expansion of our commercial disputes offering is a priority and we anticipate being active in the lateral hire space over the next 24 months, seeking out the very best new talent to join Stewarts Law, as well as promoting our rising stars from within.’

City litigation partners had mixed reactions to the merger news; Herbert Smith Freehills head of international arbitration Craig Tevendale saw sense in the collaboration: ‘Both firms have some very good people and have made a success of the litigation boutique model.’

Ted Greeno, commercial litigation partner at Quinn, Emanuel, Urquhart & Sullivan was less convinced: ‘I’m surprised that they were prepared to give up their independence but no doubt they had good reasons for it.’

Enyo was founded in 2010 by former Addleshaw Goddard partners Simon Twigden, Pietro Marino and Michael Green. A profitable outfit, Enyo posted strong financial figures over the last couple of years with revenue growing 27% to £21m in 2016. Remuneration among members stood at £12.5m.

Stewarts Law, which generated £62.1m in fees last year, has also seen positive financial growth in recent times, with the firm’s highest paid member pocketing £1.7m for the 2015/16 financial year, a 20% increase from the previous figure. The litigation specialist also saw a consecutive year of double digit revenue growth, with revenue jumping 17% to £61.3m.

Stewarts represented a number of retailers including Asda, Morrison, New Look and Next in a £1.2bn claim against MasterCard which was ruled on in January. The High Court decided in favour of MasterCard amid claims that the card issuer overcharged consumers due to controversial interchange fees.

tom.baker@legalease.co.uk

Read more on litigation boutiques in:‘Focal points – Law boutiques and the art of focus’

 

Legal Business

Boutique boost: Stewarts in talks to pick up Enyo to create £80m firm

Litigation boutique Stewarts Law is in discussions to buy Enyo Law in a deal which will see about £20m added to Stewarts’ revenue.

It is believed the deal to acquire Enyo Law will be finalised before the end of the financial year in April, although it is currently unknown how many lawyers and staff will be transferred to Stewarts.

The disputes boutique was founded in 2010 by former Addleshaw Goddard partners Simon Twigden, Pietro Marino and Michael Green.

The financial outlook for Enyo had been healthy, with revenue increasing by 27% from £15m in 2014/15 to £21m in 2015/16. Remuneration among members was also up significantly from £8.1m in 2015 to £12.5m in 2016.

A key mandate for the firm has been acting for sovereign wealth fund, the Libyan Investment Authority (LIA), in a $2.1bn claim for rescission of a series of trades purportedly entered into with members of the Société Générale Group; as well as LIA’s $1bn claim against Goldman Sachs over nine large financial derivative transactions that lost over 90% of their value. Enyo lost the Goldman Sachs case last year.

Stewarts Law, which generated £62.1m in fees last year, has also seen positive financial growth in recent times, with the firm’s highest paid member pocketing £1.7m for the 2015/16 financial year, a 20% increase from the previous figure. The litigation specialist also saw a consecutive year of double digit revenue growth, with revenue jumping 17% to £61.3m.

At Enyo, the highest paid member took home £2.9m last year, an increase from 2015’s amount of £1.8m.

Stewarts Law represented a number of retailers including Asda, Morrison, New Look and Next in a £1.2bn claim against MasterCard which was ruled on in January. The High Court decided in favour of MasterCard amid claims that the card issuer overcharged consumers due to controversial interchange fees.

tom.baker@legalease.co.uk

Read more: ‘Focal points -Law boutiques and the art of focus’