Chadbourne’s poor showing in City puts top 30 London placing at risk
28 March 2011 | By Andrew Pugh
Mixed results for US practices as Sidley and Reed Smith post positive results.
Chadbourne & Parke is on course to drop out of the top 30 international firms in London after reporting another disappointing UK performance in 2010.
After seeing City income fall by 16 per cent in 2009, last year Chadbourne’s London revenue took a 23 per cent tumble, from $26.9m (£16.55m) to $20.6m. In contrast, its global revenue rose by 9 per cent to reach $306.4m.
London managing partner Claude Serfilippi said there were two factors behind the ongoing slump in London.
“There was less insurance disputes work last year and that had an impact,” he told The Lawyer. “Also, a lot of what we do on the corporate and project finance sides relates to cross-border transactional work in Central and Eastern Europe, and that work’s slowed down. Any firm that does transactional work in those regions will be negatively affected. I’d say those are the two principal reasons for the decrease.”
While Serfilippi is confident of an improvement in 2011, he admits that much of it could depend on the ongoing unrest in North Africa and the Middle East, with the firm having a Dubai office in the latter.
“The political turmoil in the Gulf region could affect things,” he said. “I know of two M&A transactions in the region where the purchasers decided to either take a different path or put things on hold. With that caveat, hopefully things will improve in 2011.”
Despite the pressures in the Gulf, Chadbourne has now set it sights on opening its first office in Turkey. The firm has not yet applied for a practising licence, but is holding extensive discussions with local partners.
While the firm currently uses a variety of local counsel in Turkey, it does not intent to launch via a merger. The office in Istanbul, which would be led by partner Ayse Yüksel, who also heads the Middle East and North Africa (Mena)/Turkey corporate practice, would be joined by five other Turkish lawyers from within the firm.
The office will focus primarily on M&A, private equity and capital markets. Last year the firm landed roles on several of the country’s biggest IPOs, including advising Koza Gold on its $436m IPO in March 2010.
Other clients active in the country include the Carlyle Group and Dubai International Capital.
“We have some serious plans for Istanbul,” revealed Yüksel. “Our Turkish clients are encouraging us have Turkish-qualified lawyers on the ground.
“At the moment we don’t give Turkish law advice and use local counsel, and our clients want it to be all Chadbourne.”
Sidley Austin London chief Drew Scott said his firm’s finance practice was back in hiring mode at associate level for the first time since the recession, after reporting a flat revenue in London.
Turnover at Sidley rose slightly, from $75.4m to $75.9m, while global revenue fell from $1.36bn to $1.34bn.
“We’ve taken a fair amount of cost out of the business,” said Scott. “Happily all that’s behind us and 2010 already seems like a long time ago. The firm’s feeling much more confident than it was at the start of 2010.”
Scott credits the firm’s solid performance in London with an improvement in the capital markets coupled with high volumes of restructuring work.
Commenting on the latter, Scott said: “We now have dispute resolution, which we didn’t have before the recession, as well as structured finance, insolvency and regulatory. Those areas combined means we’re now as compelling a sell in restructuring as anyone.”
Scott also believes 2011 will see a steady increase in transactional activity, which is likely to see the firm active in the recruitment market.
“Our capital markets team is now so busy they’re needing to recruit, and structured finance are talking about recruiting,” he says. “Those are words I haven’t heard for a while. They don’t think they’ll have enough people if what appears to be happening in the market comes off.”
Another firm that has enjoyed a solid year in London is Reed Smith, which saw London revenue rise by 2.1 per cent in 2010, from $141.1m to $144m.
London chief Roger Parker said Reed Smith’s energy practice has been one of the biggest drivers, as well as an increase in media-related work, while corporate and real estate continued to lag.
While the firm’s focus on energy has seen some high-profile hires, such as that of Siân Fellows, who joined as a partner from Shell, the firm did not manage to seal the deal that would have thrust it to the forefront of the energy sector after its talks with Texas firm Thompson & Knight ended earlier this year.
“Everyone got on very well, but it just wasn’t the right time to close the transaction,” admitted Scott. “Texas remains a strategic interest, as does the Hong Kong-Beijing axis.”
One place you will not see Reed Smith in is the Commonwealth countries of Australia, Canada and South Africa.
“Those are markets where we have clients and they’re markets of interest, but they’re not a strategic focal point for us,” added Parker.
Other US firms that have reported their London figures include Dewey & LeBoeuf and Latham & Watkins. The latter had another strong year in the City, with turnover up by 9.1 per cent, from $151m to $165m.
Dewey saw its London revenue drop by 9.7 per cent, from $110m to $99.3m.
Weil Gotshal & Manges, meanwhile, also suffered a drop in revenue, with the figure falling by 11 per cent, from $85m to $75m.