Disputes sans frontières

High stakes: who’s who in the $20bn transatlantic litigation market

There was a time when the idea of cross-border regulatory cooperation was so unlikely it was used by litigators as part of the strategy.

“Things would just take so long because there was no cross-border inter-connectedness,” says one New York-based litigation partner. “Things fell into the ocean.”

Not any more. What used to be a black hole is now one of the driving forces behind the global growth of litigation.

As Clifford Chance’s global head of litigation Jeremy Sandelson points out in our Special Report, starting on page 25, “I believe there will be much greater coordination betweenregulators as they each seek to protect their ’own’ markets while at the same time attempting to get to grips with global issues.”

Couple that with mushrooming fines levied against some of the world’s leading financial services institutions and it’s not overstating the situation to say the regulators are ripping up the precedents.

And the world’s leading law firms are responding, investing in the busiest areas, relocating lawyers around their networks and hiring the best talent available. The Lawyer’s third annual global litigation report reflects this trend.

As Davis Polk & Wardwell litigation co-practice group coordinator Jim Windels puts it, “It’s now more important than ever to have either one firm working globally or a network of firms that work together seamlessly.”

Nowhere is the concerted push by firms to offer clients a fully integrated service more evident than at Freshfields Bruckhaus Deringer. In the past two years the firm has invested heavily in its international litigation group, most notably launching a US litigation practice with high-level hires including Aaron Marcu and Adam Siegel from Covington & Burling in 2009 and Tim Coleman from Dewey & LeBoeuf this year.

“The internationalisation of trade is leading to the current significant growth in investigations and regulatory work,” confirms Freshfields litigation head Chris Pugh. “Over the past five years there’s been a trememdous growth in cross-border regulatory work which means the top firms need a true US capability.”

Consequently, the firm has cemented its position this year as the largest magic circle litigation practice. In 2008 it was 27th in the table with revenues of $337m (£212m). A year later it rose to joint 24th and $389.6m while this year, as the return on its investment has kicked in, the firm took the 21st position with a total revenue of $401.6m.

Allen & Overy’s (A&O) strategic decision taken in 2008 to grow its litigation revenue to 15 per cent of total fee income by 2012 has borne fruit, securing it a berth in the global top 50 for the first time with revenues of $218.8m.

Legacy Lovells didn’t make this year’s list but following its merger with Hogan & Hartson it is a shoo-in for 2011.

While, as reported last week in The Lawyer, Shearman & Sterling’s strategic push to grow litigation revenue to around a third of the practice should see it enter the table in coming years.

Last year’s 50th firm, and the fifth UK entrant in 2009, Irwin Mitchell, however, has been edged out by the entry of US firm Baker Botts.

Revenue-crunching

The total fee income generated by litigation lawyers across the top 50 fell slightly in 2009 to $19.75bn from $20.89bn in 2008, just above the $19.39bn generated in 2007.

Arguably, however, a more meaningful statistic from the table comes when it is ordered by revenue per partner (RPP) and revenue per lawyer (RPL). By highlighting those firms that are generating in excess of, say, $3m per litigation partner this not only underlines the firms that are genuinely handling the premium end of the world’s disputes – usually with a smaller number of lawyers – but also shows those that have the greatest ability to turn revenue into profit.

It also highlights the firms that are advising clients who are prepared to pay a premium to get the job done, something most clearly seen in recent years by Debevoise & Plimpton’s role on the Siemens investigation.

Cravath Swaine & Moore tops this year’s RPL table with $1.78m while 23 firms posted an RPP above $3m, effectively splitting the table in half. (For more on the RPP and RPL analysis see The Lawyer next week.) Topping the RPP list is Sullivan & Cromwell, which posted $8.17m last year. (Freshfields is the UK’s top ranked firm by RPP, breaking into the top five with $6.37m.) Sullivan, best known for its stellar financial institutions practice, is, unsurprisingly, right at the core of many of the biggest litigation matters and investigations arising from the financial crisis.

The firm’s highest-profile instruction was defending key client Goldman Sachs in connection with the fraud allegations brought by the US Securities and Exchange Commission earlier this year, a case that also saw A&O New York partner Pamela Chepiga pick up a plum role representing Fabrice Tourre, the Goldman trader also named as a defendant in the civil suit. The case ended this summer with a $550m settlement paid by Goldman.

Debevoise secured its position as one of the firms at the forefront of advising clients on the toughening global regulatory regime thanks to its groundbreaking role defending Siemens on bribery charges.

Siemens was the New York firm’s biggest billing matter in its history and is going to take some replacing. More recent litigation highlights include defending former Bank of America chief executive officer Ken Lewis in relation to the acquisition of Merrill Lynch.

Hires from government

Debevoise is also one of the firms at the forefront of the predominantly US trend of hiring former government prosecutors to lend credibility to the defence team. Indeed, it is unique in having the former attorney generals of both the US (Michael Mukasey) and the UK (Lord Goldsmith) on board as partners, making the firm well positioned to capitalise on the current growth in international white-collar crime. It took 8th place in the RPP table.

“We have a tremendous cadre of more than a dozen former prosecutors already in place,” says John Kiernan, co-chair of Debevoise’s litigation department. “The multinational criminal representation is a very new phenomenon in a commercial sense, and although the lead we enjoy right now will face the usual competitive pressures, in the intermediate term the advantage of being the pre-eminent practice is that you get so much of the best work that you actually open up a lead for a period of time.”

Clearly, while few of Kiernan’s rivals are likely to argue that Debevoise is a leading firm in this space, they are less likely to share his view that it is the pre-eminent firm, if for no other reason than that most leading US litigation practices have numerous former prosecutors on board. (Covington has around 20, a tally recently strengthened even more by the return of Jim Garland and Steve Fagell after stints at the US Department of Justice.)

Paul Hastings Janofsky & Walker, which three years ago had just two former government prosecutors on board, now has 10, while late last week word was circulating New York that even Wachtell Lipton Rosen & Katz, typically the most conservative of lateral hirers, had taken on assistant general counsel at the US Federal Reserve Patricia Robinson.

Paul Hastings’ head of litigation Jamie Wareham, who recently won a major auction rate securities case for UBS in the US District Court for the Southern District of New York, says there are risks in hiring these lawyers, particularly if they have been in government for so long that they’ve lost a sense of the commercial imperatives that drive firms.

Equally, some litigation firms – notably elite single-site Washington DC boutique Williams & Connolly – have a blanket ban on hiring them on the basis that they may not be aggressive or defence-oriented enough.

Or, as one lawyer puts it rather more bluntly, “They don’t want people in their building who have just put their clients in jail.”

More typically, however, the world’s biggest firms are staffing up on former prosecutors to help them meet the challenge of the tougher regulatory environment.

“The reality is that many of these lawyers start off in big law firms, go into government and learn the ropes and then come out again,” says Wareham. “The attraction for firms is they’re getting additional skill sets.”

Boutique advance

But it’s not all about the mega-firms. Quinn Emanuel Urquhart & Sullivan, the only litigation boutique to make the top 50, has seen most growth recently within its structured finance practice.

Last year the firm’s London office was involved in one of the last cases argued before the House of Lords, and among the first judgments handed down by the Supreme Court. Sue Prevezer QC successfully acted for one of the secured creditors to Sigma Finance Corporation regarding the payment of liabilities during the so-called 60-day ’realisation period’.

Prevezer also appeared for HSH Nordbank on its cross-border case against UBS and UBS Securities. This not only featured a New York team headed by partners Peter Calamari and Philippe Selendy but also Prevezer out of the firm’s still fledgling London office along with Jonathan Sumption QC in the Court of Appeal.

Neither is it all about New York and London. Washington DC firms Covington and WilmerHale are both benefiting from their close proximity to the seat of power in the US.

Covington in particular is a firm that reflects the trend towards closer cooperation between the world’s regulators. “Lawyers in the firm, including John Rupp, head of our European compliance practice, were deeply involved in the development of the Bribery Act,” says Covington global litigation chair Greg Levy. “He also chaired several international conferences focusing on the connection between the Act and comparable measures in other countries.”

Meanwhile, the US firm is currently showing off its UK credentials representing Samsung Electronics in a High Court battle against Nokia and Tom Tom, claiming damages arising out of an alleged cartel in the liquid crystal display and cathode ray tube markets.

Technology-related legal battles are also a hot spot for WilmerHale. As co-managing partner Bill Perlstein says, although white-collar crime has been a busy area, it was IP litigation that grew revenue the most last year at the firm.

“Our advantage, other than having one of the world’s best IP litigators in [co-managing partner] Bill Lee, is that we have around 80 lawyers in our IP department who have science backgrounds,” says Perlstein. “Technology is a core competency of the firm globally.”

Fraud may be booming, but there’s more to global litigation than white-collar crime.

TOP 50 TRANSATLANTIC FIRMS BY LITIGATION