Freshfields plays give and take in Land Secs roundabout

Merger aftermath throws up surprising winners for legal instructions. By Gemma Westacott

The line-up of law firms on Land Securities’ (LS) formal panel of legal advisers could be excused for being a little unsettled of late. After all, ever since the leading commercial property developer acquired property outsourcing giant Trillium (now called Land Securities Trillium (LST)) in November 2000, it has been going through a somewhat extended shake-up of its external legal advisers.

Freshfields Bruckhaus Deringer, Herbert Smith and Slaughter and May have all built up relationships with LS in the last couple of years following the acquisition. This is despite the fact that none is on the company’s official panel.

For example, Slaughters has worked on an ad hoc basis on corporate matters for LS for several years. Herbert Smith is also not on either of the LS or LST panels, but has built on the construction work it undertook for LS when real estate partner Nick Downing joined from Nabarro Nathanson in 1997.

However, Freshfields has probably been the most successful in developing a new relationship with LS following the acquisition
of Trillium.

Although the firm has little history advising LS, it has secured several significant instructions from the company since the merger by utilising its track record advising the former Trillium, both on the outsourcing company’s inception by Goldman Sachs’ Whitehall Real Estate Partnerships in 1997, and with such weighty deals as the BT and BBC real estate portfolio outsourcing deals.

For example, Freshfields real estate partner Chris Morris led the firm’s team advising LS on its 915,000sq ft Bankside mixed-use development on London’s South Bank, including the forward sale of the 500,000sq ft Building 1 to publishing group IPC in May.

In fact, Freshfields has been so successful in playing on the LST connection that the firm now claims LS as a key client and is expecting further instructions relating to the company’s Central London office portfolio.

Meanwhile, those firms that have spent years developing and securing their places on the LS official panel, such as Cripps Harries Hall, Dundas & Wilson, Kuit Steinart Levy, Lovells, Nabarros and Simmons & Simmons, have  missed out on lucrative instructions.

Nabarros was probably the hardest hit, as it was historically the most significant legal adviser. However, this trend appears to be beginning to ebb, with Nabarros clawing its way back to top spot, especially following the hire of Freshfields’ James George last December.

George’s name has been synonymous with Trillium since he won the company as a client in 1996, as it was he who secured such massive outsourcing deals as the high-profile BBC mandate and the £4bn Project Prime deal for the DSS for Freshfields. As such, he has been instrumental in the revival of Nabarros’ relationship with LS.

For example, George is one of the lead partners, along with Nabarros’ Graham Lust and Gareth Jones, advising LS on its exclusive negotiations with Slough Estates to swap the majority of their respective industrial and retail portfolios.

The firm has also recently advised LS on its £113m purchase of Greater London House, although that deal was led by Nicholas Vergette, and there are whispers around the firm that a further significant instruction from the company is imminent.

For its part, Lovells is steadfast in its claims that the firm’s recent lack of instructions by LS has been due to conflicts of interest, rather than a change of focus between LS and its panel of legal advisers.

Unfortunately, the future of some of the other firms on LS’s panel are not so clear-cut. Kuit, for example, must have been shaking in
its boots ever since LS announced earlier in the year its intention to quit the industrial sector, which represents less than 5 per cent of the company’s portfolio, to concentrate on its core markets of retail and office.

This was no doubt a blow to Kuit, as the firm has historically advised the real estate company on the majority of matters relating to its industrial portfolio. However, Kuit is still benefiting from its relationship with LS by jointly advising the company with Nabarros on the proposed Slough Estates swap.

Surprisingly, the merger with LS does not appear to have had the same unsettling impact on LST’s legal advisers, although paradoxically Freshfields has lost some of its dominance.

Freshfields has historically enjoyed a near monopoly on LST’s work ever since its creation in 1997. However, this was challenged in 2002 when the division set up its first formal panel. And George’s departure didn’t help.

Along with Freshfields, Allen & Overy (A&O) and Lovells were chosen for transactions involving major portfolio outsourcing by corporates, while Richards Butler, Tite & Lewis and Olswang were selected for medium-scale corporate transactions. Nabarros was also named for public sector outsourcing.

But despite the formation of the panel, the firms are still expected to compete for instructions on a project-by-project basis. This system of beauty parades has since been expanded, in theory, to include firms that are not even on the panel, opening up LST to the wider legal market for the first time.

However, despite claims that the company will consider any firm that has the obvious commercial advantage, LST remains faithful to its panel of advisers, unlike its parent company.

For example, A&O undertook its first major property outsourcing for LST in April, after insurance giant Aviva opted for the company over its competitor Mapeley, while Richards Butler advised LST on a deal to outsource security services at the Department for Work and Pensions portfolio of properties. Freshfields acted on the original contract with the Government, but LST instructed Richards Butler on the final stage.

While Freshfields’ links with Trillium may not be as strong as they were, is the magic circle firm really that concerned? After all, it has parlayed its connections into gaining larger work for LS. And that’s a smart move.