Although the corporate practices of the top 20 firms suffered an average fall in revenue, by the end of the year things were pretty much the same as before.
For the UK’s top corporate practices, 2009-10 was very much a case of plus ca change, plus c’est la meme chose, with dealflow still in decline and competition for the work as tough as ever.
Revenues across the top 20 firms dropped by an average of just over 4 per cent, with total fees across all practice areas also dropping by that amount. But whereas last year brought with it some drastic action from City firms, the feeling this time around is that things may finally be picking up.
“It’s definitely better than last year,” says Allen & Overy (A&O) London corporate head Richard Browne. “Over the course of the past 12 months it’s been tough and the market’s been down substantially, but there’s more happening now.”
Leaders of the pack
It is no surprise to see that the magic circle, along with Slaughter and May, monopolised the few big deals that did see the light of day.
Clifford Chance and Slaughters took the honours by acting on the year’s standout deal, Kraft’s hostile acquisition of Cadbury. Clifford Chance rainmaker Guy Norman led for Kraft and also acted for Babcock on its £1.3bn takeover of VT Group. Slaughters M&A chief Stephen Cooke led the defence for Cadbury. However, with private equity not making the comeback that some were predicting, Clifford Chance still saw its corporate revenue fall by more than 6 per cent.
“Against levels of activity in the market we were pretty pleased with our performance,” says global corporate head Matthew Layton. “We’ve had a raft of good deals across the network.”
Slaughters, meanwhile, could not match last year’s performance, aided by a healthy slew of Government work on the back of the banking crisis. It too lost ground on its rivals, although A&O’s 12 per cent drop-off was the most alarming among the big five.
Linklaters extended its lead at the top of the table, with its corporate revenue dropping by only 1 per cent. A prize role acting for Lloyds Banking Group on its record-breaking £13.5bn rights issue helped Linklaters stay on an even keel following last year’s 14 per cent fall. Jeremy Parr led the capital-raising exercise before stepping up to fill David Barnes’ shoes as global head of corporate.
In contrast to Slaughters, Linklaters reaped the rewards from the continuing fallout from the financial meltdown of 2008, courtesy of its relationships with Lloyds and RBS.
Best of a bad crunch
Despite suffering a 6 per cent year-on-year fall, Freshfields Bruckhaus Deringer can justifiably claim to have had the best recession of all the leading corporate lights. It is the only firm to have increased corporate revenue since 2007-08.
Global corporate head Ed Braham believes that the continuing absence of deals is acting as a differentiator for the best firms.
“It’s been a horrible market in which we’ve more than held our own,” he says. “We’d probably say we took market share.”
Braham highlights the firm’s European spread as key to keeping the corporate practice on track. A German and French team landed a role for Daimler on its three-way tie-up with Renault and Nissan, while partner Ian Frost led the international group acting for Springer Science & Business Media on its sale to private equity house EQT.
The struggles of the mid-market continued, with firms either consolidating after a poor 2008-09 or suffering a delayed dip.
SJ Berwin steadied the ship after its disastrous performance the previous year. Its 1.5 per cent fall is a sound performance considering its emphasis on a thin private equity market. Corporate chief Steven Davis’s work for Apax Partners on the £600m investment by China Investment Corporation even bagged The Lawyer’s Corporate Team of the Year gong.
Norton Rose did win a role acting for France Telecom on one of the biggest European deals of the year, last September’s T-Mobile-Orange merger, but still saw revenue fall by 10 per cent.
“There’s been lots of pricing pressure and a squeeze on the mid-market,” said head of corporate Tim Marsden. “We can expect to see the magic circle push into the areas where we’re strong.”
Herbert Smith and Lovells were both widely seen as having solid if unspectacular years. But the gap to the big boys remains as large as ever.
Table: TOP 20 CORPORATE PERFORMANCES, 2009-2010 (Click image to view full version)