Linklaters shares clients' pain with fee discounts for failed IPOs

Four high-profile London Stock Exchange (LSE) official list floats have been pulled this month. Linklaters advised Merrill Lynch on two: this month's failed flotations of DIY company Focus Wickes and Irish food and drink company Cantrell & Cochrane.
Linklaters head of corporate David Cheyne told The Lawyer that discounting for aborted deals had now become standard at the firm, especially when working for banks that will take a huge cut in fees if an IPO is pulled.
Cheyne said: "In theory, we're paid for the work that we do, and on time. In practice, we take on abort discounts, especially when working for the banks. We're not independent of our client. We share the grief. But it's still better to be involved. Some IPOs come back. If you're not involved, you don't have the same position when the market recovers."
In contrast, Freshfields Bruckhaus Deringer and Slaughter and May say that offering discounts to clients has not been their standard practice over these volatile months. Freshfields corporate partner Tim Jones said: "Our work is largely time costed, but there's usually a going rate for IPOs." He said the firm will agree a fixed fee based on what it thinks that rate is.
The Lawyer understands that Slaughters also works on a fixed fee basis. Clifford Chance, which advised Focus Wickes on its pulled flotation this month, treats aborted deals on a case-by-case basis and has no discounting policy, according to corporate partner Iain Hunter.
But Linklaters' generous strategy has paid off. It came top in The Lawyer's last IPO survey, advising on 14 floats worth over £7bn between July 2000 and December 2001 (The Lawyer, 22 April). It has won work on four of this month's IPOs, compared with Freshfields' three. Clifford Chance and Slaughters have done one apiece. Slaughters also advised Punch Taverns on its flotation in May.
As well as the two pulled floats, Linklaters advised fashion house Burberry in its successful flotation last week. It is also advising South African bank Investec on its entry onto the LSE, which is set for the end of this month.

IPOs July 2002
IPO	Status	Adviser to company	Adviser to banks
Yell	Cancelled	Weil Gotshal	Freshfields
Focus Wickes	Cancelled	Clifford Chance	Linklaters
Cantrell & Cochrane	Cancelled	Dickson Minto	Linklaters
Heath Lambert	Cancelled	Slaughter and May	Freshfields
Burberry	Completed	Linklaters	Freshfields
Investec	Proceeding	Linklaters	Allen & Overy
Source: The Lawyer