No more Mr Nasty Guy?
11 January 1999
9 December 2013
22 April 2013
13 November 2013
23 October 2013
9 December 2013
Anne Mizzi reports on Herbert Smith's efforts to reposition itself as a corporate rather than litigation-centred firm.
Herbert Smith - which elected head of corporate Richard Bond to senior partner last week - is, according to observers, the next likely candidate for a major transatlantic merger.
The firm is known internationally for its litigation, but, they say, has been quietly hiving-off divisions and repositioning itself as a corporate practice in a bid to secure heavyweight deals work and make itself more attractive to a US partner.
Bond, like current senior partner Edward Walker-Arnott who was also a head of corporate, will keep Herbert Smith on message: it is not simply a litigation firm, corporate plays a central role.
It has emerged that competition partner Richard Fleck and litigation partner Charles Plant were also interested in the senior partner post but dropped out before the election.
Sources say that Plant would have re-enforced the image of Herbert Smith as a litigation firm. "It was thought that that would have given out the wrong message," says an insider. "That's the Herbert Smith way."
With a corporate man at the helm again, the firm is underlining its competence in this area. Bond's broad-based corporate practice focuses on energy and privatisation work. He was heavily involved in Britain's oil, gas, water and coal privatisations, leading the teams on the latter two deals.
Bond also led teams acting for the regional electricity companies on the National Grid flotation. And he acted for global coordinators of the sale of the UK Government's remaining share holdings in National Power and PowerGen and for Magnox Electric in connection with the nuclear industry privatisation.
Richard Hughes, who left Herbert Smith for Linklaters last year, says: "At the heart of the corporate group, perhaps Richard Bond was better placed strategically given Herbies' desire to push their corporate reputation."
But one former Herbert Smith partner says that the litigation label continues to dog the firm.
He says: "Corporate clients think 'why go to a litigation firm for corporate advice?' Corporate is rather in the shadow of litigation, in the eyes of both clients and Herbert Smith partners."
Another source says: "There is certainly a perception of Herbert Smith as a litigation firm. The reputation that Herbert Smith has had for decades for being an aggressive litigation firm does put off certain corporate clients, particularly those who have been sued."
Or as one observer puts it: "Most of the banks have been taken down a dark alley by Herbert Smith."
But corporate partner Caroline Goodall denies that companies have been put off using the firm for corporate work because of experiences at the receiving end of Herbert Smith's litigators.
She says: "I don't believe that they have. We have always had an excellent corporate department, but because we have had litigation perhaps we have not blown our own trumpet about it."
And corporate partner Michael Walter believes the market perception has changed since he joined two years ago from Stephenson Harwood. "I don't think we are perceived as a litigation firm any more. We have shed the brands like 'aggressive' and 'Rottweiler'.
"We are generally recognised as being a premier litigation firm but we have a good reputation as a full-service international law firm," he says.
Walter, who refuses to say whether he will put himself forward for the head of corporate position, says: "One of the reasons I joined was because of the reputation of the corporate practice."
He says the already strong corporate department continues to grow in reputation and size. And he points to the recent hiring of two US securities partners, Jim Wickenden and Allen Hanen, from investment bank JP Morgan.
But sources say that Herbert Smith remains a long way off magic circle membership. One says: "It's like King Canute shaking his fist at the sea, saying there's no such thing as a magic circle. Herbert Smith is in denial. But the statistics show that there is a magic circle and Herbert Smith cannot catch up without a merger."
Walter's comments appear to support this view. "I don't agree with that expression," he says when asked about the magic circle.
And neither, apparently, does Goodall. She says: "If you are talking about firms which have first-rate international corporate practices, we are in that bracket. We have always had a long record of advising investment banks. If there is a premiere league or a magic circle then we are in it."
Herbert Smith came eighth in The Lawyer 100 gross fees salary survey published in September, lagging behind the "golden four" and fifth magic circle firm Slaughter and May.
"It has between 80 and 85 equity partners and a further 50 to 60 salaried partners on glorified senior assistant salaries," explains one source. "It cannot grow organically - there are not enough good banking partners and good assistants around who would consider the move. It needs to take a quality chunk."
Taking a bite seemed to be on the cards when Herbert Smith was in secret merger talks with Ashurst Morris Crisp earlier this year.
But the talks came to nothing, say sources, and it now seems the firm has set its sights on a US merger.
One industry source says: "They only made up three partners in September while announcing bumper profits. There are associates in their banking team who are on promises of partnership, and one is on a promise for the second time around as they try to become lean and mean, possibly with a view to a US merger."
The firm has international offices in Bangkok, Beijing, Brussels, Hong Kong, Moscow, Paris and Singapore. But a former partner says this is not enough to give it the critical mass it needs.
"It calls itself an international firm but it didn't make the financial commitment early on. They need to catch up and won't without a merger," he says.
If the pundits are right, Bond's tenure as senior partner could be crucial for the firm's future international success. His low-key appointment last week is the calm before the storm, likely to precede a much more significant event in the new year.
Major corporate deals in 199
Advises Credit Suisse First Boston, the global coordinator and sponsor, on the £263m international public offering of pan-European on-line auction community QXL.com.
Acts for the Bank of Scotland on its £20.85bn hostile bid for National Westminster Bank.
Represents Merrill Lynch International, as lead manager, on a £1.15bn bond issue by Edison First Power, a subsidiary of Edison Mission Energy.
Advises Securicor on the disposal of a 40 per cent share in Cellnet to BT for £3.15bn.
Advises 12 regional electricity companies on the sale of UK Data Collections Services to Invensys for £38.5m.
Advises Salomon Smith Barney Hong Kong on its HK$1.29bn (£100.6m) on the SEHK listing of Great Wall Technology.
Advises the Automobile Association (AA) on its deal with Centrica on its £1.1bn acquisition.
Advises Koninklijke Hoogovens in relation to its proposed merger with British Steel to form a new company BSKH, which will be listed on the London, Amsterdam and New York Stock Exchanges, with a combined market capitalisation of £2,98bn.
Advises Olivetti on its £36.5bn bid for Telecom Italia. The firm worked with Italian firm Erede & Associates to advise on the £15bn-plus syndicated loan to finance the hostile takeover bid.
Advises British American Tobacco on its £15bn merger with Rothmans International.