US firm aims to complement its financial restructuring strength with a serious litigation player in the City.
When the news came out two weeks ago (TheLawyer.com, 27 June) that former Simmons & Simmons managing partner Mark Dawkins was leaving the firm he had run to join Bingham McCutchen, it was widely viewed as a coda to the Simmons management election saga.
“I got into management quite young in my career and felt it was something I hadn’t quite finished off – I always missed doing client work when managing the firm,” says Dawkins, who is adamant that he had been thinking seriously of staying at Simmons after his managing partner term.
But having lost the senior partner post in the last round in late April to fellow litigator Colin Passmore, perhaps a new start seemed more attractive.
As a former Simmons partner (via a short stint at Cadwalader Wickersham & Taft in the late 1990s), Bingham London managing partner James Roome knew Dawkins of old. Scuppering any headhunters’ chances of earning a tidy commission, he picked up the phone to his old colleague in May. Dawkins was voted in three weeks later.
However, the departure of Dawkins for Bingham is not just about Simmons’ politics. The parallel story is what Bingham is aiming to do in London and whether it can actually overcome its inherent conservatism to build a big-hitting litigation practice.
Since its launch in London at the beginning of the last decade, restructuring partner Roome – one of the best-known players in the distressed market and accurately described by one of his colleagues as a “careful builder” – has grown the firm into a £25m business in London with 17 partners (including Dawkins) and 25 associates.
The vast majority of that is in its core business of financial restructuring. Its eight-partner group, co-led by Roome and partner Barry Russell, is undoubtedly a force, coming top of Debtwire’s European advisory mandates table for 2010 with nine mandates and a total debt of e6.9bn (£6.18bn).
Bingham’s work for bondholders in recent times has included advising the private placement noteholders on the Thomson restructuring, which became the test case for the settlement of default swaps under the International Swaps and Derivatives Association’s ’small bang protocol’. It was also deeply involved on Wind Hellas, where Roome, partner Stephen Peppiatt and New York partner Ron Silverman represented the committee of senior secured noteholders on the Greek telecoms operator’s e1.8bn restructuring via a pre-packaged administration sale, one notable for being one of only two substantial mezzanine debt for equity swaps of recent years.
Wide of the mark
But compared with Bingham’s undoubted star cast of restructuring lawyers in London, its litigation bench has always been strangely shallow given how contentious bondholder wranglings can become. Two previous attempts to widen out its offering foundered. Bingham hired Neil Micklethwaite, a former litigation head at DLA, in November 2004. However, the practices diverged: Micklethwaite’s general litigation background (he developed a strong following of Russian clients) did not dovetail easily with the strict financial bias of Bingham’s practice, and he left in September 2007 for immigration boutique Gherson before landing at Brown Rudnick last year.
In 2007 Bingham hired Sue Prevezer QC from Essex Court Chambers. She subsequently moved to Quinn Emanuel Urquhart & Sullivan in 2008, although the relationship appears cordial, with Bingham continuing to instruct her on Elektrim for the bondholders, where she and Natasha Harrison, a partner since December 2004, triumphed at the Court of Appeal in October 2010.
And so it has been that much of the burden of the practice has been laid on Harrison, who originally trained at the bar and worked at Denton Wilde Sapte, since building a formidable reputation as a litigator at Bingham. She made The Lawyer’s Hot 100 this year for her work on Elektrim, but has been acting for the holders of the $22bn (£13.75bn) worth of bonds issued by Iceland’s three largest failed banks – Kaupthing Bank HK, Glitnir Banki HF and Landsbanki (see box).
Harrison has two senior counsel in the shape of Sheena Buddhev and Richard Hornshaw, both of whom are starting to make their names in financial litigation, notably for their work on behalf of the bondholders of the insolvent Icelandic banks. But internal partner promotions have not been forthcoming, either in litigation or the UK. Although Bingham has hired a series of laterals in the past couple of years, such as finance partner Sarah Smith from Sidley Austin in January 2010 and hedge funds partner Davina Garrod from McDermott Will & Emery just a month later, London was entirely ignored in the last promotions round (12 January 2011), with the 13 new partners coming from Boston, Hartford, New York, Los Angeles, Portland, San Francisco and Washington DC.
Luring in London
Bingham’s belated move comes amid increasing competition from other US firms for UK litigators. Over the course of the decade there has been a series of judgments that have signalled an increasing trend towards cooperation between the US and English courts, particularly in insolvency cases – highlighted most recently on Rubin v Eurofinance (2010) in the Court of Appeal (CoA) and NML Capital Limited v Republic of Argentina (2011) in the Supreme Court.
Harrison notes that the key practical implication of Rubin is that a UK-resident judgment debtor cannot, if the judgment arises out of foreign proceedings connected with insolvency, avoid the judgment by staying in the UK and ignoring the foreign legal process.
“Whether or not the Supreme Court upholds the decision will ultimately be a question of policy,” she says. “In particular whether the English courts now wish to develop the principle of universalism and provide for the automatic recognition of judgments obtained in a foreign bankruptcy.”
And NML Capital, where the Supreme Court allowed NML’s appeal against the CoA decision that Argentina was protected by state immunity from having a US judgment enforced against it in England, is also of note for transatlantic litigators.
And so coupled with the fallout from the financial crisis and the regulatory demands on clients, it is no wonder US firms are making senior-level litigation hires in London. Jonathan Kelly left Simmons for Cleary Gottlieb Steen & Hamilton last year (The Lawyer, 10 February 2010), while just two months ago Rory McAlpine resigned from SNR Denton for Skadden Arps Slate Meagher & Flom. And then, of course, there is the unstoppable rise of Quinn Emanuel – the new home of former Bingham partner Prevezer, and which also hired CMS Cameron McKenna litigation partner Rob Hickmott in July 2010 and Olswang litigation head Martin Davies in December of that year.
With Bingham’s average profit per equity partner figure of £1.92m and a margin of 62 per cent, that is an attractive proposition for City laterals. Bingham, which despite offering trainees a mouthwatering £100,000 upon qualification, does not offer guarantees to partners and is not known for giving over-the-odds financial incentives.
“We like to bring in successful lawyers, not books of business,” states Roome. “We haven’t assumed that Mark will bring clients with him. Our expectation is that he’ll work at least initially on existing cases.”
Despite Harrison’s increasing profile in financial litigation, to have one partner servicing the workload coming from the firm’s stellar five-partner restructuring practice has seemed to Bingham watchers as woefully inadequate. “She needs some support,” says one banking litigator sympathetically.
Harrison dismisses this. “I don’t see it as a case of carrying the practice on my own,” she insists. “On the contrary, I feel I’ve been supported throughout by New York and London in building the practice while being given the freedom to develop my vision for the London litigation practice.”
However, Harrison adds that the firm had been actively seeking a litigation lateral. “The next step’s always been to make a strong senior hire, to increase the depth of the offering at the senior level,” she concedes. “This has been very much about finding the right person who’ll be additive to the practice, who’s a fit with the culture of the team and the firm and who shares the same vision in relation to the practice.”
Now that the first wave of post-crisis mandates has abated, the real litigation action is coming from foreign institutions suing investment banks – and Bingham, which acts for a slew of banks in the US, is not going to be acting against them. The problem, then, is to bridge that gap. “When investment banks get sued over here they use Linklaters or Herbert Smith,” says another banking litigator.
Making of Mark
So the hire of Dawkins is at once defensive and opportunistic. Bingham is making a clear statement that it wants – indeed needs – to widen its litigation practice in London to something more akin to what it has in New York, particularly since its takeover of 120-lawyer McKee Nelson two years ago (The Lawyer, 6 July 2009).
“The practice in London’s highly focused with a good reputation, but very much in the funds and bondholder areas,” reflectsDawkins.
“I think what they see from me is someone with a good track record in the financial institutions sector.”
“Bingham acts for bondholders who often have a minority stake and want to be more aggressive,” says one banking litigator. ”Knowing how the banks perceive this, and how they might react, would be a very useful addition.”
But the challenge is not just to win work straight from banks in London, but also to patch that embryonic practice onto the US one, which means the task becomes one of internal relationships.
Dawkins’ management experience is seen by Bingham as key to the job. “He’s a very smart guy and obviously a builder,” says Jeff Smith, the New York-based head of litigation. “He’s done it before when he was in management and he understands the way clients work.”
Although some might worry that a former managing partner would want to meddle on the strategic side, Roome sees Dawkins’ experience as a distinct asset. “We don’t think Mark will have any difficulty in making the transition back to lawyering,” he says. “His strategic nous and pragmatism are just the skills you find in a successful litigator.
“We hope he’ll be closely involved in strategy within his practice area. Nor do I foresee any problems if he wants to have a say in the strategy and direction of the London office – or the firm.”
- Bingham’s key cases
Acting for the holders of more than $22bn (£13.75bn) of bonds issued by Kaupthing Bank, Glitnir Banki and Landsbanki. Litigation group consists of 59 financial institutions that are seeking to challenge the priority status retroactively granted to deposits following emergency legislation brought in by the Icelandic government in October 2008.
Strategic Value Master Fund Ltd v Ideal Standard International Acquisition SARL & Ors
Acting for Strategic Value Master Fund, a minority lender under a senior facility agreement whose parent company is Bain Capital. Currently seeking declarations on the correct interpretation of that agreement and has been granted permission to appeal.
Plexus Fund Ltd v ECM Real Estate Investments AG
Acting for Plexus Fund on a dispute over a e75m (£46.86m) bond issue and the terms of the change of control in one of the first times this issue has been tested in the Luxembourg courts. In July 2010 the Luxembourg court ruled in favour of Plexus, finding that there had been a change of control that entitles bondholders to claim early redemption of bonds. That judgment is currently being appealed.
Sea Containers Ltd and Sea Containers Services Ltd
Acting for liquidators Elizabeth Bingham of Ernst & Young (London) and John McKenna of Finance & Risk Services (Bermuda) of multinational container leasing group Sea Containers and Sea Containers Services on two complex pensions disputes.
Source: Bingham McCutchen