Magic circle firm’s ACT dept refuses to play second fiddle to corporate. By Gavriel Hollander
Freshfields Bruckhaus Deringer’s antitrust, competition and trade (ACT) team has, it is fair to say, stood head and shoulders above its UK rivals for some time. But with merger control not the lucrative stream it once was, this might be the time for the pretenders to step up to the plate.
However, other City competition practices appear, if anything, to be falling still further off the pace. A little over a year ago a team led by Freshfields partner Deirdre Trapp won a decision in the Competition Appeal Tribunal (CAT) for Tesco, overturning a ruling that would have prevented the supermarket giant opening new stores in areas where there was already substantial competition. The victory went a long way to securing for the firm The Lawyer’s Competition Team of the Year Award in 2009 for the third time in a row.
And the maxim that success breeds success has rung true for Freshfields, with more high-profile work coming along for the competition team throughout 2009. This included landing the mandate, alongside Herbert Smith, to act for BAA on judicial review proceedings brought before the CAT in relation to the sale of its airports.
Partner David Aitman’s role in securing the BAA work highlights one of the factors that sets Freshfields apart in the competition space – the ability to lead major client relationships from the ACT team, rather than see it as an offshoot of the corporate practice.
Besides Aitman’s BAA relationship, other key clients led by competition partners include Hewlett-Packard, which uses Jenny Connolly as its go-to adviser, and Tesco, which has an ongoing partnership with Trapp.
At a time when the firm is bracing itself for what many are expecting to be a double-digit drop in revenue, Freshfields’ City competition practice is an enduring good news story. But in many ways it is a simple numbers game.
The firm boasts a team of 50 ACT fee-earners, with a partnership headcount of 14, nearly double those of any of its magic circle peers. It gives the partnership the resources to go out and win work independently, as Trapp is happy to substantiate.
“Compared with other firms’, our ACT offering is entirely unique,” she says. “In days gone by we would have looked more like competition teams at other firms, which in some instances are largely support teams to corporate departments. It’s an area in which we’ve continued to invest and is one of our standout strengths.”
While hearing a firm talk up its own position is hardly unusual, it is difficult to find a critical voice from anywhere in the City when asking around about Freshfields’ competition practice.
One antitrust partner at a US firm based in London identifies another reason behind Freshfields’ near monopolisation of the top competition work.
“They’ve cornered the market in putting people in and taking them out of the Office of Fair Trading [OFT],” says the partner. “Others do it, but [Freshfields] seems to do so a lot more at the highest level.”
That ad hoc OFT relationship saw senior associate Alastair Mordaunt move across to the regulator in 2007, while, the previous year the firm snared senior director Simon Priddis as a partner.
“Clients say they want to have a relationship with a firm that’s close to the regulators,” says London ACT head Rod Carlton. “We’ve had people go there and clients want that, and as a result we’ve a lot of contact with them. It’s a bit of a virtuous circle, but any business would want to get itself into that position.”
Late last year Priddis acted on OFT aspects of a deal that saw the London Stock Exchange (LSE) purchase online trading platform Turquoise. While that mandate did derive from the corporate team, the recessionary drop-off in merger control activity has turned the spotlight on other areas of the business.
“The work mix has changed,” admits Carlton. “We’ve moved away from a merger control wave pre-crisis. We’re doing more on the restructuring side now, which is exportable. Work we’ve been doing in the UK, we’re now doing elsewhere too.”
This means that the firm is not reliant on through-put from a still struggling corporate team – a situation that has seen practices at firms such as Clifford Chance and Slaughter and May suffer in comparison over the past year.
With the gloss having been taken off what one competition partner describes as “the glory boys” of the M&A teams, a strong competition practice has become increasingly important.
“They’ve done very well in not focusing on the merger side,” says an ACT partner at another City firm. “They’ve some of the advantages of Slaughter and May and some of the advantages of a firm such as SJ Berwin. When you put those two together you’re on to a good thing.”
That combination of self-generated regulatory work and a trickle of legacy M&A work, as well as having good relationships with regulators, has meant that Freshfields remains the dominant ACT force in the City. And certainly, that does not hurt its earning potential in Europe either.
“We operate as an international group,” explains Trapp. “Regulators and agencies talk among themselves a lot more now and we work in the same way.
“These days, you don’t know when something’s going to kick off, or where. It used to be the case that law was very different from one country to the next, but communication between agencies has really improved.”
Competition practices may still not be the glory boys of the City, but with M&A markets still sluggish to the point of inertia, Freshfields’ faith in its team to pull in some much-needed revenue is looking particularly well-placed.