Round up of the year 2010

After the storm: Consolidation and mergers have been the main themes of a positive 2010, with Halliwells providing enough negativity all by itself to balance out the year


Freshfields Bruckhaus Deringer kicked off the year with a gender diversity initiative in a bid to improve its retention rate among female ­solicitors. Mid-sized firms got busy on their overseas strategies; LG slashed its preferred list of ­international firms, while Withers also refined its international ­network. On the Continent, the departure of Wolfgang Grobecker from Hengeler Mueller for Milbank caused serious waves. Having said he had parted company with the elite German firm for strategic ­reasons and that his clients wanted a global firm, Hengeler hit back by insisting that Grobecker’s ­departure was due to “unacceptable misconduct”.

Meanwhile, the Jackson review dominated the news agenda in ­January. The report proposed that civil litigation success fees should be capped at 25 per cent of damages and that losers would no longer be liable for after-the-event (ATE) ­premiums
Four firms – Eversheds, Herbert Smith, Pinsent Masons and Simmons & Simmons – made it into the Stonewall Equality Index. Later in the year The Lawyer would publish the first-ever diversity report, which assessed top firms’ performances across a variety of metrics, from gender and sexual orientation to ethnicity and disability.


Allen & Overy (A&O) set the pace in February with its announcement – the first time in the magic circle – that it would allow part-time equity partners. The same month it made waves by poaching 17 partners from Clayton Utz to become the first magic circle firm to have a major presence in Australia. Although the majority of the partners who jumped ship are based in Sydney, the defection of three partners to set up an office in Perth underlined the city’s importance. The move made A&O the second-largest UK-headquartered firm in the Asia region.

Indeed, international stories dominated the month, with Latham & Watkins aping A&O’s mass ­poaching with a nine-partner haul from White & Case’s Middle East ­network.

Offshore, Gibraltar was in the news with the story that the ­founding partners of Marrache & Co had been arrested on charges of falsely accounting client money.

Back in London, Bingham lawyers were the envy of the City when it emerged that its newly-qualifieds were being paid £100,000, highlighting the continuing gulf between salaries at City and US firms in London.

At The Lawyer HR Awards ­ceremony, Norton Rose scooped the big one, HR Team of the Year, for its work on Flex the previous year. That scheme meant that Norton Rose, unlike virtually every other major law firm in 2009, escaped making redundancies.


One Essex Court and Herbert Smith mended a breach in their ­relationship following a bust-up over unpaid bills worth more than £500,000. The row led to a 15-month freeze on instructions to the magic circle set from Herbert Smith.

Staying with the bar, Lincoln’s Inn set 4 New Square defeated a £33m race discrimination claim brought against three set members and its senior clerk. St Philips ­Chambers in Birmingham distanced itself from door tenant Roger Grierson, who stood for the BNP at the general election. He resigned from the set after the news became known.

The Bar Standards Board rapped BPP Law School for taking on too many students. Such scrutiny came at a tricky time for the school, ­coming just three months after its US parent Apollo Group was investigated by the Securities and Exchange Commission (SEC) in connection with accounting irregularities (The Lawyer, 23 November 2009).

RBS general counsel Chris ­Campbell told The Lawyer that he was considering introducing Mexican wave-style relationships between his panel firms in an attempt to reduce the bank’s £200m annual legal spend.

Research by The Lawyer suggested that domestic outsourcing could eclipse offshoring as a means of ­cutting legal costs. 44 per cent of legal process outsourcing (LPO) vendors were aiming to increase the number of onshore personnel and lawyers they employ, with law firms indicating that they were more comfortable outsourcing locally than internationally, despite the greater cost savings offered by India or South Africa.


The prospect of alternative business structures (ABSs) created a row north of the border as four top ­Scottish firms – Dundas & Wilson, Maclay Murray & Spens, McGrigors and Shepherd & Wedderburn – considered having their lawyers register with the Solicitors Regulation Authority (SRA) rather than the Scottish Law Society in relation to the Scottish Law Agents Society’s attempt to ban the introduction of ABSs.

Berwin Leighton Paisner (BLP) struck a deal with client Thames Water that will see the utility ­transfer the majority of its legal function to the City firm. The legal team will remain at the company’s Reading headquarters even after transferring to BLP.

SJ Berwin embarked on the first of its merger discussions of the year, with the news that it was talking to Orrick Herrington & Sutcliffe (see box, page 20). However, the talks foundered early on.


In the month when The Lawyer published its annual Transatlantic Elite magazine, cross-ocean activity was the flavour of the month: US litigation boutique Kobre & Kim launched in London; SJ Berwin entered merger talks with Proskauer Rose, while Denton Wilde Sapte announced its transatlantic deal with Chicago firm Sonnenschein Nath & Rosenthal.

Closer to home, Eversheds was ordered to pay £123,300 to an associate who claimed he had been dismissed unfairly and suffered sex discrimination during the firm’s redundancy programme.

Meanwhile, CMS Cameron McKenna floated its controversial proposal of outsourcing a 20-strong back-office function for £600m with ­Integreon, while Leigh Day & Co broke all known records with its £105m fee on the Trafigura case.


Mayer Brown and Simmons engaged in a bit of a Burton-Taylor romance, with merger talks starting twice before the two firms decided to call it a day. The Lawyer reported on Mayer Brown’s “cultural implacability” as regards internationalism. The attraction for Simmons may have been the Asian end of Mayer Brown. The merged firm would have had a global turnover in excess of £1bn and a lawyer count of 2,400.

Freshfields established referral framework with TLT Solicitors in what would be the first in a string of examples of City firms setting up ad hoc Mexican wave relationships with smaller regional firms to keep costs down for clients.

Andrew Rimmingon, corporate partner at Dorsey & Whitney, was acquitted of fraud. The FSA began formal proceedings against ­Rimmington on 30 April 2009, but it was only when Bloomberg made the story public on 20 May that the firm sacked him, citing “clear and firm policies”. The fact that one of Dorsey’s partners had been charged had clearly not, until then, posed an ethical dilemma.

Kirkland & Ellis made a splashy double hire from Ashurst in snaring private equity partners Gavin ­Gordon and David Arnold. At The Lawyer Awards ceremony in June BLP walked off with the award for Law Firm of the Year, while (from the sublime to the ridiculous) ­Halliwells went into administration (see box, page 18).


The financial reporting season saw a mixed set of results, not least in the magic circle, where The Lawyer discerned a split between Freshfields and Linklaters on one side and A&O and Clifford Chance on the other (12 July). Linklaters’ fall in profit per equity partner (PEP) of 7 per cent was twinned with the firm’s desire to go all-out for a full equity ­partnership.

Law Rocks at the 100 Club saw the BLP band triumph, just weeks after winning Law Firm of the Year.

Was the offshoring bubble about to burst? According to a document seen by The Lawyer, Integreon was making a 26 per cent greater loss than anticipated at its Bristol ­operation. Firms’ reluctance to send work overseas was understood to be having an impact on the bottom line.


Halliwells’ former executive ­chairman Ian Austin gave an ­exclusive interview to The Lawyer on 2 August, in which he protested that “we all bear responsibility” for the firm’s failure. “I’ve lost everything – I fought hugely,” he said. “I’ll not have anyone question that ­commitment.”

He defended the disbursement of £15m of a £20m cash incentive from landlord Allied London to equity partners following the firm’s move into the new building, citing tax-efficiency as the rationale for distributing money at that point. More tastefully,

Burges Salmon senior partner Stephen McNulty set up a job network among ­commercial law firms to take on students whose training contracts with Halliwells were suspended.

Volume powerhouse Optima Legal Services was told to sever links with outsourcing giant Capita after the SRA found that their relationship breached rules governing non-lawyer investment in firms.

The lead litigation partner at Optima Philip Robinson and lead property partner Anthony Ruane were reprimanded by theregulator. Optima was found to have jumped the gun in setting up an ABS.

Norton Rose fell foul of the new Government’s immigration cap when it failed to secure a work ­permit for one of its future trainees and had to turn away a handful of Indian interns, illustrating the ­difficulties firms were encountering in trying to hire globally following the new policy. After considerable lobbying from the City and ­companies in the knowledge ­economy, the Coalition scrapped the policy last month (November).


The Lawyer UK 200 Annual Report 2010 laid bare the financials of the profession. In an intriguing coda to the research, The Lawyer revealed the firms that were the fastest to make profit during the course of the year. The winner was not a magic circle firm, but pensions specialist Sacker & Partners, which took 171 days to reach profit – beating the august Slaughter and May (176) and Freshfields (177).

Hammonds became the latest firm to announce a transatlantic merger, with a deal with Cleveland-based Squire Sanders & Dempsey. As The Lawyer commented: “It is a truth universally acknowledged that any firm that announces a remarkable profit recovery is usually in want of a merger.”

And so it was with Hammonds. The firm proclaimed an increase in PEP of 432 per cent in May, while its two-year search for a merger partner paid off with the Squire Sanders deal.

Meanwhile, A&O staff were ­plotting a Cockney knees-up charity spectacular with Bethnal Green: The Musical, involving the local community.

The Lawyer published (12 ­September) its earnings per equity partner (EPP) table, a metric designed to weed out over-egged profitability by considering ­earnings across the partnership.

Over five years Travers Smith has reconfigured its partnership the most. Its proportion of equity ­partners has dropped by 16 per cent in that time, compared with 3 per cent at Macfarlanes.

Partner rates in the magic circle have bounced back to over £725 per hour, according to The Lawyer’s annual hourly rate survey, ­conducted by costs consultant Jim Diamond. It was a stark comparison with last year, when the UK’s elite firms were reported to be charging an average hourly fee – including discounts – of £450.

Away from the City, privacy lawyers, led by Tamsin Allen, a ­Bindmans partner, were gearing up to act on the phone-hacking saga. Allen led the pack with a judicial review of the actions of the ­Metropolitan Police.


Slaughters capitulated to the outsourcing trend by setting up a three-strong panel of LPO providers – including CPA Global and Exigent – at the behest of client Carillion.

The move was seen as having enormous symbolic importance, although Slaughters was at pains to say that the work would probably be low-level data support for M&A.

At Freshfields Will Lawes was voted in as senior partner, ensuring the smoothest of successions and the least possible radical management change. Chief executive Ted Burke’s role was redefined as ­managing partner, while the ­German practice got a look-in with the new role of executive partner for Cologne tax chief Stephan Eilers.

It was a good month for ­Freshfields, with news that it had snatched client BP from under the nose of Linklaters to act on any ­hostile bids following the Gulf of Mexico oil disaster.

London firm ACS:Law was scrutinised by the Information Commissioner over allegations that it had breached data protection laws. The firm found itself at the centre of a major row after a list of alleged web pirates it had compiled appeared online. The list contained more than 5,000 users who were alleged to have shared adult films illegally.

Meanwhile, in Berlin The Lawyer held its second European Awards. Salans scooped European Law Firm of the Year, while Kinstellar won the Emerging Law Firm trophy and Manuel Martin of Gomez-Acebo & Pombo won European Managing Partner of the Year.

Staying in Europe, 12 partners, including the European IP head and Europe managing partner, left Howrey in one of the biggest exits in recent times to set up their own IP firm following conflicts.


The SJ Berwin managing partner election took an acrimonious turn following Rob Day’s success in ­winning the job. Large swathes of the firm’s global partnership – including the London tax team and the majority of the real estate group – supported Day’s opponent Perry Yam in the election, in a move seen by sections of the firm as a protest at the lack of transparency over merger talks.

Addleshaw Goddard showed its radical stripes as it was revealed that it had committed to a ­multimillion-pound ’no win, no fee’ arrangement for billionaire client Boris Berezovksy; the firm was also beginning to collect information on the social backgrounds of its ­graduate applicants as a precursor to collecting similar information on the rest of the workforce. It joined Herbert Smith and Baker & McKenzie in quizzing applicants on their schooling backgrounds.

In other diversity news, Clifford Chance elected a white male as ­senior partner – banking lawyer Malcolm Sweeting.

Hammonds and Squire Sanders signed their merger deal, Linklaters made further efforts to move ­German partners onto the same remuneration package as UK ­partners as part of its all-equity push, and Dentons sued its former India chief following the allegation of a bribe (denied by her) and costs of a ­subsequent court case.

Meanwhile, Norton Rose hooked up with Canadian firm Ogilvy Renault and South Africa’s Deneys Reitz in its continuing bid to emulate DLA Piper.


More departures from Barlow Lyde & Gilbert (BLG), as the firm’s management continued to make changes that were unpalatable to several senior staff. Six high-profile ­partners left in the space of three months for Taylor Wessing, Camerons and others.

The year was rounded off with an intriguing management election looming at Simmons, pitting a ­London partner against a German, with the revelation that Mark Dawkins had decided not to stand for a third term.

Meanwhile, A&O was close to pulling the plug on its derivatives venture docGenix, but won an eye-wateringly high-profile ­mandate advising the Treasury on the Irish bailout – edging out the Government’s long-term adviser Slaughters in the process.