HSBC replaced Nabarro Nathanson with Freshfields last week as its adviser on the UK's largest single office letting – its lease from Canary Wharf of a £500m, 41-storey Docklands headquarters.
Nabarros, one of the property panel firms for HSBC and its subsidiary Midland Bank, had been advising the bank on its new headquarters when Canary Wharf “was just a glimmer in our eye, last year,” said Richard Bennett, general counsel at HSBC.
“They acted for us in exploratory discussions up to when we got into heads of terms. That was their brief.”
After that, he said, at the beginning of June, management of the group decided that the legal work for the second stage should be tendered for under a fixed fee basis. It had already been decided that the contract with the construction company to build the offices was also to be under a fixed price.
Bennett said the transaction “requires a combination of tax, construction and property law all of which is intertwined.” HSBC was persuaded to relocate from the City to Docklands because of a controversial £150m tax break available under the area's “enterprise zone allowance”.
Eight firms, including Nabarros and Linklaters, submitted written tenders for the deal including a fixed quote, and a number of them were asked in for interview.
“If time had permitted we would probably have seen all eight.” Bennett said.
Freshfields won the tender, although its fixed fee quote was not the lowest. “Experience was paramount in this case,” said Bennett.
Freshfields' team, led by property partner Chris Morris, has advised both Citibank and Credit Suisse First Boston on taking leases from Canary Wharf.
The HSBC deal is the second time Freshfields has beaten Linklaters to a Canary Wharf deal. Linklaters also tendered for the Credit Suisse work. Linklaters property partner Robert Finch conceded: “Freshfields is beginning to dominate in the Canary Wharf area. But we could win the next deal that comes along.”
Morris' team at Freshfields includes construction partner Sally Roe, tax partner Francis Sandison and planning partner Paul Watchman. They will be working on the deal until at least the end of 2001, when HSBC expects to move in.
At Nabarros, head of property Geoffrey Lander had been leading his team advising on searching for a site for at least six months. Spokesman Chris Hinze said: “The bank has gone out of its way to compliment us on the work we have done on the relocation project.”
Nabarros is also advising Martin Sorrell, chief executive of advertising agency WPP, on suing Paul Reichmann, the property tycoon who is in a syndicate that owns Canary Wharf, in a dispute over office space at Docklands. Sorrell is claiming Reichmann and the Canary Wharf company allowed his advertising agency to be gazumped by the Financial Services Authority.
Hinze said: “My understanding is that HSBC are aware that we are acting for WPP and as far as I know they have no issue with that.”