Sitting on defence

Whatever happened to the BAE-EADS deal, the lawyers were going to be okay


The mooted merger of UK defence group BAE Systems and EADS, the Continental aerospace company, crash-landed last week after the companies failed to convince politicians the deal was in the interests of France, Germany, the UK and the US.

But it was just another day at the office for the lawyers on the deal. Seeing your deal collapse is part of any solicitor’s working life and generally has a minimal effect on how much firms earn from the client and how satisfied the lawyers feel. A lot of the work is carried out well before the deal becomes public knowledge.

Clifford Chance, which advised EADS on the UK aspects of the merger, is set to receive further work from the company despite the deal collapsing, primarily because it frequently finds itself carrying out advisory work for EADS. The magic circle firm is understood to have a global fee agreement with the company, meaning it is likely to take a small hit given the deal’s collapse, but the hit for law firms is rarely big.

What both Clifford Chance and EADS’ French lead adviser Darrois Villey Maillot Brochier have missed out on, however, is another year of intense advising on the deal before its planned close. Darrois, which entered at an early stage and referred the UK work to Clifford Chance, spent six months advising on the deal. The legal structure had been completed and both BAE and EADS were in agreement.

Advice on negotiations with governments provided handy extra work for lawyers including Davis Polk & Wardwell, where Simon Witty, the US firm’s recent recruit from Freshfields Bruckhaus Deringer, was among the team advising the French government. A vast number of lawyers acted for the US government, while Gleiss Lutz corporate partner Ralf Thaeter in Berlin advised the German government and Schilling Zutt & Anschütz Mannheim corporate partner Jochem Reichert advised Daimler.

Berlin has a 22.5 per cent stake in EADS, controlled by Daimler. The French government, with the Lagardère company, also has 22.5 per cent.