The new year dawned with news that the first merger of 2007 was already doomed to fail. The planned tie-up between Dewey Ballantine and Orrick Herrington & Sutcliffe was off (The Lawyer, 8 January). There was little love lost between the firms and the finger of blame was quickly pointed at Orrick chairman Ralph Baxter, who had demanded a guaranteed $25m (£12.92m) payout over five years (The Lawyer, 15 January), while Dewey was nursing an equally impressive $89m (£45.18m) pensions deficit (The Lawyer, 22 January).
This side of the pond, things were looking bright for Eversheds, which achieved the previously unimaginable by convincing engineering conglomerate Tyco to ditch between 175 and 200 firms in favour of a single £10m agreement with the national firm (The Lawyer, 8 January).
On 12 January Linklaters chief Tony Angel revealed on www.thelawyer.com that he would be stepping down as managing partner, and the race was on for a successor. Capital markets head Nick Eastwell and Asia chief Simon Davies quickly emerged as the frontrunners (The Lawyer, 22 January).
But the shock of the month came when a The Lawyer/YouGov survey revealed that the majority of associates were not aspiring to partnership (The Lawyer, 29 January), fuelling the year’s flurry to develop alternative career paths.
Freshfields Bruckhaus Deringer had a year of PR nightmares, the first coming after The Lawyer revealed it was to axe 100 equity partners by April to foot £40m restructuring costs (5 February). A week later Freshfields – in a statement that would come back to haunt it (see August) – revealed that it had revamped its management in a bid to manage conflicts of interest (The Lawyer, 12 February).
With the heat on Freshfields, Linklaters was hoping to break with its own chequered past and enter a new era with the announcement that Davies had won the battle to replace Angel at the helm (www.thelawyer.com, 2 February).
Numerous other firms would follow suit later in the year, but Russell Jones & Walker was first off the blocks to take advantage of the changes recommended by Sir David Clementi, announcing an overhaul of its business structure in view of utilising an alternative business structure (The Lawyer, 12 February).
Meanwhile, Barclays turned the microscope on its external advisers’ billing, implementing a new monitoring system to keep track of how firms staff deals (The Lawyer, 19 February). Billing was a topic of debate for in-house counsel that would continue throughout the year.
Mayer Brown – then still weighed down with the ‘Rowe & Maw’ name – became the next international firm to slash its equity partnership, revealing that it would shed 45 equity partners as part of a large-scale restructuring (The Lawyer, 5 March).
The push to liberalise the Indian legal services market also began to heat up, with the influential All India Bar Association recommending that the government open up the market to foreign lawyers (The Lawyer, 12 March).
Change was also called for in the UK legal market, with JPMorgan looking to push diversity to the forefront of law firms’ minds. The Lawyer revealed on 19 March that the investment bank had summoned its panel law firms to a meeting with a view of bringing their policies on lesbian and gay employees into line with the bank’s own policy.
Undoubtedly the most talked about private equity deal of the year – in a very active market – was Kohlberg Kravis Roberts’ (KKR) take-private of Alliance-Boots. Slaughter and May acted for Alliance-Boots in the £11bn mega-buyout, while KKR turned to Clifford Chance (The Lawyer, 19 March).
Slaughter and May made a surprise announcement in The Lawyer (2 April), revealing that the UK-centric firm was jumping on the Asia bandwagon and ramping up its international strategy with the first ‘best friends’ meeting with its Asia law firms.
However, the news was soon overshadowed by one of the biggest stories of 2007 – that lawyers were cashing in, to the tune of £1bn, by handling claims of sick miners through the British Coal compensation scheme. As first revealed by The Lawyer (9 April), 30 firms shared a pot of £800m for processing claims in relation to respiratory disease and vibration white finger. One lawyer to benefit was Jim Beresford, senior partner of Beresfords Solicitors, who emerged as the UK’s richest lawyer by taking home £16.8m in one year.
Hammonds, meanwhile, re-emerged in the headlines with the announcement that it was suing 12 former partners in an ongoing dispute over distribution of firm profits.
Associate issues remained at the centre of most firms’ strategies, with the 16 April edition of The Lawyer revealing that City associates and trainees were set to receive record pay rises.
Clifford Chance fell out of favour with certain banks by implementing liability caps – which were to be followed by others in the City – of e40m (£27.17m) on vendor due diligence and e70m (£47.56m) on buy-side due diligence (The Lawyer, 23 April).
But the focus quickly returned to Freshfields with the announcement that the firm was to face a claim by its former disputes co-head Jo Rickard (The Lawyer, 30 April).
Revenue reached an all-time high at Linklaters, smashing the symbolic £1bn barrier to challenge Clifford Chance for the title of the world’s largest law firm (The Lawyer, 7 May).
But not all law firms making big bucks were celebrating. The firms under fire for making sizable amount of money out of sick miners’ compensation claims hit back in the 14 May edition of The Lawyer, citing the Department of Trade and Industry’s own costs, which at the time were expected to reach £2.4bn.
Soon after, Herbert Smith senior partner David Gold revealed plans to hand the running of the firm back to the partners in a decentralisation of management (The Lawyer, 14 May), while the bill for Freshfields’ restructuring came in a whopping 40 per cent over budget at £55m (The Lawyer, 21 May).
In the same week, The Lawyer also revealed that the ongoing boom in M&A prompted General Electric to launch its first-ever European M&A panel.
The pressure was on Clifford Chance when it was revealed in the 4 June issue of The Lawyer that the firm was embarking on a cost-cutting drive with a major upscaling of its offshoring programme in India, in a bid to keep average profit per equity partner above the £1m mark.
#Russell Jones & Walker took its post-Clementi plans a step further, relaunching its Claims Direct business with a £5m advertising campaign to reposition the firm in the mass-consumer arena (The Lawyer, 11 June).
In fact, almost a third of the top 100 UK firms were eyeing up the possibilities of alternative business structures and considering flotations or private equity investment, according to exclusive research carried out by The Lawyer (25 June).
Freshfields’ dirty laundry was in the full glare of the public eye in July when former head of insolvency Peter Bloxham had his week in court over his £4.5m age discrimination claim. The Freshfields hierarchy appeared in court to give evidence, but this was soon over#continuedshadowed by the news that former corporate partner Lois Moore had also filed a claim (16 July).
The news was also bad for Addleshaw Goddard after five months of failed negotiations with Mr Justice Peter Smith that would have seen the judge join the firm for a £750,000-a-year package (The Lawyer, 9 July). The talks came to light when Smith J was slammed by the Court of Appeal for marring his judgment with his personal feelings in a recusal application. The revelations sparked an inquiry by the Office of Judicial Complaints.
SJ Berwin suffered at the hand of 2007’s strong green movement, when it was revealed it had the worst carbon emission count of seven of the UK’s top 20 firms (The Lawyer, 23 July).
Meanwhile, exclusive The Lawyer/YouGov research revealed the shocking truth that 24 per cent of lawyers wanted a change of career (The Lawyer, 2 July). The result underlined the recruitment and retention crisis facing City firms. The trend was especially pronounced in the lower mid-market of £25m-£50m turnover firms, where more than 50 per cent of associates wanted out.
Clifford Chance, meanwhile, was plotting to relaunch its US practice following its first major strategy review in seven years (The Lawyer, 23 July). The formal recommitment to its £150m US business meant a sustained lateral drive and the relocation of rainmakers to New York.
Yet again diversity issues came to the fore this month with Clifford Chance struck by what was thought to be the first discrimination claim against a UK law firm on the grounds of sexual orientation (The Lawyer, 20 August). Former competition partner Michael Bryceland first hit the firm in November 2006 with the claim, which was settled in April for an undisclosed amount of money.
Once again the heat was on for Freshfields, with the firm opting to stand by head of corporate finance Barry O’Brien despite him landing a £9,000 fine for two breaches of the Solicitors’ Code of Conduct for conflicts of interest (The Lawyer, 6 August). Back in 2004 O’Brien accepted an instruction from billionaire entrepreneur Sir Philip Green, who wanted to bid for Marks & Spencer (M&S). But M&S was already a corporate client of the firm.
Meanwhile, Denton Wilde Sapte was hoping that a massive investment in Africa and the Middle East would boost the profits of the firm’s struggling flagship banking group (13 August).
Money, money, money was the talk of the 3 September issue (and the expanded The Lawyer UK 200 Annual Report), which revealed that a total of 12 firms saw their most senior partners take home an equity share in excess of £1m in the 2006-07 financial year. Three of those firms also posted average earnings per partner of more than £1m – not bad if you can get it.
But while profits were good, the magic circle was left wanting in the diversity stakes, with all four firms seeing less than 10 per cent of their equity falling into female hands. Clifford Chance was further chastised by gay rights advocacy group Stonewall in the wake of Brycewell’s discrimination claim.
But the 10 September issue revealed a backlash against the diversity movement, with 38 per cent of lawyers surveyed by The Lawyer and YouGov either disagreeing or strongly disagreeing with clients monitoring diversity strategies.
Despite doom-mongering throughout the City, the mid-market remained stoically bullish, predicting that profits would remain high and the private equity boom would continue despite the credit crunch (The Lawyer, 24 September).
Meanwhile, the year’s first successful mega-merger finally came off with Dewey Ballantine this time managing to successfully woo LeBoeuf Lamb Greene & MacRae (The Lawyer, 17 September) into a tie-up.
The US market was a continuing theme throughout October. First, Berwin Leighton Paisner and New York firm Kramer Levin ditched their formal alliance after nearly five years of cooperation (The Lawyer, 1 October), while Linklaters managing partner-elect Simon Davies revealed that he would kick off his term in office with an ambitious plan to make the firm a major player on Wall Street (The Lawyer, 15 October).
New York M&A powerhouse Wachtell Lipton Rosen & Katz then revealed that it was exploring the opportunity of launching its first international office in London (22 October), while other US firms pinned their hopes on organic growth, ramping up their trainee schemes to improve growth in the City.
Freshfields received good news on 10 October, winning Bloxham’s age discrimination case. However, Bloxham did receive some vindication: the Central London Employment Tribunal found that he had been discriminated against but that the discrimination was proportionate and in line with the firm’s ultimate aim of reforming its pension scheme.
One of the biggest stories of the month was Northern Rock’s struggles as a result of the credit crunch (The Lawyer, 8 October). Law firms jostled for roles on the ensuing battle for the bank and reawakened a debate about conflicts.
Until 18 September, Freshfields was advising the Bank of England until Northern Rock came calling for corporate advice. The Bank of England then called in Clifford Chance. Allen & Overy, meanwhile, advised Northern Rock on its banking arrangements as well as Virgin Group on its bid for the bank.
As the month closed, the Legal Services Bill received Royal Assent on 30 October and became the Legal Services Act, sparking a huge debate about the future of the legal sector.
Diversity issues caused a stir throughout November, with a flurry of readers posting comments on TheLawyer.com after it was revealed that Clifford Chance had launched a lesbian, gay, bisexual and transgender (LGBT) network (The Lawyer, 5 November). The announcement rather ‘conveniently’ came just months after Michael Bryceland’s sexual discrimination claim.
Things were also hotting up in the race to take advantage of the Legal Services Act. Just days after the Legal Services Bill received Royal Assent, Irwin Mitchell launched initiatives with the Automobile Association (AA) and RAC, aligning itself with the high-street brands to provide will-writing services (The Lawyer, 5 November).
Other firms with volume operations such as Dickinson Dees, ASB Law and Russell Jones & Walker were also busy positioning themselves for the advent of the act.
In-house counsel were, meanwhile, shocked yet again by the age-old issue of legal fees, when The Lawyer (19 November) revealed that the average partner hourly rates at magic circle firms had risen 67 per cent from £375 to £625, during the past four years. National firms fared even worse, with partner rates spiralling by 89 per cent from £185 to £350 an hour.
The senior counsel at one FTSE 100 company memorably said: “The magic circle has been so busy with M&A that they can charge £650-£700. If you don’t pay it they don’t care, because someone else will.”
And, of course, another month could not pass without Freshfields being back in the headlines. This time it was good news for the firm – the final age discrimination claim it was due to face during 2007, that of former corporate partner Lois Moore, was withdrawn (The Lawyer, 12 November).
The festive season started with a bang, with the UK’s leading insurers Norwich Union and Royal & SunAlliance reviewing their legal panels in anticipation of a radical overhaul of the personal injury claims system (The Lawyer, 3 December).
Shortly after, Herbert Smith went ahead with third-party litigation funding, becoming the first firm to instruct a broker to find financial backing for a case after asking broker Calunius Capital for help with two matters (The Lawyer, 10 December).
But the news was overshadowed by publication of The Lawyer’s highly anticipated Hall of Fame for the legal profession (The Lawyer, 10 and 17 December). Ranging from Laurie Adams to Fiona Woolf, all were qualified lawyers who have been pioneers either in the law or in the practice of it.
The Lawyer HR Awards and Video
January heralded the launch of The Lawyer‘s inaugural HR Awards. The first awards event within the legal industry to honour the contribution of the sectors’ human resources teams, the celebrations were captured in all their celluloid glory in our first online video available on www.thelawyer.com.
The Lawyer 20th Anniversary
Hoorah for The Lawyer! 2007 was a year of celebrations for the magazine, which reached the ripe old age of 20. Christmas festivities are to be overshadowed with today’s publication of The Lawyer‘s 20th Anniversary supplement, which looks back over the sector’s highs and lows since 1987.
The Lawyer.com redesign
24 September saw the launch of our dramatically redesigned website www.TheLawyer.com. After months spent toiling and tweaking, the expanded site was unveiled, with more tailored content, dedicated sections for in-house counsel and practice management and a new Backchat section that enables readers to tell us what they really think.
The Lawyer Podcast
January dawned with the launch of the monthly The Lawyer Podcast. The first radio-style programme available over the internet and iTunes to be produced by a legal publisher, the podcast provides an insight into the minds of key industry figures from private practice, the bar and in-house.
The Lawyer UK 200
September saw the publication of the new, improved and expanded edition of The Lawyer UK 200 Annual Report. The benchmark for financial comparisons between firms, the report was expanded to cover the top 200 UK law firms in anticipation of the changes likely to be driven by the Legal Services Act.
The Lawyer in New York
September also saw The Lawyer go transatlantic. With the UK and US markets undisputedly becoming more intertwined, associate editor Matt Byrne upped sticks and relocated to New York to launch a regular blog, providing an insider’s view on the latest developments in the US legal market.