Finance Top 15: the very slow road to recovery

Finance practices’ flickering flame of hope was soon snuffed out in 2012/13, as banks remained hobbled by litigation and the glow of Asian salvation proved a false dawn. By Natalie Stanton

Quite a few finance teams kicked off 2012/13 with a healthy dash of optimism that the markets would creak back into action. This did not last long. Most soon realised they were still licking their wounds in the aftermath of the downturn. Although the second half of the financial year picked up a bit, as one finance partner notes: “It’s too early to say we were out of the woods. As recently as April, Cyprus went pop and there was another eurozone crisis.”

Banks were crippled by high-risk litigation in the wake of regulatory clampdowns, the promising Asian market stalled and US firms continued their march into the UK, bringing high-yield teams into the market with renewed vigour. The restructuring market was only interrupted by dribs and drabs of new lending.

A quick glance at our top 15 table by finance revenue shows that any rise in finance turnover in 2012/13 was pretty unspectacular.


The table saw no new entrants nor exits, with most firms either generating the same proportion of revenue from the practice as in 2011/12 or shuffling within 1 per cent plus or minus.

DLA and Herbies rocket

The only firms to notice a big uptick were DLA Piper and Herbert Smith Freehills, which grew by 16.8 per cent and 52.8 per cent respectively, thanks to bolt-ons and mergers.

While each firm calculates its global finance revenue differently, all take into account general banking and finance work, restructuring and insolvency, debt capital markets and high-yield. Most also add some regulatory work relating to finance into the bucket.

Traditional names remain dominant. Allen & Overy’s (A&O) and Clifford Chance’s practices are streets ahead. A&O upped the proportion of its total turnover raked in by finance by an estimated 1.4 per cent, bouncing up from £556m to £563.6m.


“It wasn’t a normalisation of deal activity, but we’re back to business,” says Andrew Trahair, who co-heads A&O’s global banking practice with Stephen Kensell.

The firm experienced a dry patch in syndicated finance work due to constricted bank spending, but its restructuring practice remained active. Leveraged and project finance, and work for alternative credit providers also helped to beef up turnover.

The firm bucked the downward trend in Asia, increasing finance revenue generated from the region. It also found joy in Australia and in December 2012 worked on one of the largest project financings in history, advising Ichthys and joint venture partners Inpex Corporation and Total on the $20bn (£12.3bn) financing for Ichthys’ liquefied natural gas project in Australia’s Northern Territory.

Clifford Chance saw its fair share of turbulence in the year. After a flurry of structured finance partner exits in 2012 the firm plugged the gap by making up more associates in its finance practice than in any other part of the firm, a whopping 50 per cent of all promotions, to be exact.

In addition to advising the banks on multibillion refinancings for the likes of Glencore Xstrata and Cemex, Clifford Chance saw opportunities further afield. The firm relocated a number of UK-based partners to Asia Pacific to bolster its asset finance offering, while pinpointing Africa as a growth area.


“There’s been a huge amount of investment in big infrastructure and projects in sub-Saharan Africa,” says the firm’s global finance head Mark Campbell. “We’re making sure we’re on the ground there.”

In third place, Linklaters floundered around the £486m mark.

“In London we’ve been a bit busier and globally we’ve probably been about level,” says global head of banking Gideon Moore.

The firm cites restructuring, leveraged finance and high-yield as particularly strong areas. The Paris offering was dealt a blow by the exit of a trio of capital markets partners for White & Case in February. To top up numbers, it too played the promotions game, making up about 10 associates across its broad finance spectrum and hiring KPMG Dubai-based Islamic finance specialist and former head of Norton Rose’s Islamic finance group Neil Miller in March.

Despite trailing the rest of the magic circle, Freshfields Bruckhaus Deringer put in the best performance of the bunch in 2012/13. The overall 7.2 per cent uptick in total revenue helped boost its finance turnover by 7.9 per cent, the third largest rise in the top 15. This charge was led by restructuring and insolvency work, as shown by the firm’s replacement of Hogan Lovells as adviser to the senior lenders on the £1.1bn debt restructuring of waste management company Biffa.

Muddle in the middle

Outside the magic circle, the six UK firms raking in finance turnover between £100m and £200m had mixed experiences. Unlike the magic circle, both Norton Rose Fulbright and CMS’s finance practices saw growth falter during the period.

“Last year was no better or worse than the year before,” argues Norton Rose Fulbright’s global head of banking and finance Jeremy Edwards. “It’s a difficult climate.”

Restructuring is less of a hotspot for Norton Rose Fulbright, which has traditionally been more focused on asset and project finance, as well as general lending. The firm had some success in these areas in 2012/13, winning a spot on Deutsche Bank’s global panel and seeing a significant uptick in work for the Royal Bank of Canada – it worked on the bank’s first global covered bond in September 2012. But it now has growth in restructuring and debt capital markets work on its radar.

Hogan Lovells also has a strengthened debt capital markets practice on its wish-list. Since the start of 2012 the firm has brought seven lateral hires into its finance practice, including two into its New York debt capital markets team.

Over 2012/13 the group worked on some landmark deals including acting for Apple as issuer’s counsel in its $17bn registered public offering. A strong performance across the board allowed finance revenue to increase by a sturdy 3 per cent.

Slaughter and May saw some retirements at the top of its finance practice, but insists that partner headcount was relatively stable during the year. Like most firms it increased its bulk of alternative financing work but otherwise focused on the borrower side. During the year the firm advised on a number of multibillion-pound refinancings for clients including Drax and Cemex, helping the practice bump up revenue by 6.8 per cent.

But the increases in finance revenue at DLA Piper and Herbert Smith Freehills blow every other firm out of the water. DLA recorded a 16.8 per cent rise – growth of almost twice the pace of the firm as a whole. Its number of finance partners ballooned from 158 to 176.7 – thanks partly to its new Mexico City office and bolting on Paris corporate boutique Frieh Bouhenic – which houses a substantial restructuring offering – as well as organic growth.

Herbert Smith Freehills’ (HSF) practice was also transformed, virtually beyond recognition, after increasing revenue by 52.8 per cent. It sounds huge – and it is – although finance only increased as a proportion of firmwide revenue by about 2.3 per cent. The rest was down to legacy Herbert Smith’s financial Aussie tie-up in October 2012. The merger helped boost the firm’s finance partner headcount from 35 to 57. It also enabled HSF to build strong relationships with the four big Australian banks and regional natural resources companies. 

But it was a strong year by any measure, with the firm winning first-time panel appointments for banks including Sberbank, Deutsche Bank, BNP Paribas and Societe Generale.

Ashurst has the last laugh

Market sources had pointed to Ashurst as a firm facing significant challenges in relation to finance. There were frequently asked questions including over how its finance group would hold up with no formal US presence and a slow leveraged finance pipeline. The practice proved its critics wrong by recording a £3.5m increase in turnover against a relatively static firmwide turnover, partly due to an eruption in work for collateralised loan obligations (CLOs) and credit funds.

“This year alone Ashurst has worked on 12 of the 16 European CLO 2.0 transactions which have closed to date,” says Ashurst partner Chris Georgiou. 

“It’s been our busiest sector all year alongside our banking group’s bank portfolio disposals activity and we’re still flat out with a pipeline extending into 2014,” adds partner Martyn Rogers. So far, these have involved working for clients including Credit Suisse, Carlyle and Pramerica.

Thanks to its Aussie merger, Ashurst also won work for all four major Australian banks for the first time.

“A nice little bonus,” adds Rogers.

There was less to celebrate at Berwin Leighton Paisner (BLP). Propping up the by-revenue table for the second year running, as well as the table when ranked by revenue per lawyer (a sub-£1m £780,000), BLP saw a 5.1 per cent drop in finance turnover. It puts this down to the subdued deals market and the gap left by the close of mammoth transactions such as RBS’s £1.6bn Project Isobel.

Deals including a $2bn financing for Pacific Drilling helped fill the hole, but over the year the firm lost a host of finance partners – largely to US firms – topped off with the October resignation of finance head Matthew Kellett. The firm is currently conducting a review of the finance department.

A drop in finance turnover at Watson Farley & Williams (WFW) meant it was toppled as the firm generating the biggest proportion of revenue through its finance practice by top-ranked A&O. Structured slightly differently to other firms in the table, WFW’s finance practitioners are distributed across practice groups.

While its finance revenue globally dropped by 9.3 per cent, the turnover generated by finance in the UK rose by 10 per cent.

Top 15 by finance revenue
Rank Firm Finance turnover 2012/13 (£m) Finance turnover 2011/12 (£m) Per cent change Per cent total turnover No of finance partners Revenue per finance partner (£m)
1 Allen & Overy *563.6 *556 1.40% *47.4 *230 2.45
2 Clifford Chance *530 *529 0.20% *41.7 223 2.38
3 Linklaters *486 *484 0.40% *40.7 *180 2.7
4 Freshfields *211.2 *195.8 2.90% *17.3 *80 2.64
5 Norton Rose Fulbright 186 189.1 -1.60% 22 168.3 1.11
6 DLA Piper 184.7 158.2 16.80% 12 176.7 1.05
7 CMS 156.2 159.85 -2.30% 23 150.1 1.04
8 Hogan Lovells 149.3 145 3.00% 14 117 1.28
9 Slaughter and May *109 *102.1 6.80% *24.6 *24 4.54
10 Simmons & Simmons 95.1 94.6 0.50% 38 74 1.29
11 Herbert Smith Freehills* 84.6 47.9 52.80% 12.6 57 1.48
12 Ashurst 84 80.5 4.30% 26 61 1.38
13 Watson Farley & Williams 48 52.9 -9.30% 47 56 0.86
14 Addleshaw Goddard 38.3 39.1 -2.00% 23 35 1.09
15 BLP 35 36.9 -5.10% 15 45.1 0.78

The Lawyer UK 200

This year, The Lawyer’s annual ranking of the largest UK law firms by turnover is available as an interactive digital benchmarking tool.

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