Clifford Chance is advising venture capital firm Catalyst and homeless magazine publisher the Big Issue on setting up a £50m social fund. The magic circle firm is setting up the fund pro bono after Catalyst's main law firm Ashurst Morris Crisp decided to charge for the work.
This is the first time Catalyst has used Clifford Chance, and according to chief executive Rodney Schwartz, the magic circle firm is building up its private equity work for Catalyst, which usually goes to Ashursts.
Catalyst and the Big Issue are hoping to raise £50m from private institutions to invest in private companies in the education, healthcare and renewable energy sectors.
The Big Issue will receive an unspecified share of the profits in the as yet unnamed fund, which is the UK's first socially orientated venture capital fund. The Big Issue's profits used to help the homeless.
Schwartz told The Lawyer that the Big Issue introduced him to Clifford Chance, its longstanding pro bono adviser, at the end of last year, after Ashursts turned down his request to act for the fund for free.
“We did ask Ashursts to do this pro bono, but they said no. Ashursts submitted a proposal to do the work on a discounted basis, but this was nothing as attractive as the Clifford Chance proposal,” he said.
Schwartz said that Ashursts' refusal to do the work pro bono would “in no way jeopardise” its position as Catalyst's main adviser. However, he also said that although there was no suggestion of Clifford Chance doing this deal on a “quid pro quo” basis, he would use the magic circle firm again.
This deal is a PR coup for Clifford Chance, which was recently slammed in a memo written by its New York associates for not being committed to pro bono.
An Ashursts spokesperson said: “Ashursts is very supportive of pro bono causes, as our record clearly demonstrates. In this particular case, we offered to act for the fund for reduced fees rather than no fees. Naturally, we wish the fund well. We're acting for Catalyst in relation to their own second fund, which is expected to be launched in the near future.”